Calpine higher on plan; Delphi untouched by strike; Standard Pacific better on new issue

By Stephanie N. Rotondo

Portland, Ore., Sept. 24 - It was a "one-off" day in the distressed bond market Monday - as in one-off trades.

One trader characterized the day as "really, really quiet," while another speculated that trading was light as market players awaited new housing data, expected on Tuesday.

"Guys are stalling to see how bad that is going to be," the trader said.

As has been typical of late, the names that traders did see active were Calpine Corp. and Delphi Corp.

Calpine filed its third amended plan of reorganization Monday, which reflected small changes in its estimation of claims. It also increased equity value yet again.

On the filing, traders said the corporate debt gained a couple points, while the equity moved higher as well.

Delphi's bonds were called unchanged to better as a threatened union strike against the parts supplier's former parent, General Motors Corp., ceased to be a threat and became a reality. Part of Delphi's settlement with its unions turned responsibility for retiree health care benefits over to the automaker.

Investors in Standard Pacific Corp. were undeterred despite a cut dividend. Instead, the market chose to focus on a new convertible issue the company plans to release. Traders said the homebuilder's bonds were up as much as 3 points, while other names in the sector, particularly Technical Olympic USA Inc., were lower.

But even as the lackluster day came to a close, several market sources said they expected things in the junk sector to shake up.

One trader said he is still expecting a sell-off, as failing hedge funds liquidate ahead of their Oct. 1 redemptions.

Calpine better on third plan filing

Calpine filed a third version of its reorganization plan on Monday, which prompted the power producer's bonds to edge higher.

One trader called the bonds "up a couple" points, with the 8½% notes due 2011 at 109.75 bid, 110.5 offered and the 8½% notes due 2008 at 110 bid, 111 offered.

Another trader called the debt "a little bit better," with the 2011 issue around 110.

At another desk, a trader pegged the notes due 2008 at 109 bid, 110 offered, up a point. He said "all the rest of them are up a point" as well.

Another trader placed the notes due 2011 up 1.5 points at 109 bid, 110.

A market source saw the company's 8¾% notes due 2007 also at the 109 mark, up a point.

The third plan reflects changes to the estimated claims amounts. The stock gained 15 cents, or 9.80%, to $1.68.

Still, one trader remains cautious. He agreed that the bonds should move higher based on the details of the new plan but did not believe that the recent credit crunch had no effect on the company. According to the trader, he believed the valuation levels to be likely up to $2 billion lower than the current estimation.

Delphi not touched by strike

A union strike did little to hurt Delphi's bonds, which were called unchanged to slightly better on the session.

One trader pegged the 6½% notes due 2013 at 91.5 bid, 92.375 offered, which he deemed unchanged. At another desk, a trader said the bonds "continue to rally," with the 6.55% notes that were to have come due last year at 92 bid, 93 offered.

Another trader called the 6.55% notes up a quarter point at 92 bid, 93.5 offered.

General Motors' was also unscathed by the strike. A trader said the 8 3/8% notes due 2033 were at 87.25 bid, 87.75 offered, up half a point. Another trader said the bonds ended down a quarter point at 87 bid, 87.5 offered. He noted that the news about the strike "was supposed to be bad news" for the carmaker, but the junk market was treating it pretty much as a non-story.

A third trader said the bonds got as good as 88.5 bid, 89.5 offered, up 3 points on the day, then "lost most of it back," to end at 87 bid, 88 offered, up maybe a point on the day.

The United Auto Workers union began picketing Monday as talks with General Motors hit a snag. GM, which is responsible for Delphi retiree health care benefits, has reportedly proposed a health care plan that many feel would not cover costs for retirees, as previously promised.

Elsewhere in the autosphere, Federal-Mogul Corp.'s bonds - which tend to trade in line with each other - were called better at around 85.

Another trader said Federal-Mogul's bonds were up 1 point to 85 bid, 86 offered.

Dana Corp.'s 6½% notes due 2008 were a half point higher at 81.5 bid, 83.5 offered.

New issue boosts Standard Pacific

A reduced dividend did little to deter investors from homebuilder Standard Pacific.

One trader called the bonds up 2 points, with the 9¼% notes due 2012 at 72 bid, 73 offered. Another trader said the bonds were also up 2 points but placed them in the 76 area.

"They had news out, and it was good, but I didn't see any trading today," a trader said. "I would say they're up a couple of points, but I can't verify it."

The cut dividend will be used to pay down debt, the company said Monday. In addition, the company plans to offer $100 million in convertible senior subordinated notes due 2012.

Other homebuilders did not fare as well.

One trader quoted Hollywood, Fla.-based Technical Olympic's 10 3/8% notes due 2012 down a point at 36.5 bid, 38 offered.

Another trader saw the 9% notes due 2010 around 70, "about where they have been."

Elsewhere, a trader saw the 8¼% notes due 2011 down 1.25 points to 67.75 bid, 68.75 offered. He said "the other ones are down the same" amount.

A trader said activity in homebuilders is lagging slightly as many market participants are waiting to see what third-quarter results will show. However, he said, it is widely expected that those numbers will be weak.

Gaming names higher

A trader said Trump Entertainment Resorts Inc.'s 8½% notes due 2015 were better at 85.

He speculated that recent gains in the casino operator's bonds are due to a game of "catch up." He said that other names in the sector have previously performed better than Trump.

Elsewhere in the gaming world, the 8¾% notes due 2012 linked to 155 East Tropicana LLC, otherwise known as Hooters, traded higher at 102.

Broad market mixed

Fedders Corp.'s 9 7/8% notes due 2014 were called unchanged at 15.5 bid, 16.5 offered.

A trader said Movie Gallery Inc.'s 11% notes due 2012 traded around the 97 level, while Neff Corp. paper - the 10% notes due 2015 - traded at 75.

Another trader called Movie Gallery's debt down 2.5 points to 35.5 bid, 37.5 offered.

A trader also saw James River Coal Co.'s 9 3/8% notes due 2012 at 81 bid, 82 offered.

Hines Horticulture Inc.'s 10¼% notes due 2011 were up a half point to 71 bid, 72 offered.

Meanwhile, Sea Containers Ltd.'s bonds were up a point, with the 10¾% notes due 2006 at 73 bid, 75 offered and the 7 7/8% notes due 2008 at 70 bid, 72 offered.

Tembec Inc.'s 7¾% notes due 2012 were down 1 point at 40.5 bid, 41.5 offered.

Paul Deckelman contributed to this article.

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