Delta bonds weak, mostly holding pat; Winn-Dixie retreats on light profit taking; Remy bonds rise big

By Ronda Fears

Memphis, Nov. 30 - Remy International Inc.'s bonds were up big on Thursday, and while there was no news readily seen regarding the Anderson, Ind.-based manufacturer of automotive electrical systems, a trader away from the trade said it might have to do with speculation of news forthcoming from the company's refinancing efforts with Rothschild Inc.

"There could be some refinancing news leaking out, but we haven't seen anything," the trader said.

Another trader saw the Remy bonds up big and said there supposedly was news of an unknown nature in circulation. He saw the 8 5/8% notes due 2008 open in the 79 bid, 81 offered and rise to 86-88 and the 11% notes open at 32 bid, 34 offered and head north to 36 bid, 38 offered, while the 9 3/8% notes due 2012 firmed similarly from an open at 29 bid, 31 offered to 31 bid, 33 offered.

Meanwhile, another trader, also unaware of any news or of any wire story pushing the bonds up, pegged the Remy bonds up 4 points at 85 bid, 87 offered.

Remy's bonds have been roiled for weeks at the hands of market rumblings that it is on the verge of bankruptcy, which escalated on Nov. 10 when it hired Rothschild to lead a refinancing effort. On the heels of lowered guidance that day as well, the credit was cut by Standard & Poor's to CCC from CCC+.

In the bank loan market, Teco Panda's bank debt rallied during market hours as investor sentiment toward the power project financing paper seemed to improve, according to a trader. The bank debt ended the day quoted at 146 bid, 147.5 offered, up from Wednesday's closing levels of 141.5 bid, 142.5 offered, the trader said.

"Everybody just feels better about it. They think the Arkansas plant could be an acquisition target," the trader explained.

Rotech spikes by 4 points

Elsewhere on distressed desks, traders noted several seemingly unexplainable gains, such as a 4-point spike in Rotech Healthcare Inc.'s 9½% notes to 90.

But there were skeptics, including one trader on the West Coast who remarked, "I'm looking at ROHI, but 2007 is key. I just don't see how they can afford not reorganizing through Chapter 11. Even if they pull a few good quarters out of the bag, I just do not see them not filing for bankruptcy."

And, Calpine Corp. continued to climb, provoking one trader to quip, "Insanity prevails" regarding the bankrupt San Jose, Calif., independent power producer. He pegged that paper better by as much as 5 points with the 8½% notes due 2011 at 77/80 and the 10½% notes due 2006 up 2 points at 92.5/93.5. Another trader saw the 8½% notes due 2008 up 2 points to 88 bid, 90 offered and the 7¾% notes due 2009 firmer by 1 point to 91 bid, 93 offered.

On the downside, Winn-Dixie Stores Inc. retreated on profit taking, as several onlookers expected, but traders said the selling was very light. The bonds dropped back to 88.25 bid, 89.25 offered from 91 the previous day, while the Florida grocery chain's when-issued stock fell back by more than 3%. The Jacksonville, Fla., grocer is coming out of bankruptcy.

Delta bonds holding fairly pat

Delta Air Lines Inc.'s bonds were steady to a tad weaker Thursday on the company saying that after listening to US Airways Group Inc.'s merger proposal it still pledges to move toward a stand-alone bankruptcy reorganization plan. The unsecured creditors committee also sat in on the US Airways presentation, but they were mum after the meeting.

"I saw no flurries of any kind," from the meeting, said one market source. "Nothing to indicate anything one way or the other" in terms of the bondholders' reaction to the US Airways pitch.

Delta's 7.9% notes were seen going as high as 60.5 on the session but drifted back to close the day at 58, about where they went out Wednesday, one trader said. Similarly, he said the 8.3% notes due 2029 traded pretty much range-bound, "maybe a half-point weaker," at a close of 57 bid, 58 offered.

US Airways chief executive Doug Parker said in statement, "We are confident that our proposal for a 'New' Delta will create more value than a stand-alone plan."

But afterward, Delta said in a statement that it would "continue to progress toward filing our stand-alone plan by the end of the year, which would have us emerge from bankruptcy as a highly competitive, independent and financially sound airline by mid-2007."

Atlanta-based Delta, the No. 3 domestic carrier, has a hostile takeover offer from Tempe, Ariz.-based US Airways now valued roughly at $8.6 billion; the bid surfaced Nov. 15.

Northwest drifts lower

Northwest Airlines Corp., which has been a tag-along gainer on the Delta development, was seeing heavy selling Thursday, dually propelled by end-of-month selling and profit taking, traders said.

The Northwest bonds were described as weaker by 1 point pretty much across the board, with the 10% notes due 2009 at 82.5 bid, 83.5 offered and the 8.70% notes due 2007 at 81 bid, 82 offered.

Several onlookers have said the run-up in Northwest's bonds was well ahead of any potential deal news for the Eagan, Minn.-based No. 4 domestic carrier, and the end-of-the-month accounting process probably forced many players to take a more realistic look at their positions.

"They got a little stupid," one trader said. "Everybody was falling all over themselves like something was going to happen tomorrow."

On top of profit taking, traders noted heavy selling in Northwest shares as oil prices continue to rise. Oil futures gained 58 cents Thursday to $63.13 a barrel on the New York Mercantile Exchange. Northwest shares fell 5.6% on Thursday.

Sea Containers adds 2 points

Sea Containers Ltd.'s bonds got another lift Thursday with the 10¾% notes due 2006 adding 2 points to 70/72.

While action picked up in the paper, traders said there was no news pushing the name other than speculation in reports from Finland of a possible sale of its SuperSeaCat ferry operator unit would be a positive event, which emerged Wednesday.

In a Finnish publication, there was a report that Sea Containers' SuperSeaCat would be a good fit for the Finland ferry group Viking Line. The newspaper report cited an unnamed source that asserted the Bermuda-based maritime group could easily sell its Finnish fast ferry business, SuperSeaCat.

Sea Containers has already sold Finnish ferry business Silja Line for €450 million.

Sea Containers filed for Chapter 11 last month after failing to redeem the $115 million of 103/4s when they came due.

Calpine continues climb

Also pushing higher, in this case on little more than market buzz about - well, something - was Calpine Corp.'s bonds, with a trader attributing the recent rise in the bankrupt San Jose, Calif.-based power generator's paper to "more rumors of a private equity buyout scenario floating around" - although he wondered aloud whether troubled Calpine, trying to get out from under a mountain of debt via Chapter 11, "is the kind of kettle of fish you want to buy."

With so much investment money coming in from hedge funds and private-equity players looking for value in troubled names, "any kind of a company is a [potential] target" these days, he added.

Another trader declared that "insanity persists" in seeing Calpine's 8½% notes due 2011 up as much as 5 points on the session at 77 bid, 78 offered, while its 10½% notes due 2006 were 2 points better at 92.5 bid, 93.5 offered.

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