Calpine bonds drift downward; Delphi notes on a 'wild ride'; Technical Olympic better

By Stephanie N. Rotondo

Portland, Ore., Sept. 12 - Wednesday was a "frustrating" day, a trader said, as some market players exited early to prepare for Rosh Hashanah.

"It was a frustrating day," the trader said. "Accounts are telling me they are not doing anything."

Another trader said the afternoon was rather quiet, attributing the lack of activity to the upcoming holiday.

The distressed names of the day were Calpine Corp. and Delphi Corp., both of which continued to acquire losses.

"Calpine and Delphi were the two big movers," a trader said. "Other than that it has been a real inactive day."

"There is a lot of trading, all of it down," he quipped, characterizing the broader market.

Calpine's bonds lost 5 to 6 points on the day, bringing its total for the week to around 8. One trader said the day's decrease was due to a lower valuation being thrown around.

Delphi, which has been weakening for a few weeks now, lost another 5 points on the day.

On the opposite side of the coin, Technical Olympic USA Inc.'s debt was "a little better," according to one trader. However, he was not sure why, and there was no fresh news out to prompt the gain.

Calpine drifts downward

Calpine's bonds were "getting hurt," a trader said, as the bonds continue to rack up losses over the week.

The trader quoted the 8½% notes due 2011 off 5 points at 99 bid, par offered. Other traders echoed that market, and one noted that the debt had lost 8 points since Monday. Another source pegged the 8½% notes due 2008 at 98.

"Looks like it was down pretty good today," said a trader of Calpine's bonds, slating the notes due 2008 at 99 bid, 101 offered from 108 bid, 110 offered previously.

He also saw the convertibles down, with the 4¾% notes due 2023 at 94 bid, 96 offered, down from 101 bid, 103 offered; the 7¾% notes due 2013 at 93 bid, 95 offered, down from par bid, 103 offered; and the 6% convertibles at 82 bid, 84 offered, down from 90 bid, 92 offered.

Another trader saw the notes due 2011 down 5 points at 99 bid, par offered.

One trader, in giving potential reasons for the day's decline, said he heard the power producer's EBITDA expectations had been lowered, which could affect recovery levels.

Rosetta Resources Inc., which purchased Calpine's oil and gas businesses, asked the bankruptcy court overseeing Calpine's case, to dismiss the fraudulent conveyance charges against it. Rosetta said that, as the charges would demand recovery for damages, the case was baseless since Calpine has said it will give its creditors full repayment, including interest.

Delphi takes a 'wild ride'

It was a "wild ride" for Delphi, a trader said, with the bonds drifting as much as 8 points lower during the session, before closing down just 3 points.

A trader said Delphi paper was trading "mostly in the 80s," while another placed the 6½% notes due 2009 down as low as 79. He added that there was a print of 83.

"I don't believe it," he said.

The trader also saw the 8¼% notes due 2033 offered at 70 without a trade, noting that in the previous session, the bonds moved closer to 75.

"They were under-offering themselves over and over," the trader said.

Another trader saw the 6.55% notes due 2006 at 82.5 bid, 84.5 offered, down 2 points.

Delphi's bonds have been moving lower for several weeks. Traders have said that concerns with the reorganization plan, as well as a hefty settlement payment to former parent General Motors Corp., have made investors cautious.

Still, the company has said that it expects to post an operating profit by the end of the year and a total profit by 2009.

In the rest of the autosphere, Dana Corp.'s 6½% notes due 2008 slipped to 78 bid, 80 offered, down from 81 bid, 83 offered, while Remy International Inc.'s 11% notes due 2009 fell to 107 bid, 112 offered from 110 bid, 116 offered.

Dura Automotive Systems Inc.'s debt was also weaker, its 8 5/8% notes due 2012 down more than 2 points at 43.5 bid, 45.5 offered.

Technical Olympic better

According to one market source, investors are starting to ask more and more about the distressed housing sector. The industry, which includes not only homebuilders, but anything associated with it, was beaten up in the previous session. Those losses have been piled on top of one another over the last few months, as housing concerns, the subprime mortgage fallout and recession worries have hurt the sector.

Still, a trader saw at least one name in the industry "a little better."

The trader said Technical Olympic's bonds moved up as much as 4 points, though it was unclear why. He quoted the 10 3/8% notes due 2012 up around 34 and the 9% notes due 2010 in the 69 level.

Another trader said the 8¼% notes due 2011 were better at 66.5 bid, 68.5 offered. At another desk, a trader placed the 10 3/8% subordinated notes at 33.5 bid, 35 offered and the 9% notes at 69.75 bid, 70.75.

Among other homebuilders, a trader saw Beazer Homes USA Inc.'s 8 5/8% notes due 2011 down a quarter of a point at 76.75 bid, 78.75 offered, which was "no real change."

In distressed mortgage names, Residential Capital LLC "tried to go up" by half a point to 1 point in early dealings, a trader said. He noted that the bonds "ended unchanged."

Another trader said ResCap paper "continues to do a little better," pegging the 6 7/8% notes due 2015 up half a point at 78 bid, 79 offered.

Broad market mixed

A trader said Bon-Ton Stores Inc.'s 10¼% notes due 2014 were down a few points to 91.5 bid, 92.5 offered from 93 bid, 94 offered. Another trader called the bonds, as well as Burlington Coat Factory Warehouse Corp.'s 11 1/8% notes due 2014, down a point to 91.75 bid, 92.75 offered.

The first trader also said Tembec Inc.'s debt was "drifting lower, but without a lot of trading." He placed the 8½% notes due 2011 at 44.5 bid, 45.5 offered, unchanged from the previous session where the notes had fallen half a point.

Blockbuster Inc.'s 9% notes due 2012 were quiet, a trader said, but quoted better. He pegged the bonds at 85.5 bid, 86.5 offered. Another trader said Movie Gallery Inc.'s 11% notes due 2012 were up 2 points at 32 bid, 34 offered.

MagnaChip Semiconductor Ltd.'s 6 7/8% notes due 2011 closed down a half point at 77.5 bid, 79.5 offered; the 8% notes due 2014 were down a point at 62 bid, 64 offered.

Paul Deckelman contributed to this article.

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