Visteon bond quoted wide; Pilgrim's Pride steady as company files plan; MGM flat to down a tad

By Stephanie N. Rotondo

Portland, Ore., Sept. 18 - A focus on new issues and a Jewish holiday resulted in a lackluster day for the distressed debt arena.

"It was a little noisy this morning," a trader said. But with Rosh Hashanah beginning at sunset, some players vacated their desks before the market closed. Those that were left behind focused on the recent onslaught of new issues.

"This morning it just seemed like all the recent new issues were trading," the trader added. "Off of their highs, but still hanging in."

Of the distressed names trading, Visteon Corp.'s bonds were quoted wide throughout the session. The bonds had run up earlier in the week, on no news.

Meanwhile, Pilgrim's Pride Corp. officially submitted its reorganization plan and disclosure statement. The chicken producer's notes were little fazed, ending flat to down a tad.

Among new issue issuers, MGM Mirage's new issue traded some, but interest in its existing debt seemed to wane. Traders saw the bonds ending the week unchanged to down about half a point.

Visteon bonds quoted wide

Visteon's debt was seen quoted wide throughout the session, traders reported.

One trader saw the 7% notes due 2014 closing at 18 bid, 21 offered on Thursday, only to open at 15 bid, 23 offered Friday morning.

Another trader saw the issue at 18 bid, 23 offered, versus 20 bid, 21 offered the day before.

"So really no change," he said.

The Van Buren Township, Mich.-based automotive pars supplier's debt "went on a tear," the second trader added, earlier in the week, jumping from 14 to the low-20s in active trading on no news.

On Friday, Visteon decreased a proposed incentive program from $80.2 million to $11.4 million. The funds would be used to pay managers and key employees while in restructuring.

In addition, the new plan covers 95 employees, including the company's 12-member board. The previous plan covered more than 2,500 employees.

Pilgrim's steady, files plan

Pilgrim's Pride's bonds were little changed as the company officially filed its reorganization plan.

A trader quoted the 7 5/8% notes due 2015 at 107.25 bid, 107.75 offered, "so down a little bit" from Thursday levels of 107.5 bid, 108 offered.

Another market source deemed the notes unchanged at 107 bid, 108 offered. The 8 3/8% notes due 2017 were also steady at 106 bid, 107 offered.

Under the terms of the plan, the Pittsburgh, Texas-based chicken producer will sell about 64% of the new stock in the reorganized company to JBS, a transaction valued at about $2.8 billion. The proceeds from the sale will be used for distributions to the company's creditors.

All allowed claims from Pilgrim's creditors will be paid in full. Though existing stock will be canceled, shareholders will receive the same number of new shares, representing the remaining 36% of the equity.

A hearing on the disclosure statement is scheduled for 10:30 a.m. on Oct. 20.

MGM flat to down a tad

MGM Mirage's new issue saw some action - like most of the other new issues that came to market this week - but the casino operator's existing debt was not as active.

A trader said he saw some trades in the 8½% notes due 2010 around par, which he called unchanged. The 5 7/8% notes due 2014, however, slipped about half a point to around 82.

Another source pegged the 7½% notes due 2016 at 82 bid, 83 offered, also down half a point, though on mostly small trades. The 8 3/8% notes due 2011 were steady at 94 bid, 95 offered.

The new issue - the 11 3/8% notes due 2018 - were seen "right around the issue price" at 97 1/8 bid, 97 5/8 offered.

Moody's Investors Service rated the new issue Caa2, while affirming the company's probability-of-default rating of Caa3.

The outlook is negative.

"MGM's Caa3 PDR reflects the company's high probability of default given its substantial upcoming debt maturities, very high leverage and weak operating performance," the agency said in a statement. "This would include the possibility that it may pursue a transaction that Moody's would deem to be a distressed exchange."

Financials close mixed

A trader said that Aiful Corp.'s 6% eurodollar bonds due 2011 were quoted trading as low as 29 bid, 32 offered, finally going out around 32 bid, 33 offered, which he estimated to be down about 14 points from Tuesday's levels around 46 to 48. Japan's second-largest consumer lender by assets announced that it will try to delay debt repayments after being shut out of the credit markets and forced to refund interest charges to customers.

Among U.S.-based financial companies, a trader said that Capmark Financial Group Inc.'s floating-rate notes due 2010 "seemed unchanged" around 27 bid, 28 offered, while its other bonds were likewise steady at 26 to 28.

However, he did see some movement in CIT Group Inc.'s bonds, saying the name "moved up a little bit."

The most active CIT bond were the 5.2% notes due 2010 - "one of the short ones," he noted. "All of these are playing 'Beat the Clock,' because [investors don't know what they're going to do with refinancing. The shorter ones are what trades."

He saw the 5.2s ending the day around 68, which he called up 3 points on the day, trading between 66.75 and 68 in "good-sized trading.

"I don't know if there's a deal coming, or if they're going to make their next payment," which for the 5.2s comes due on Nov. 3.

He noted that the CIT 6 7/8% coming due this Nov. 1 "traded a lot too, I would bet, because people don't know if [the company] is going to make this [redemption] or not."

He saw "a boatload" of the bonds trading around 78.5 to 79.5, which he called up 1 point to 1.75 points.

Paul Deckelman contributed to this article.

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