Hawker Beechcraft notes dive; GM bonds stable despite Delphi chatter; Spectrum posts loss, bonds slip

By Stephanie N. Rotondo

Portland, Ore., Feb. 9 - Hawker Beechcraft Corp. was the day's big loser, traders reported Monday, as the company's debt fell as much as 16 points on the day.

The aircraft producer's bonds could have been hit by a recent round of layoffs and a downgrade last week, a trader said.

Meanwhile, General Motors Corp.'s bonds remained relatively unchanged, despite news reports that the company is looking to buy back parts of Delphi Corp. According to the reports, GM plans to include Delphi in a viability plan that is due to the Treasury Department later this month.

Spectrum Brands Inc., the recently bankrupt battery maker, reported a wider loss for its first quarter. The dismal numbers pressured the company's debt, resulting in a couple-point loss for the bonds.

Overall, traders said the day was on the quiet side.

"Today didn't happen," one trader quipped, adding that there was "a lot of hurry up and wait."

But market sources remained upbeat that activity would pick up after Tuesday, when President Barack Obama's stimulus package is expected to go to the Senate. Also, some noted that earnings are still coming out, which could provoke some movement.

Hawker Beechcraft notes dive

Hawker Beechcraft's debt took a dive during Monday trading, falling at least 10 points on the day.

A trader quoted the 8½% notes due 2015 at 16 bid, 17 offered, compared with 26 bid, 27 offered last week. Another trader pegged the notes at 15 bid, 16 offered.

"They haven't been trading much recently," the second trader said of the paper. "But that definitely looks a good bit lower from where it had been in the higher 20s."

Another source deemed the bonds 16.5 points weaker at 15.5 bid.

There was no fresh news out Monday on the aircraft manufacturer. However, last week Moody's Investors Service downgraded the company to B3 from B2, citing concerns over diminished revenue prospects and cash flows.

Also last week, Hawker said it would cut 2,300 jobs before the end of the year. That is in addition to about 500 workers that were laid off before the end of 2008. Pink slips went out to some employees on Friday.

"The government's stimulus package has failed to sufficiently loosen credit markets, which are absolutely vital to the success of HBC and our industry," Jim Schuster, chairman and chief executive, said in a letter to employees last Tuesday. "The media and some politicians have cast general aviation as a wasteful extravagance instead of a critical business tool and the source of millions of American jobs."

Schuster might have been referring to the hubbub surrounding Detroit automakers, as they made their way to Washington, in their corporate jets - just before they met with lawmakers asking for federal bailout funds.

"This is an extremely painful step for the HBC family and community, but one that is absolutely necessary," Schuster said in his letter. "While I wish I could commit to you that this will be our final action, I cannot do so at this time given the extreme volatility in the marketplace."

As of October, Hawker had about $2.4 billion in debt and an expected $190 million in interest payments to make in 2009.

Hawker Beechcraft is a Wichita, Kan.-based manufacturer of business jets.

GM unchanged amid Delphi buzz

General Motors' bonds remained relatively stable, traders reported, despite chatter that the company is looking to buy back its offspring Delphi Corp.

A trader saw GM's 8 3/8% notes due 2033 at "13 and change," while its 7.2% notes due 2011 traded around 18.

"It's all within pennies of where it has been," he remarked.

Another trader also placed the 7.2% notes at 18 and quoted the benchmark 8 3/8% notes at 13 bid, 14 offered, both "about the same."

GM has reportedly entered into talks with Delphi to buy back parts of the bankrupt automotive parts supplier. The company is planning on adding Delphi to its viability plan, due to lawmakers by Feb. 17.

Delphi, which went out on its own from GM about a decade ago, has struggled for over a year to exit Chapter 11 protections. In early 2008, a plan was in place. But as the market took a downward turn, so did Delphi's plan. But then an investor group led by Appaloosa Management backed out of a $2.55 billion exit financing agreement, leaving Delphi in the lurch.

Delphi's debt is currently trading in the low single digits.

Still, both GM and Delphi are remaining mum on any possible negotiations.

"As GM has previously stated, any future actions or involvement by GM would have to be considered in the context of the viability plan it intends to submit to the United States Treasury later this month," Renee Rashid-Merem, a GM spokesperson, said in a statement.

Elsewhere in the autosphere, Ford Motor Co.'s 5.70% notes due 2010 traded at 80, with about $10 million changing hands, according to a trader.

Another trader saw the 9.30% notes due 2030 at 19 bid, 20 offered, unchanged on the day.

GMAC LLC, GM's financing arm, saw its 6 7/8% notes dip nearly 3 points to 65.25 bid.

Spectrum slips on poor numbers

A wider quarterly loss put more pressure on recently bankrupt Spectrum Brands Monday.

One trader, who remarked that he was a seller of the 7 3/8% notes due 2015, saw the issue fall to 23 from 25. He also saw the 12½% toggle notes due 2013 at 25, compared with 27.

Another trader quoted the 7 3/8% notes at 22 bid, 23 offered, a couple points lower on the day.

Chicago-based Spectrum posted a loss of $112.7 million, or $2.19 per share, for its first fiscal quarter of 2009, which ended Dec. 28, 2008. That compares with a loss of $43.4 million, or 85 cents per share, the year before. Part of the quarter's loss was attributed to restructuring charges at $1.03 per share.

Excluding certain items, the company posted a loss of 18 cents per share.

Total sales fell 6.7% to $564.2 million, despite a 21.8% increase in North American battery sales. However, the company noted that without the impact of foreign-exchange rates, sales fell by a mere 1%.

Spectrum entered into bankruptcy protections earlier this month. Under its prepackaged plan, the company hopes to cut debt by $840 million and to slash its annual interest payments by $95 million for the next two years.

Spectrum will not hold a conference call to discuss the results, which have been halted until further notice.

Broad market mixed

Idearc Inc. and R.H. Donnelley Corp. failed to stir up investors' interest, despite both companies being downgraded by Moody's.

A trader said that Idearc's 8% notes due 2016 were at "2.75 locked and still nobody cared." He added that the debt has been at 2.5 bid, 3.5 offered for some time.

Also, in Donnelley's debt, the trader said there was "a lot of pricing, but no interest."

"If you own them, you don't want to sell them at 10 or 12," he stated.

The trader quoted the 8% notes due 2013 linked to Dex Media at 11.5 bid, 12.5 offered and the 8 7/8% notes due 2017 at 10 bid, 11 offered.

NOVA Chemicals Corp.'s 7.4% notes coming due in April gained a couple points to close at 67 bid, 68 offered, another trader said.

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