Calpine bank debt continues to gain; Refco backs off gain

By Paul Deckelman and Sara Rosenberg

New York, Jan. 25 - Calpine Corp.'s second-lien bank debt rose about another 2½ points on Wednesday as investors continued to react positively to the recent interest payment news.

The bonds of bankrupt New York financial services concern Refco Inc. remained on something of a roller coaster - after getting clobbered earlier in the week and then rebounding, traders saw the company's notes backing off from their peak levels, although nobody could get a handle on just why the bonds were gyrating around so much.

General Motors Corp. bonds were seen a little higher ahead of the beleaguered automotive giant's scheduled Thursday release of its fourth-quarter and 2005 yearly numbers, and GM's arch-rival, Ford Motor Co. - which came out earlier in the week with its own, better-than-expected results - went along for the upside ride.

However, traders said that the automotive parts sector, which normally moves with Ford and GM, was mostly quiet.

Calpine's second-lien paper closed out the day quoted at 89.5 bid, 90.5 offered, up from Tuesday's closing levels of 87 bid, 87.75 offered, a bank loan trader said.

On Tuesday, news hit the market that the bankrupt San Jose, Calif.-based power generating company will be paying current interest on all first-lien debt, and will be making payments on the second-lien debt at the end of March and the end of June. Each payment will be $78 million.

The second-lien debt interest payments will be paid on a pro rata basis across the second-lien bond and bank debt.

Prior to the interest payment news, the second-lien bank debt was being quoted at 84 bid, 85 offered.

Over on the bond side of the fence, a trader saw the company's second lien bonds accordingly firm, going to 87 bid, 89 offered from 85 bid, 87 offered previously.

However, he saw its unsecured notes lower, with the 8½% notes due 2008 dipping two points to 30 bid, 32 offered and its 7¾% notes due 2009 also down a deuce at 36 bid, 38 offered.

At another desk, a trader, quoting the payment news, likewise saw the second lien bonds "up two points today and four on the week." He pegged Calpine's 8½% notes due 2010 and its 8¾% notes due 2013 at 89 bid, 90 offered.

News that Calpine received final approval for its $2 billion debtor-in-possession facility was cited as initially pushing down its convertibles before they rebounded to end a point higher on the day.

Calpine's 6% convertibles traded at 17, and its 4.75% convertibles were at 23 bid, 24 offered, the a sell-side trader said.

Refco dips

Elsewhere, a trader saw Refco's 9% notes due 2012 backing off a little from the highs that the bonds hit on Tuesday. He quoted them at 65 bid, 67 offered, down from Tuesday's 68 bid, 70 offered.

The trader pointed out that even Tuesday's high level was well below the levels in the mid 70s that those bonds had previously held. They were decimated on Monday, although market participants could not point to specific news that would justify such bond-bashing.

The stricken brokerage giant's bonds have slid into the dumpster from their prior levels around par ever since the discovery last August of several hundred millions of dollars of bad loans buried deep within the company's balance sheet, which led to the ouster of chairman Phillip R. Bennett, who was subsequently charged with securities fraud by federal prosecutors. Loss of investor confidence in the company - amid allegations that client funds had been secretly shifted from protected, regulated accounts to unprotected accounts at an unregulated subsidiary - ultimately led to the company's October bankruptcy filing.

Ford, GM gain

In the automotive sector, Ford and GM were quoted a little higher, with Ford's benchmark 7.45% notes due 2031 at 72.5 bid, 73.5 offered and GM's 8 3/8% notes due 2033 at that same level, both up ¾ point on the session, a trader said. GM's financing arm, General Motors Acceptance Corp., was meanwhile down a bit, a trader said, its 8% notes due 2031 half a point lower at 100.75 bid, 101.25 offered. Ford's financial unit, Ford Motor Credit Co. saw its 7% notes due 2013 up ¼ point at 89 bid, 90 offered.

Another trader said that GM "was stronger, but it gave back some of its early gains." He saw the 8 3/8s as having gotten as good as 73.5 bid, 74.5 offered during the session, before coming off that zenith to finish at 72 bid, 73 offered, still up about a point or so on the session.

At another desk, a trader saw the GMAC 8s at 101 bid, 102 offered, while its 6¾% notes due 2014 were at 94 bid, 95 offered, and its 6 7/8% notes due 2911 at 95 bid, 96 offered, "all up a point or two."

Other auto names mostly steady

But while GM and Ford were firmer, he saw the bonds of other automotive-related names mostly little changed. For instance, he saw no movement in the bonds of bankrupt Troy, Mich.-based interior components maker Collins & Aikman Corp.; its 10¾% notes due 2011 were most recently seen around 33 bid.

Likewise, he saw no change in the bonds of Foamex International, and only slight movement in the bonds of Delphi Corp. The bankrupt Troy-based automotive electronics maker was, if anything, a little easier at 56 bid, 58 offered.

One auto supplier name where that trader did see some notable movement was bankrupt Novi, Mich.-based vehicular frames maker Tower Automotive Inc. He saw its RJ Tower Corp. 12% notes due 2013 get as good at 77 bid, 79 offered, before dropping back a point to 76 bid, 79 offered - still up three points on the session. He said he had seen no fresh news to explain Tower's movements.

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