Swift notes trade heavy; Downgrade pressures Primus bonds; Six Flags paper better on earnings

By Stephanie N. Rotondo

Portland, Ore., April 17 - Swift Transportation Co. Inc.'s bonds were deemed one of the busiest names in the junk sector Thursday.

The heavily traded paper fell "a bunch," a trader said. He further speculated that the decline was due to concerns over whether an upcoming coupon would be paid or not.

Meanwhile, a recent downgrade placed more pressure on Primus Telecommunications Group Inc.'s debt. A trader said the bonds have been falling for the last several months, though he admitted that the name was not one in heavy rotation. He blamed the lack of action to the bank debt, which in case of a bankruptcy would see better recovery.

Six Flags Inc.'s paper was helped out by stronger first-quarter results. The theme park operator saw an increase in revenue and attendance and was optimistic about the year to come. As a result, the bonds pushed up as much as 2 points on the day.

Still, there was fairly light volume overall, traders reported.

"There is still not a lot of volume," one trader said, noting, "buyside guys remain hesitant."

The trader did say that it was "good news" that Freddie Mac was looking to buy some "jumbo" mortgages off of some struggling banks, which he said could free up some liquidity.

"That's got to help," he said.

Swift notes trade lower

Swift Transportation's debt traded actively, a trader said, sliding during the session.

One trader quoted both the 12½% notes due 2017 and the floating-rate notes due 2015 at 37.5 bid, 39.5 offered. Another trader pegged the bonds at 37 bid, 40 offered, calling that "off a bunch of points."

"I think they are falling into that same category like Linens n'Things," the second trader said when asked what prompted the move. "People don't think they are going to make the payment."

Another trader said the 12½% notes "were the bonds of the day," seeing them at 38 bid, 39 offered, well down from 45 bid, 46 offered previously.

"They were on a wild ride," he said, "with lots of trading." He did not know of any news that might have pushed the bonds down so badly.

Another trader quoted the bonds at 38.5 bid, down 6 points on the day, suggesting that in the lack of specific news, perhaps there was negative transportation news out, or just investor angst with the sector.

Both of the company's bonds have a May 15 coupon payment looming. However, as the company is private, there is little information available regarding the company's current financial performance. But there has been some concern in the industry at large given the rising cost of fuel and the struggles in the retail sector.

Swift Transportation is a Phoenix-based transportation provider.

Downgrade pressures Primus

Primus Telecommunications' bonds have been on the decline and were further weighed down by a recent rating downgrade, a trader said.

One trader, who said the company's debt was "taking a big dump," quoted the 3¾% notes due 2010 at 36 bid, 38 offered, down from levels around 50 just one month ago. The trader also saw the 8% notes due 2014 at 42 bid, 44 offered.

At another desk, a trader pegged the 14¼% notes due 2011 at 95 bid, 97 offered and the 12¾% notes due 2009 at 85 bid, 87 offered.

On Wednesday, Moody's Investors Service cut its rating on Primus to "Ca" from "Caa3," citing a reassessment of potential recovery in the case of default. The ratings agency also noted that while Primus has shown some improvement in some areas of its business, it is expected that the company will remain cash flow negative.

One trader believes that the apathy some feel toward the name has to do with the company's bank debt, which he said traded in the low-90s.

"Why would you buy the bonds when you can buy the bank debt?" he said, adding that bank debt holders have nothing on top of them to lower their recovery levels.

Primus Telecommunications is a McLean, Va.-based integrated communications services provider.

Six Flags edges up on better numbers

Higher attendance boosted Six Flags' first-quarter profit, which in turn helped the company's debt edge up as well.

One market source called the 8 7/8% notes due 2010 half a point better at around 72, while another deemed the issue up 2 points to 73.

At another desk, a trader said that Six Flags "had big [first-quarter revenue] numbers, but the bonds didn't go anywhere." He saw the 8 7/8% notes staying at 72.5 bid, 74.5 offered, the 9¾% notes due 2013 at 59 bid, 60 offered and the 9 5/8% notes due 2014 at 58 bid, 59.5.

He opined that "despite the good numbers, the bonds really didn't move up," theorizing that "they moved up before the numbers, then when the numbers came, it was kind of already priced into them."

On Thursday, Six Flags released its first-quarter results, which showed revenue increasing 35% to $68 million from $50.7 million the year before. Attendance, which had slowed last year, climbed 19% to more than 1.4 million.

In a prepared statement, Mark Shapiro, president and chief executive officer of Six Flags, said, "Our first-quarter performance confirms that a re-energized Six Flags is clearly resonating with families in search of high-quality entertainment that is affordable and close to home."

Shapiro added that as air travel becomes more expensive and frustrating, Six Flags is "well-positioned to be a preferred entertainment option this summer."

Six Flags is a New York-based theme park operator.

West bonds slip on earnings

Though not technically distressed - "yet," one trader said - West Corp.'s bonds saw some action in the junk sector after posting weak first-quarter numbers and lowering their 2008 guidance.

The trader called the name "one of the major movers" of the day, its 11% notes due 2016 trading around 86, down from levels near 91 previously. Another source called the 9½% notes due 2014 down 3.5 points to around 92.

"It could be becoming at least stressed," the first trader said.

The trader also noted there was a high amount of volume, which was unusual for that particular company.

Another trader said the company's bonds were "lower by a decent amount" after the company released its quarterly earnings, pegging the 9½% notes at 92.5 bid, 93.5 offered and its 11% notes at 85 bid, 87 offered, calling it a 5-point loss on the latter bond.

For the three months ended March 31, West reported a net loss of $1.2 million, compared to a net income of $9 million for the first quarter of 2007. The company also lowered its 2008 revenue forecast to $2.19 billion to $2.225 billion, versus the original guidance of $2.2 billion to $2.275 billion.

West is an Omaha, Neb.-based provider of outsourced communication solutions.

Good call for Tribune

Tribune Co.'s term loan X was stronger on Thursday, following a lender conference call that was held to discuss progress at the company since going private last year and to provide an update on business trends in early 2008, according to a trader.

The term loan X was quoted at 92 bid, 93 offered, up about a point from previous levels, the trader said.

The company's term loan B, however, was unchanged at 67½ bid, 68½ offered, the trader continued.

The reason for the positive momentum in the term loan X was because during the call, Tribune management said that they are considering selling more assets and investors expect that any asset sale proceeds would be used to pay down the term loan X debt, the trader added.

Tribune is a Chicago-based media company.

Mortgage, autos unchanged

A trader saw Residential Capital LLC's 6½% notes due 2013 hanging in there in the lower 50s, around 53 bid, 54 offered, with most trades taking place in a 53-53.5 context. There was "good volume" in the credit, he said. He saw ResCap parent GMAC LLC's 8% bonds due 2031 at 73 bid, 74 offered. In the morning, he said, "they wanted to move higher, and did move higher," to around the 75 bid area, "but they weakened at the end. They settled back down."

A trader saw some activity in Countrywide Financial Corp.'s 6¼% notes due 2016 at 85 bid, 87 offered, unchanged.

Another trader saw Thornburg Mortgage Inc.'s 8% notes due 2013 at 74 bid, up a half to 1 point, noting the news that Texas billionaire Richard Rainwater had upped his stake in the company to 7.5% from 5.5% earlier in the year - even though he last month said in an interview that Thornburg was "the worst single investment of my career."

In the autosphere, Metaldyne Corp.'s 11% notes due 2012 were "moving up" to around 35.5 bid from prior levels in the low 30s, with a trader attributing the gain to a short squeeze. He meantime saw its 10% notes due 2013 at 63 bid, 64 offered. He said he'd be "a buyer of those."

A trader saw Delphi Corp.'s bonds unchanged across the board at 36 bid, 37 offered, on "not much activity."

Sara Rosenberg and Paul Deckelman contributed to this article.

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