GM steady on improved sales; Visteon still climbs; Hawker notes gain on cash interest payment

By Stephanie N. Rotondo

Portland, Ore., April 1 - It was a big news day for the distressed debt market Thursday, after suffering through several sessions this week without much news.

General Motors Corp. announced its March sales report, which - as expected - showed a considerable uptick in vehicles sold. Though the automaker's bonds were among the day's most active, they nonetheless ended unchanged.

Visteon Corp. might have also benefitted from the improved U.S. auto sales numbers, as traders saw the automotive parts supplier's debt trading higher during the session.

Elsewhere, Hawker Beechcraft Acquisition Co. LLC's notes drifted higher following word the company would pay cash on its upcoming pay-in-kind coupon.

And, Energy Future Holdings Corp. paper seemed unfazed by a rating downgrade. A trader saw the bonds improving at least a point on the day.

Due to the upcoming Easter holiday, Prospect News will not publish on Friday.

GM steady on improved sales

General Motors' bonds continued to be active - though unchanged - following the release of the company's March sales results.

A trader called the 8 3/8% notes due 2033 and the 7.2% notes due 2011 "about the same," trading in a range of 37 to 371/2.

Another trader also deemed the paper unchanged, seeing about "$20-odd million" of the 8 3/8% notes trade at 37 bid, 38 offered. He pegged the 7.20% notes "up and down" around 37.

For the month of March, the Detroit automaker showed the sixth consecutive month of year-over-year sales gains. GM reported a 34% increase in sales from the previous month.

"Our March results show continued progress toward our growth plan,' stated Susan Docherty, GM's vice president of marketing, in the sales release. "By investing in our brands and remaining disciplined in our approach to the U.S. market, we posted solid results."

Ford unchanged to higher

U.S. auto sales were expected to jump considerably in March, as Toyota Motor Corp. had launched a series of incentives to lure back buyers after its recent recall debacle.

GM and other automakers, such as rival Ford Motor Co., then had to offer new incentives as well to stay competitive. According to news reports out Wednesday, it was believed that the Toyota-led incentive war would bring about the biggest increase in sales since 2009's "cash for clunkers" program.

Meanwhile, Ford Motor's term loans were unchanged to higher on the day, depending on which trader was asked, as the company released sales numbers for the month of March that showed a strong improvement from the prior year.

The Dearborn, Mich.-based automotive company's term loan B-1 was quoted by one trader at 96¾ bid, 97¼ offered, in line with previous levels, and by a second trader at 96 7/8 bid, 97 3/8 offered, up three eighths of a point.

And, the term loan B-2 was quoted by the first trader unchanged at 95¾ bid, 96¾ offered, and by the second trader at 96¾ bid, 97¾ offered, up a point on the day.

For the month of March, Ford's total sales were 183,783, up 39.8% from 131,465 in March 2009, car sales for the month were 71,015, up 52.8% from 46,467, and truck sales for the month were 59,623, up 30.1% from 45,813 in the previous year.

Visteon continues to climb

Elsewhere in the automotive arena, Visteon's bonds were up "another point or two," according to a trader.

The trader quoted the 8¼% notes due 2010 and the 7% notes due 2014 at 97 bid, 98 offered.

Another trader also placed both issues around the 98 level.

The first trader wondered if a short-squeeze was the cause for the gains. However, the GM and Ford sales releases also probably played a role, as Ford by itself provides about 30% of its business.

In the news, Visteon's unsecured creditors committee was reported to have asked the bankruptcy judge overseeing the case to terminate Visteon's exclusivity. The group is alleging that Visteon is continuing to bow to term lenders.

"Competing plans are poised to be filed, and should be parallel-tracked. The official committee could be a proponent of the rights offering plan or submit a plan predicated on reinstatement (partially, or in full) of the term loan," the unsecured creditors said in court documents filed Wednesday.

Hawker gains on cash interest payment

Hawker Beechcraft Acquisition's notes traded upward as the company announced it would pay cash on an upcoming interest payment for its PIK notes.

A trader called the 8 7/8% PIK notes due 2015 "up a couple" around 80, while the 9¾% notes due 2017 were "up a couple too" around 74.

At another desk, the 8 7/8% notes were seen around 80 and the 9¾% notes around 741/4.

The Wichita, Kan.-based aircraft manufacturer said in a regulatory filing that it would pay cash for the interest period ending Sept. 30.

The coupon comes due Oct. 1.

TXU unaffected by downgrade

Energy Future Holdings' paper gained some ground during Thursday trading, shaking off a rating downgrade from Fitch Ratings.

A trader called the bonds up anywhere from a point to 1¼ points, seeing the 10 7/8% notes due 2017 at 74 and the 11¼% notes due 2017 at 69.

"They looked up a point across the board," the trader said. "But only a few of them traded."

Fitch cut its issuer default rating on Energy Future and several subsidiaries to B- from B. The downgrade was attributed to low expectations regarding cash flow generation capability, as well as the company's high debt leverage.

The outlook is negative.

Also in the energy sector, Reliant Energy Inc.'s 7 7/8% note due 2017 ended about a half-point better, a trader said, at 891/2.

Broad market mostly firm

Also in distressed territory, Harrah's Entertainment Inc.'s 10% notes due 2018 were up "almost a point-ish" to around 84, a trader said.

Rite Aid Corp.'s 8 5/8% notes due 2015 meantime regained some of the previous day's losses, ending up nearly a point better at 86½ bid.

Sara Rosenberg contributed to this article

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