GM dips post-numbers; Clear Channel trades active; retail, gaming mixed; Lyondell notes slip

By Stephanie N. Rotondo

Portland, Ore., April 7 - Though distressed debt traders still characterized the marketplace as "reasonably subdued," there was more activity in the distressed arena Wednesday.

General Motors Corp. made up a bulk of that activity, as traders said anywhere from $60 million to a "couple $100 million" of the carmaker's debt changed hands. The bonds, however, ended softer after the company released its first earnings report as the "new" GM.

Meanwhile, Clear Channel Communications Inc. was also one of the day's top trading credits. While the media company's bonds finished the day slightly weaker, traders were not sure what caused the surge in activity.

The retail and gaming sector was mixed during Wednesday trading. Some names, like Harrah's Entertainment Inc., ended better, while others, such as Michael's Stores Inc., were about unchanged.

And, Lyondell Chemical Worldwide Inc.'s notes slipped in trading. The declines came as news outlets reported the company could be facing a bribery probe.

GM dips post-numbers

"Tons" of General Motors benchmark bonds were trading during the mid-week session, a trader said.

The trader called the 8 3/8% notes due 2033 down "about a point" around 353/4. He said at least $60 million of the issue changed hands, but that away from those, "that's pretty much the only one that was trading."

"GM continues to just kind of plod along," said another trader, who quoted the bonds at 36 bid, 37 offered. He noted that the paper was the most active of GM's various issues, as well.

"Couple $100 million [traded], I'd say. Everything else was just onesies, twosies," he said.

The Detroit-based automaker announced Wednesday that it had completed its so-called "fresh-start" accounting. For the period between July 10 and Dec. 31, the company reported revenue of $57.5 billion and a net loss of $4.3 billion. The loss includes a $2.6 billion pre-tax impact related to the settlement loss of its UAW retiree medical plan, as well as a $1.3 billion foreign-currency re-measurement loss.

Additionally, GM said it had generated $1 billion in cash from operating activities.

"We are building the foundation that will allow us to return to public ownership," said Chris Liddell, GM's vice chairman and chief financial officer, in the earnings release. "Completing fresh-start accounting is an important step in that process."

GM reportedly is planning an initial public offering sometime in the future. However, management acknowledged that it was not ready to do so.

"As the results for 2009 show there is still significant work to be done," Liddell said. "However, I continue to believe we have a chance of achieving profitability in 2010. We are also dedicated to delivering on our commitments to our stakeholders."

Liddell noted that GM remained committed to repaying the outstanding balance of the bailout funds it received from the Canadian and U.S. governments "by June 2010 at the latest."

Clear Channel trades active

Clear Channel Communications' debt was "trading in some size," a trader said, despite a lack of fresh news out on the company.

The trader said about $25 million of the 10¾% notes due 2016 traded at 78 bid, 79 offered. He added that a "like amount" of the 11% notes due 2016 changed hands, all "up and down" around 73.

"That's marginally weaker, but by eighths and quarters, not by anything that matters," he said.

At another desk, a market source saw the 10¾% notes falling half a point on the bid side to 78½ bid, 79½ offered. The 11% notes were also a half-point weaker at 72¾ bid, 73¼ offered.

Clear Channel Communications is a San Antonio-based multimedia company.

Retail, gaming mixed

Consumer-centered sectors - such as retail and gaming - were largely mixed on the day, traders reported.

A trader saw Harrah's Entertainment's 10% notes due 2018 "kind of sideways" at 84 bid, 84½ offered, with about $30 million of the issue changing hands.

The trader also saw Michael's Stores' 10% notes due 2014 around the 106-level.

Another trader said Blockbuster Inc.'s 9% notes due 2012 had improved by about 2 points to 233/4. However, he noted there were not many trades in the name.

Lyondell notes slip

Lyondell Chemical Worldwide's 9.80% notes due 2020 closed the session a bit softer as news reports claimed the company could be facing a bribery probe.

A trader placed the bonds around 921/2, calling that down a point. Another trader also deemed the debt a point weaker at 92 bid, 92½ offered.

According to a Bloomberg article, parent company LyondellBasell informed authorities that it had discovered "compliance issues" related to the U.S. Foreign Corrupt Practices Act.

As the story goes, Lyondell made a $7 million payment two years ago to a person affiliated with SAT & Co., a Kazakhstan-based company. Lyondell was a partner at a petrochemical plant in that region until earlier this year.

The claim is that the payment was made without going through the proper channels.

Should an investigation occur, it would likely not interfere with the company's plans to exit bankruptcy by the end of the month. However, fines and/or indictments could follow.

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