Calpine bank debt up; Delphi, Dana continue climb; Adelphia better

By Paul Deckelman and Sara Rosenberg

New York, Oct. 24 - Calpine Corp.'s second-lien term loan rallied Tuesday as talk circulated among bank debt market participants that the company may go back to current payments on its loan.

In the junk bond market, traders saw continued strength in the bonds of Delphi Corp., which had risen Monday on takeover speculation about the bankrupt Troy, Mich.-based automotive parts maker. Sector peer Dana Corp. also continued to take an upside ride.

And traders saw still more firmness in the bonds of Adelphia Communications Corp., although they saw no fresh news about the bankrupt Greenwood Village, Colo.-based cabler.

Calpine debt firms up

Bank loan traders saw Calpine's second-lien paper closing out the day at 109 bid, 110 offered, up about 1½ points from previous levels, a trader said.

Market participants cited speculation that the company may go back to paying current on its loan.

A junk bond trader meantime saw the bankrupt San Jose, Calif.-based power company's 8½% notes due 2008 in retreat, 2 points lower at 61 bid, 63 offered.

Transeastern bank debt firms

Also in the bank debt market, Florida homebuilder Transeastern's term loan was seen stronger during the session, with levels going out at 74 bid, 76 offered, about a point better than previous quotes, according to a trader.

No specific news was seen pushing the Transeastern bank debt higher, the trader said.

However, on Monday, Technical Olympic USA Inc., a participant in the Transeastern joint venture, announced that it has amended its $800 million revolving credit facility to make it a secured loan as opposed to unsecured.

The amendment also increased the current borrowing capacity and provides additional liquidity on a pro forma basis.

Technical Olympic, a Hollywood, Fla.-based homebuilder, said that the amendment process was initiated as a result of a material adverse change in one of its guarantor subsidiaries which holds the investment in the Transeastern joint venture.

Dura steady; Delphi, Dana bonds climb

In the automotive realm, Dura Automotive Systems, Inc.'s second-lien term loan was very active at unchanged levels of 85 bid, 87 offered on Tuesday, according to a trader.

On Friday that bank debt had moved up into the mid 80s from the low 80s as speculation on a potential debtor-in-possession financing worked its way through the market. According to the rumors, the company is looking at JPMorgan or Bank of America to lead DIP financing if it files for bankruptcy.

The troubled Rochester Hills, Mich.-based automotive parts maker's bonds, meantime, were seen little changed on the day, with its 8 5/8% senior notes due 2012 at 33.5 bid and its subordinated 9% notes due 2009 at 7.625. Both of those issues are trading flat, or without their accrued interest, a status they assumed after Dura failed to make the scheduled $17.25 million Oct. 15 coupon interest payment on the 8 5/8s. Dura instead invoked the standard 30-day grace period.

Delphi continues to lead sector

Also among the automotive names, Delphi's bonds continued to firm for a second straight session on merger and acquisition speculation.

A trader in distressed notes called Delphi's 6.55% notes that were to have come due earlier this year a point higher at 102 bid, 103 offered, and said the company's 6½% notes due 2009 were at 101 bid, 102 offered and its 6½% notes due 2013 at 96 bid, 97 offered, also up a point. However, he said that the 7 1/8% notes due 2029 remained at 92 bid, 93 offered.

Those bonds started to rise Monday after The Wall Street Journal reported over the weekend that Ripplewood Holdings LLC is preparing a likely bid for the bankrupt auto parts maker that could top $10 billion.

The paper reported that the buyout specialist's effort is being led by a former Chrysler Corp. president, Thomas Stallkamp, who is now a partner with the New York-based investment company. Neither Stallkamp nor Delphi would comment on the Journal's report.

The paper further said that although Ripplewood is considering a bid for the whole company, it might still just make a bid for part of it.

Ripplewood is the latest of several presumed possible suitors for Delphi who have emerged in the media over the last few months; other reports have linked Delphi with private equity group Cerberus Capital Management LP or hedge fund Appaloosa Management, which owns a 9.3% Delphi stake.

Dana continues climb

Dana's bonds, meantime continued to gain, pulled along in the wake of Dura's rise, participants said. One quoted the bankrupt Toledo, Ohio parts maker's notes up a point across the board.

He saw Dana's 6½% notes due 2008 up a point at 76 bid, 78 offered while its 7% notes due 2028 and due 2029 were each up a point at 72 bid, 74 offered.

Adelphia gains

One mover, a trader said, was Adelphia Communications, although he had seen no news about the cable operator, which recently completed the sale of substantially all of its assets to Time Warner Cable and Comcast Corp for $17 billion.

The trader quoted them "up a few," seeing its 10¼% notes due 2011 at 79 bid, 81 offered, up from 76 bid, 77 offered previously.

He also saw the company's 10¼% 2006 notes at 75 bid, 77 offered, also up 2 points on the day.

Traders speculated that Adelphia's bonds have recently risen because the company is getting close to the time that it will officially emerge from Chapter 11.

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