Auto parts names under pressure; Harrah's debt dips; No pride for Pilgrim's; Charter paper slides

By Stephanie N. Rotondo

Portland, Ore., June 23 - In a generally weaker distressed bond market Monday, auto parts manufacturers were seen ending the session heavier.

Delphi Corp.'s bonds closed 3 points lighter, while Visteon Corp.'s debt fell as much as 5 points on the day. As U.S. automakers struggle amid declining sales, parts suppliers such as Delphi and Visteon are expected to get the short end of the stick.

Meanwhile, Harrah's Operating's paper softened Monday. The company's newest issue slipped 2 to 2.5 points, which one trader attributed to a Lehman Brothers report.

Weather in the Midwest is expected to warm this week, but that has not lessened the pressure on Pilgrim's Pride Corp.'s bonds. The company's notes have been hurt by rising corn prices - attributed to floods that raged throughout the biggest corn-growing region in the world.

Charter Communications Inc.'s paper lost another couple of points, a trader said. There has not been any news to cause the recent gains in the cable provider's debt. Theories on the dip have ranged from profit taking to troubles at rival Comcast. Still, it could just be a case of gaining too much too fast, the trader said.

Auto parts names pressured

With U.S. automakers cutting production left and right, auto parts manufacturers are feeling the pressure.

A trader said Delphi paper was weaker at around 30. Another source also saw the Troy, Mich.-based company's debt in the low-30s, down as much as 3 points.

Visteon's 7% notes due 2014 were also heavy. A trader said he saw the bonds trade at 59.5.

"That's a lot lower than where they have been trading," he said. "I don't know if it's a bad print or not. If it's real, that's down a few points."

At another desk, the bonds were also seen lower by 4 points at 60 bid.

"Anything in that space is pretty heavy," the trader said. "There is nothing good coming out of that sector."

Another trader called Visteon's 7% notes down 5 points on the day at 59 bid, 61 offered, while its 8¼% notes due 2010 were steady at 92. The new 6¼% notes due 2015 were down half a point at 84 bid, 85 offered.

Metaldyne Corp.'s 10% notes due 2013 were at 55 bid, 57 offered and its 11% notes due 2012 were at 29 bid, 31 offered, both down 2 points on the day.

On Monday, General Motors Corp. told its dealers that prices on 2009 models will increase about 3.5% and production on vehicles will be cut. According to news reports, the company is hoping to make up for the rising cost of commodities, such as steel.

The move by GM comes just a week after Chrysler LLC announced a 2% increase on 2008 models. Ford Motor Co. also recently announced a production cut due to declining sales.

For companies like Delphi, which is still struggling to emerge from bankruptcy, the cuts do not bode well. Delphi is seeking court enforcement of its exit financing deal with Appaloosa Management, which backed out of the $2.55 billion deal in the final hour. Appaloosa, however, is seeking a dismissal of the complaint.

Harrah's bonds slip

In the gaming sector, Harrah's bonds ended the session weaker, which one trader attributed to a Lehman Brothers report.

According to the trader, Lehman analysts said that they believed the casino operator would use the payment-in-kind feature of its 10¾% notes due 2018. As a result, its debt slipped.

The trader quoted the 10¾% notes due 2016 - considered the more liquid issue - at 81 bid, 82 offered, down from Friday's levels of 84 bid, 84.5 offered. The trader called the bonds "reasonably active."

Another trader said the 2016 paper was "definitely lower again" at 82.25, down 2 points. Another market source pegged the 5¾% notes at 54 bid, down 1 point.

Elsewhere, Station Casinos' 6% notes due 2012 fell 1.25 points to 82 bid.

Last week, Lorenzo Fertitta, president of the company, said he would hand over control to his brother Frank, as he headed off to work for Ultimate Fighting Championship, which the Fertitta family owns a portion of. Fertitta said the success of the gaming centers' was requiring more time and attention.

No pride for Pilgrim's

Pilgrim's Pride's debt continued to be "under pressure," a trader said. He pegged the 7 5/8% notes due 2015 at 82 bid, 83 offered and the 8 3/8% notes due 2017 at 72 bid, 73 offered.

Flooding in the Midwest was blamed last week for losses in the poultry-producer's bonds. The inclement weather played havoc on corn crops, resulting in higher prices for the grain. But on Monday, reports indicated that the floodwaters were waning and drier weather was in the forecast. A U.S. Department of Agriculture report is expected June 30 assessing the damage.

Among other food-related names, Chiquita Brands' 7½% notes due 2014 gained half appoint to end at 85 bid.

Charter paper slides

A trader said Charter Communications' bonds "kept getting beat up" during Monday's session, calling the debt down a couple points across the board. He quoted the 11% notes due 2015 at 80, while another source saw the 8% notes due 2012 down a half point at 96.5 bid.

The trader said there was no news to prompt the move but said that some people were pointing to the beat down rival Comcast has seen in its equity. However, the trader called that "a stretch" as an explanation - "but clearly it's for sale," he stated.

At another desk, Charter's 10% notes due 2014 lost 2 points to 64 bid, 66 offered, while its 8 3/8% notes due 2014 were off by half a point at 96 bid, 97.5 offered.

Broad market mostly weaker

Six Flags Inc.'s 9 5/8% notes due 2014 closed at 58 bid, 60 offered.

Meanwhile, a source said Linens n'Things Inc.'s floating-rate notes due 2014 "remained weak" near 35.

A trader saw Delta Air Lines Inc.'s 8.3% stubs having descended to 30 bid, 32 offered from 33 bid, 35 offered previously.

Idearc Inc.'s 8% notes due 2016 dipped one point to 67 bid, 69 offered. Another market source saw the bonds off 2 points, also around the 67 mark.

Claire's Stores Inc.'s 9¼% notes due 2015 were seen up 1 point to 52.5 bid.

Paul Deckelman contributed to this article.

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