High-yield advances half a point; GM, Ford trade higher; Westlake Chemical plans $250 million

By Paul A. Harris

St. Louis, Jan. 9 - High-yield was broadly half a point higher Monday, sources said, as the press preview of the North American International Auto Show created a positive buzz that gave a lift to automotive names.

And once again, for the fifth straight session, no new issues priced in the primary market, as the 2006 market remained at zero year-to-date issuance.

Early Monday a trader acknowledged that although the secondary market has commanded the lion's share of attention thus far in 2006, the new deals are certainly coming.

"There has been very good buying coming out of the gate this year, so things have been up almost consistently across the board," the trader added.

"The Lehman High Yield Index is already up 52 basis points on the month so far. It's been pretty strong."

GM's Wagoner persuasive

Bond prices as well as share prices of troubled auto maker General Motors Corp. got a lift on Monday as GM CEO Rick Wagoner outlined the turnaround plan for his company at the North American International Auto Show on Monday, sources said.

Wagoner's plan will include de-emphasizing low-margin sales to car rental companies and attempting to gain more health care and benefits concessions from the unions.

Also helpful, according to high-yield sources, was the expectation that GM is making progress in its attempt to unload its financing arm, General Motors Acceptance Corp.

Finally, a trader said that Goldman Sachs's verdict, Monday, that GM's bankruptcy scenario has been exaggerated, also gave a lift to the auto maker's bonds.

Almost across the board sources had GM paper up two points on the day.

One source had GM's 8 3/8% bonds due 2032 closing at 70.50 bid after opening Monday morning at 68.50 bid.

Another source, spotting the same GM paper at 71.50 bid, also marked it up two points.

Yet another trader, specifying that the GM 8 3/8% bonds due 2033 had "traded quite a lot," had the bonds at 70.75 bid, 71.25 offered, up from 68.75 bid, 69.25 offered on Friday.

Meanwhile GMAC's 8% bonds maturing in 2031 closed at 102 bid, up from 100 bid in the morning, a trader said.

"Everyone is focused today on GMAC, with Wachovia saying they may be able to get a piece of it bought," a source commented.

"That seems to have sparked a little rally this morning."

This source spotted the GMAC 8% notes due 2031 at 101.25 bid in the morning, "25 basis points tighter."

However, the source insisted, a GM bankruptcy remains "a very real possibility.

"I don't think anyone is discounting that at all."

Ford firms

Also getting a lift was the paper of Ford Motor Co.

Last week Standard & Poor's, pointing a finger at the company's declining market share, downgraded Ford two notches deeper into junk to BB-.

However on Monday Ford's long paper lifted alongside that of GM.

One trader had Ford's 7.45% bonds due 2031 closing the session at 71.50 bid, 72.50 offered, up a point and a half from the 70 bid, 71 offered opening.

Another had that same paper at 70.75 bid 72.75 offered at the close, up a point from Friday's 70.75 bid.

Also deriving strength from the positive feel in auto names, Monday, was bankrupt parts-maker Delphi Corp.

One trader said that Delphi's bonds maturing in 2006, 2009, 2013 and 2029 all had traded in the 57.50 bid, 58.50 context, a point stronger on the day.

Another had Delphi paper trading 58.375 bid, 59 offered, up from 57 bid, 57.50 on Friday.

Calpine up on asset-sale news

From elsewhere in the Chapter 11 mire bankrupt Calpine Corp. saw improvement in its bonds on Monday, trailing Friday's news reports that the San Jose, Calif., independent power producer will consider selling assets as part of its restructuring.

One trader had Calpine's 9 7/8% bond due 2011 trading at 84.50 bid, 85.50 offered at the close, about a point higher on the day, and commented that there are some buyers out there.

Another also marked the same bonds up one point, Monday.

Traders also gave various spots on Calpine's 8½% notes due 2008.

One trader spotted them at 38 bid, 39 offered, up half a point. Another saw it "as good as 39 bid, up about half a point from Friday."

Another trader, however, was marking the bonds unchanged on the day, Monday.

Another source had Calgen's secured 11½% bonds spotted at 103.75 bid, 104.50 offered, also unchanged.

Georgia-Pacific firm

Elsewhere Georgia-Pacific Corp.'s paper was seen by a trader holding in on Monday, even though Moody's downgraded the company by two notches last week, citing increased debt after its acquisition by Koch Forest Products Inc.

The source saw Georgia-Pacific's 7.7% notes due 2015 at 97.50 bid, Monday morning, and asserted that it was pretty well bid.

"There are very good technicals in the bonds," the trader said.

"They got downgraded on Friday. But it's right in line with what people are think, in terms of what the ratings are when this buyout gets done.

"People here are thinking that Koch is going to deleverage fairly quickly."

Retail and gaming

Meanwhile, a trader who focuses on the retail and gaming sectors saw a half-point improvement in the bonds of Finlay Fine Jewelry on Monday to 90 bid, 91 offered.

And the source also reported seeing interest in Mothers Work's 11¼% which, although still trading below par, are up about 10 points from a month ago, according to the trader.

The gaming sector, meanwhile, was unchanged on the day, the trader said.

Westlake with drive-by

Although no bonds sold during Monday's primary market session, and none have sold thus far in the five session-old year of 2006, the forward calendar did take aboard a pair of prospective issuers.

Westlake Chemical Corp. will host an investor conference call at 10 a.m. ET Tuesday for its $250 million offering of 10-year senior notes (existing ratings Ba2/BB-).

Deutsche Bank Securities, Banc of America Securities and JP Morgan are joint bookrunners for the debt refinancing deal from the Houston-based chemical company.

And The New Reclamation Group, a South African waste recycling company, will begin a roadshow Wednesday in London for its €245 million offering of seven-year senior secured notes - an acquisition financing led by Citigroup.

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