Auto loans in retreat, bonds lower as well; asbestos bonds seen "sloppy"

By Paul Deckelman and Sara Rosenberg

New York, June 14 - Distressed loans in the auto sector seemed to take things especially hard on Wednesday in a market that pretty much "felt like garbage" across the board, a trader said, as names like Collins & Aikman Corp., Delphi Corp., Federal-Mogul Corp. and General Motors Corp. all experienced losses.

Junk bond traders meantime also saw the whole auto sector struggling in a generally lower market - even GM, whose bonds had been charging forward over the previous several sessions.

Apart from the autos, the bonds of asbestos-challenged companies like Owens Corning, Armstrong World Industries Inc. and Federal-Mogul were all seen lower, continuing the sector's recent retreat.

A trader in distressed bank loans saw the paper of bankrupt Troy, Mich.-based automotive interiors manufacturer Collins & Aikman close out the day quoted at 94½ bid, 95½ offered, down from previous levels of 96 bid, 97 offered.

Delphi, a bankrupt Troy, Mich.-based automotive electronics manufacturer - formerly a GM subsidiary - saw its revolver close out the day quoted at 102 bid, 102.75 offered and its term loan close out the day quoted at 103 bid, 103.75 offered, with both of these tranches said to be down by about a quarter to a half a point.

Federal-Mogul, a Southfield, Mich.-based auto parts manufacturer driven into Chapter 11 by its exposure to asbestos injury liability claims, saw its revolver close out the day at 96¼ bid, 97¼ offered, down about a point when compared to levels two days ago, the trader continued.

And Detroit-based automotive giant GM saw its revolver close out the day at 95 bid, 96 offered, also down about two points when compared to levels two days ago, the trader added.

No credit-specific news was seen as pushing any of these names lower, but rather it seemed to be a function of the market as a whole reacting to other markets being off, such as high yield.

Junk traders meantime saw just about the whole of the auto sector lower, amid a generalized market retreat of about 1 to 2 points.

That included even GM, whose bonds had firmed over the previous several sessions after former subsidiary Delphi announced an agreement with its main union on expanded buyouts for most of its workers. That development was seen lessening the chances of a potentially ruinous strike that would disrupt the automaker's parts supply pipeline. But on Wednesday, GM was seen giving up some of its recent gains. Also lower were the bonds of its General Motors Acceptance Corp. financing unit, and those of Delphi and various other parts suppliers, continuing the negative trend that the latter had shown over the previous several sessions.

A trader saw GM's benchmark 8 3/8% notes due 2033 down ¾ point at 76 bid, 77 offered, while Delphi's 6½% notes due 2009 were down a full point at 83 bid, 84 offered.

At another desk, a trader, seeing the GM bonds down ¾ point at 76 bid, 76.5 offered, saw GMAC's 8% notes due 2031 also ¾ lower at 94 bid, 94.5 offered.

He saw Ford Motor Co.'s 7.45% notes due 2031 at 71.75 bid, 72.25 offered, off ¾ point, while Ford's credit arm's 7% notes due 2013 were a point down at 86 bid, 86.5 offered. Among the parts suppliers other than Delphi, former Ford unit Visteon Corp.'s 8¼% notes due 2010 were half a point lower at 92 bid, 92.75 offered, although its 7% notes due 2014 were only down ¼ point at 81.25 bid, 82 offered.

Bankrupt Toledo, Ohio-based parts maker Dana Corp.'s 7% notes due 2028 lost a point to 77 bid, 78 offered, while bankrupt Novi, Mich.-based automotive frames maker Tower Automotive Inc.'s 12% notes due 2013 also backtracked a point, to 69 bid, 71 offered. Alpharetta, Ga.-based auto battery maker Exide Technologies' notes were also seen down a point, at 86 bid, 88 offered. Collins &Aikman's 10¾% notes due 2011 lost two points to 29 bid, 31 offered.

Asbestos names drop

And a trader in distressed bonds saw Federal-Mogul's notes down a point at 58 bid, 60 offered.

That was in line with the continued fall in the bonds of bankrupt Toledo-based insulation maker Owens Corning, and those of the bankrupt Lancaster, Pa.-based floorcovering-maker Armstrong.

A trader characterized the asbestos-challenged issues as "very sloppy," down as much as five points intra-day before coming off those lows late in the session to cut those earlier losses about two points.

He saw Owens Corning's notes ending down two points at 84.5 bid, 85.5 offered, while Armstrong's bonds were also down a deuce, at 69.5 bid, 70.5 offered. Those bonds have all been steadily falling for some two weeks now, on a combination of profit-taking off hefty earlier gains - the Owens Corning bonds had gotten as high as 122 bid last month - plus investor angst over whether Congress will ever in fact pass a bill setting up a proposed $140 billion industry- and insurance-funded claims mechanism to settle asbestos-related medical lawsuits, that have driven companies like Owens Corning, Armstrong and Federal-Mogul into Chapter 11.

Elsewhere in distressed-land, Spectrum Brands Inc., the Atlanta-based maker of Rayovac batteries and various other consumer products, was lower. Its 8½% notes due 2015 lost two points to 84.5 bid, 85.5 offered.

Movie Gallery Inc.'s 11% notes due 2012 were down 2½ points on the day at 75 bid, 76 offered, "one of the bigger movers," a trader said. There was no fresh significant news seen out on the Dothan, Ala. based video-rental store chain operator, although it did say in an 8-K filing with the Securities and Exchange Commission that at last week's annual meeting shareholders approved an executive bonus plan.

Calpine Corp.'s notes were "down a couple" of points, the trader said, although there was no fresh specific news out about the bankrupt San Jose, Calif.-based power generator. Its 8½% notes due 2011 dipped 1½ points to 45 bid, 46 offered. However, its Calpine Canada Energy Finance II ULC unit's 8½% notes due 2008 were seen hanging in there at 61 bid, 63 offered. "I don't think any were trading today [Wednesday]," the trader said.

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