R.H. Donnelley paper moves higher; Ford bonds fall on sales numbers; broad market ends mixed

By Stephanie N. Rotondo

Portland, Ore., April 15 - Traders called the distressed market slightly better to unchanged Wednesday, though some noted that most trading was geared toward new issues.

One trader said the market was "flat to up a quarter," generally speaking.

R.H. Donnelley Corp.'s bonds were seen moving higher, gaining as much as 4 points during the midweek session. The move came despite news that the company had elected to use a 30-day grace period in lieu of making a $55 million interest payment.

Meanwhile, Ford Motor Co.'s bonds dropped in trading following the release of its European sales report for the month of March. The bonds had previously been slowly but steadily climbing higher since the Dearborn, Mich.-based company said it reduced its debt by over $9 billion.

R.H. Donnelley moves higher

R.H. Donnelley's debt climbed up despite news that the company was choosing to enter a 30-day grace period in lieu of paying a coupon.

A trader saw the 8 7/8% notes due 2016 gaining 1.5 points to 3.5, while the 9 7/8% notes due 2013 move dup more than 4 points to 27.5. He also saw the 9% notes due 2013 at 13 1/8, about 3.75 points firmer, while the 8 7/8% notes due 2017 inched up half a point to 4.5.

Another source called the 8% notes due 2013 up more than a point to 12.75 bid.

The Cary, N.C.-based phonebook publisher said that using the grace period on its $55 million in interest payments due on Wednesday did not constitute a default, unless it ran over the 30-day period and had not secured a wavier from creditors.

Donnelly, which is currently engaged in restructuring talks, said it "remains optimistic" about the outcome of said negotiations, though it cautioned that no guarantees could be made. At the end of the fourth quarter, Donnelly had paid down $600 million in debt during 2008, but still had about $9.5 billion in debt outstanding. Rival Idearc Inc. filed for Chapter 11 protections in March.

Ford slips on sales

Ford Motor saw its bonds falling half a point to 1.5 points following the release of new sales data.

At one desk, the shorter issues were seen dropping a quarter to half a point, while the longer paper fell 1.5 points or more. A trader pegged the 7 3/8% notes due 2009 at 92.75, the 8% notes due 2016 at 70 and the 7 3/8% notes due 2011 at 79 1/8. In the long bonds, the benchmark 7.45% notes due 2031 were deemed more than 2 points weaker at 40, while the 6 5/8% notes due 2028 slipped to 35 7/8.

Another trader quoted the benchmark issue at 38.5 bid, 40.5 offered, calling that 1.5 points softer.

On Wednesday, Ford's European division announced its March sales. For the month, sales fell 13% to 163,000 vehicles in its 19 core markets across the continent. For the quarter, sales were seen falling 16% compared with 2008, with 352,200 vehicles being sold.

But the one bright spot was the company's Fiesta, which sold 52,800 units in March. That was the highest retail sales month for the small compact model.

"It is very encouraging to see Fiesta doing so well and also our market share developing so positively, given the declining market we are continuing to face in Europe," Ford Europe's vice-president of marketing, sales and service, Ingvar Sviggum, said in a statement.

Meanwhile, General Motors Corp.'s bonds ended the session mixed.

One trader called the 8¼% notes due 2023 a tad weaker at 7 1/8. But another saw the benchmark 8 3/8% notes due 2033 gaining half a point to end at 8.5 bid, 10.5 offered.

GM said on Wednesday that it had received offers for its Saturn unit, including a proposal from Black Oak Partners LLC, an Oklahoma-based private equity firm.

Broad market mixed

Elsewhere in the distressed arena, Freeport-McMoRan Copper & Gold Inc.'s 8 3/8% notes due 2017 dropped nearly a point to 97.5.

Capmark Financial Group Inc.'s 5 7/8% notes due 2012 edged up slightly to around 20, a trader said.

MGM Mirage's debt, which had gained in the previous session on news that its banks had granted approval allowing a monthly payment on its CityCenter project, fell back down Wednesday, its 6 5/8% notes due 2015 slipping 1.5 points to 40.5 bid.

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