GM bank debt bounces; Movie Gallery continues to rebound

By Paul Deckelman and Sara Rosenberg

New York, April 25 - General Motors Corp.'s revolving loan paper "came back in nicely" on Tuesday, in the words of one trader, more than recouping the ground lost in Monday's dealings even while the auto giant's junk bonds were largely unchanged on the session, traders in that market said.

Elsewhere, Movie Gallery Inc.'s term loan B continued to tread higher on the heels of the release of rival movie rental company Netflix Inc.'s positive first quarter results. Its bonds were also seen firmer.

Troubled Canadian forest products producer Tembec Industries Inc.'s bonds were seen up anywhere from one to three points, helped by the prospect that the United States and Canada may soon settle a long-running trade dispute that has held up hundreds of millions of dollars of payments to Tembec and its sector rivals.

GM's revolver was seen bouncing back to the 95 bid, 96.25 offered context at which the paper had traded at the end of last week, according to a trader.

On Monday, the Detroit automotive company's revolver had dropped about three-quarters to a full point, to 94.25 bid, 95.5 offered, basically due to market technicals.

But while the bank debt seemed to have a bit of bounce to it, the company's bonds and those of its General Motors Acceptance Corp. financial unit were just thumping along like a flat tire. A trader saw the benchmark GM 8 3/8% notes due 2033 unchanged at 73 bid, 73.5 offered, while GMAC's 8% notes due 2031 were similarly steady at 94 bid, 94.5 offered.

That pattern was seen replicated all across the junk automotive spectrum. The trader saw GM rival Ford Motor Co.'s 7.45% notes due 2031 down ¼ point at 72.5 bid, 73 offered, while Ford's credit arm's 7% notes due 2013 were unchanged at 87.25 bid, 87.75 offered.

"There were a hell of a lot of things unchanged," he said, speaking about the overall market, but also about what was - or was not - going on in the auto sector.

For instance, he saw former Ford subsidiary Visteon Corp.'s 8¼% notes due 2010 at 83.5 bid, 84.5 offered, unchanged.

Meantime, he said the bonds of Delphi Corp. - which performed much the same function for GM as Visteon did for Ford - were slightly firmer, its 6.55% notes due 2006 and 7 1/8% notes due 2029 both up ¼ point in a 69.5-70.5 context.

The trader also saw bankrupt Toledo, Ohio-based parts maker Dana Corp.'s 5.85% notes due 2015 unchanged at 75 bid, 76 offered.

Also flat were the 12% notes due 2013 of bankrupt Novi, Mich.-based interior components manufacturer Tower Automotive. Those bonds were up perhaps ¼ point at 71 bid 73 offered.

Movie Gallery loan rises

Apart from the automotive realm, Movie Gallery's term loan B continued to tread higher, on the heels of the release of movie rental company Netflix Inc.'s positive first quarter results, according to a trader.

For the quarter ended March 31, Netflix reported revenue of $224.1 million, a 47% year-over-year growth from $152.4 million for the first quarter of 2005. GAAP net income was $4.4 million (seven cents per share) compared to a GAAP net loss of $8.8 million (17 cents per share), non-GAAP net income was $6.4 million (10 cents per share) compared to a non-GAAP net loss of $4.5 million, (nine cents per share) for the first quarter of 2005.

Dothan, Ala.-based Movie Gallery's term loan B ended the session quoted at 91 bid, 92 offered, up about ¼ to ½ point from Monday's levels of 90.75 bid, 91.5 offered, the trader said.

It was the second straight firm session for the bank debt, which had a good day on Monday, strengthening on the bid side from levels of 90 bid, 91.25 offered at the end of last week, with some attributing the momentum to the company's recent announcements that it has reached a management agreement with Hilco Real Estate LLC under which a program will be initiated to restructure leases at more than 1,100 existing Movie Gallery and Hollywood Video stores, and that it expects to be in full compliance with the financial covenants for the reporting period ended April 2.

On the bond side of the fence, a trader saw the company's 11% notes due 2012 - which had also been seen firming on Monday - continuing to tack on another point, bringing it to 51.5 bid, 53 offered.

"It was up even more earlier," a trader said, "but then it gave back a touch.

Winn-Dixie gains end

The trader meantime saw the bonds of Winn-Dixie Stores Inc. taking a breather after having firmed smartly over the past several sessions, helped by assorted bits of news about the bankrupt Jacksonville, Fla.-based supermarket operator's ongoing restructuring.

In Tuesday's dealings, its 8 7/8% unsecured notes due 2008 were seen holding steady at 84 bid, 85 offered, while two real estate-secured pass-through issues, the 7.803% notes and the 8.181% bonds, were each little changed at 82 bid, 84 offered.

Canadian paper higher

With junk market secondary dealings largely becalmed Tuesday, a trader said, the biggest movers that he saw were in the Canadian paper sector, which was "up a couple of points." He saw the struggling Tembec's bonds up two to three points, while such competitors as Abitibi-Consolidated Inc. and Bowater Inc. - the latter is U.S.-based but also has extensive operations north of the border - were up about two points.

Another trader saw Tembec's 8½% notes due 2011 three points better at 57 bid, 58 offered, although a market source at another desk disagreed, pegging those bonds up maybe two points - but at 55.5 bid. At another shop, the 8 5/8% notes were seen up two points to 58 bid.

Yet another trader saw the Tembec bonds "up three points, at one point," before dropping back to end up about a point. He quoted its 7¾% notes at 54.5 bid, 55.5 offered, up a point.

A trader said the movement "was all in response to the potential for resolution of the U.S.-Canada tariff issue. [The forest products companies] may end up getting money that was in escrow. For some of these companies, it could be a significant amount, maybe in the hundreds of million [of dollars], particularly for Tembec." He saw Pope & Talbot's 8 3/8% notes at 89 bid, 90 offered - well up from recent levels in the lower 80s.

"This sector moved up," the first trader said, "on [expectations] that they're going to get some sort of refund back on the import duty" when the United States and Canada finally come to an agreement, even though there has been no official word yet.

The forest products names were "the really big mover on what was otherwise a pretty quiet day," he said, even though "the [Treasury] long bond was getting beaten up and stocks were down, with the Dow Jones Industrials off about 50 points."

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