Collins & Aikman bonds bounce off lows; Mirant debt keeps rising

By Paul Deckelman and Sara Rosenberg

New York, March 1- Collins & Aikman Corp. bonds seemed to shift gears Wednesday as the Troy, Mich.-based automotive supplier's notes headed lower in initial trading, continuing their recent slide, but then bounced sharply off those lows to head higher by the end of the day, some traders said.

In bank debt activity, Mirant Corp.'s paper continued its fragile winning streak, heading higher for a third consecutive session, apparently on market technicals.

Collins & Aikman Products Co.'s 10¾% senior notes due 2011 and 12 7/8% subordinated notes due 2012, which had been getting beaten down each day over the last few sessions, were seen having firmed off their lows, perhaps because the market felt that they had been beaten down enough and it was time for a reversal.

Wednesday started out as more of the same, with the 103/4s quickly dropping another two points to 92 bid, while its 12 7/8% notes due 2012 likewise were down a quick deuce in morning dealings to 66 bid, a market source said.

The company makes plastic interior and exterior auto components and is thus extremely exposed to rising oil prices - since most plastics are made from petroleum derivatives - and the bonds were thrown for a loop by a story last week in the Detroit Free Press indicating that it could be badly hurt by continuing oil price hikes and the resulting rise in plastic prices.

The bonds have also been impacted by announcements of planned output cutbacks by the two biggest U.S. carmakers, General Motors Corp. and Ford Motor Co., who together account for much of Collins & Aikman's business.

As Collins & Aikman led the way lower, other troubled automotive names followed along, including the bankrupt Novi, Mich.-based automotive frame maker Tower Automotive Inc., whose RJ Tower Corp. 12% notes due 2013 lost two points to 60 bid, 62 offered, while bankrupt Troy Mich.-based automotive metal stamping manufacturer Intermet Corp.'s 9¾% notes due 2009 lost a point to 64 bid, 66 offered.

A trader saw Metaldyne Corp., especially, "getting walloped," with the Plymouth, Mich.-based automotive metal components maker's 11% notes due 2012 pounded down to 84.5 bid, 85.5 offered from prior levels at 88.5 bid, 89.5 offered, this after Standard & Poor's dropped its debt ratings to B from BB- previously, with a negative outlook.

The ratings agency cited the company's high leverage, constrained liquidity and the increasingly challenging conditions in the auto industry.

And Dura Operating Corp.'s 9% notes due 2009 lost more than a point to 92 bid, and its 8 5/8% notes due 2012 were down about a point at par bid.

But later in the session, things seemed to turn around a bit for the oversold automotives.

A trader saw Dura's 9s, after having fallen as low as 90.75 bid during the session, getting off the floor to recover to 92 bid, 93 offered, which he pegged as down only half a point.

And Collins & Aikman, he said, also bounced from its lows, the 103/4s ending at 92.5 bid, 93.5 offered after having touched lows of 91.5, while the 12 7/8s came up from lows of 64 to end at 67 bid, down only a point.

At another desk, a trader, contacted later in the day, saw the Collins bonds actually "popping" quoting the 103/4s as going home at 93.5 bid, 94 offered, well up from their intra-day lows at 90.5 bid 92 offered, and the 12 7/8s getting as good as 68 bid, 70 offered, up from 64.5 bid, 65.5 offered at mid-afternoon.

The second trader acknowledged that "it could just be a bounce," after having been so oversold Tuesday and earlier Wednesday. "There were no news headlines saying great screaming news for CKC," he declared.

Mirant loans up again

In the bank loan market, Mirant's '03 debt was once again stronger on the day with levels moving up to 76.5 bid, 77 offered from 75.5 bid, 76.5 offered on Tuesday, according to traders. (Wednesday's editions of Prospect News publications gave erroneous closing prices for the Mirant bank debt - and wrongly stated that the mid-70s prices published in Tuesday's editions were wrong).

At the open on Monday, the bank debt was seen around 73.5 bid, 74.5 offered and it has been steadily ticking its way up from there, ending every day this week at progressively higher levels.

Mirant's '05 paper was quoted at 81.5 bid, 82.5 offered on Wednesday, one trader added.

All of the momentum so far has been attributed to market technicals.

The bankrupt Atlanta-based energy company's bonds were seen "up a couple of points," a trader said, its 2½% convertibles gaining two points to 78 bid, 79 offered and its 5¾% converts three points better at 81 bid, 82 offered.

He also saw the company's straight bonds about two points better, with Mirant's 7.40% notes due 2004 and 7.90% notes due 2009 at 83 bid, 84 offered.

Trump bonds gain

Elsewhere, a trader saw the Trump Atlantic City Associates' 11¼% second mortgage bonds due 2006 "continuing to move up," up a point on Wednesday to 99.75 bid, 100.25 offered.

He speculated this was because the parent company of Trump A.C., Trump Hotels & Casino Resorts Inc., "is getting close to getting out" of Chapter 11 via a pre-packaged bankruptcy reorganization that will leave the Atlantic City, N.J.-based gaming company's bondholders with two-thirds of the company's stock and chairman Donald J. Trump with 26%, but still running his eponymous company.

Parmalat gains

Another company making progress on its efforts to leave bankruptcy is Parmalat Finanzaria SpA, the Italian-based dairy products giant laid low in late 2003 by a gigantic accounting scandal.

Parmalat on Wednesday was tinkering around with the ratio of shares that its bond holders will receive for their debt, as it aims toward its goal of getting out of Italian insolvency proceedings and being listed again on European stock exchanges by July.

It cut the amount of shares that most creditors will receive in exchange for about €27 billion ($35.4 billion) in debt, after a judge overruled bankruptcy administrator Enrico Bondi's decision to reject about €4 billion of claims from the company's biggest lenders such as Bank of America Corp. and Citigroup Inc.

That will bring the reimbursement ratio for holders of debt and guarantees from Paramalat SpA, which accounted for more than €13 billion euros of the claims, to 6.9% from the originally proposed 7.3%.

A trader saw Parmalat's euro-denominated bonds "up perhaps a point" at 23 bid, 25 offered. Its dollar denominated 6 5/8% notes due 2008 continue to languish around 15 bid, 17 offered, the trader said.

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