Refco loan improves as payoff eyed; takeover buzz boosts Visteon

By Paul Deckelman and Sara Rosenberg

New York, Sept. 8 - Refco Inc.'s bank debt has seen a tightening in levels and a pick up in activity of late, traders said, as stories have emerged that the company is contemplating paying off that debt.

In the automotive arena, Visteon Corp.'s bonds were seen better, given a 1 to 2 point boost, traders said, by takeover talk about the company which seems to be making the rounds of the financial markets.

In that same sector, Dura Automotive Systems Inc.'s second-lien term loan - which had fallen on Thursday on concerns about the loan's lien - was seen on the rebound, amid the generally firmer auto names.

Refco's bank debt was seen improving, with traders citing recent stories that the company is considering paying off the loan on Oct. 16.

In a filing with the U.S. Bankruptcy Court for the Southern District of New York late Thursday, Refco asked for court approval of a settlement with its lenders that would see the $642 million owed on a Refco Group Ltd., LLC credit agreement, $1.69 million in interest accrued as of the bankruptcy filing date and all other accrued interest repaid by Oct. 16.

A trader saw the New York-based commodities brokerage company's loan trading right around the 109 level on Friday.

A trader in distressed bonds meantime said that he saw Refco's 9 % notes due 2012 open at 80 bid and finish around 80 bid, 82 offered, "right where it's [recently] been."

Visteon up on M&A talk

Among the automotive names, Visteon's bonds were seen up at least a point or two on the session Friday, citing vague takeover speculation about the Van Buren Township, Mich.-based automotive parts company, a former unit of Ford Motor Co.

A trader quoted its bonds "measurably higher," with the 8¼% notes due 2010 up 1½ points at 101 bid, 101.5 offered and its 7% notes due 2014 at 94.5 bid, 95.5 offered, a 2 point gain.

Another trader, also citing the "takeover rumblings," called the 81/4s and the 7s each up 1½ points at 100.5 bid, 101.5 offered and 93.25 bid, 94.25 offered, respectively.

A trader called the bonds "pretty active" and quoted them up a point on the day. He said that "it's just speculation" that the company could be ripe for a takeover, though with no names of potential buyers being bandied about and "nothing confirmed."

The latter trader said "the good news in autos the last couple of days has been kind of propelling the whole sector."

Dura second-lien loan up

One name which was moving higher was Dura, whose second-lien term loan rebounded during the Friday session as investors' concern over the lien perfection issue seemed to ease, according to a trader.

The second-lien paper closed out the day quoted at 98.25 bid, 98.75 offered, up about ½ point compared to Thursday's levels.

On Thursday, the loan had fallen by about 1½ points to the 98 context on nervousness over whether the lien on the second-lien was perfected.

"No one really seems to know if the lien is perfected or not but people seem to be feeling better about it today," the trader added.

Junk bond traders, on the other hand, saw the Rochester Hills, Mich.-based automotive component maker's 9% subordinated notes due 2009 continuing to wallow in the mid-teens at 15.5 bid, 16 offered, while its 8 5/8% senior notes due 2012 were a point lower at 72.5 bid, 73.5 offered. However, another trader who saw both series of bonds at those same levels considered them unchanged on the day.

Other auto names steady

That was also pretty much the story in the bellwether bonds of the car manufacturers. General Motors Corp.'s benchmark 8 3/8% notes due 2033 were seen unchanged at 87 bid, 87.5 offered, while its General Motors Acceptance Corp. 8% notes due 2031 were "maybe a touch better," a trader said, at 102.25 bid, 102.75 offered.

GM arch-rival Ford's flagship 7.45% notes due 2031 were seen down ¼ point at 80 bid, 80.5 offered, while its Ford Motor Credit Co. finance arm's 7% notes due 2013 were unchanged at 94 bid, 94.5 offered.

Among the bankrupt automotive supplier names, a trader saw Troy, Mich.-based parts provider - and former GM unit - Delphi Corp.'s 6½% notes due 2009 unchanged at 91 bid, 92 offered, while Dana Corp.'s bonds - after having lost 4 points on Thursday - were down a bit further Friday, the Toledo, Ohio-based company's 5.85% notes due 2015 down ¼ point at 70.5 bid, 71.5 offered, and its 7% notes due 2028 also ¼ point off at 73.5 bid, 74.5 offered.

"Not a heck of a lot was going on in the sector," he opined.

However, another trader, while acknowledging a paucity of activity, saw both Dana and Delphi "feeling a little better," with the latter actually up a point on its shorter-maturity bonds.

Airlines up as oil down

A trader saw the bonds of bankrupt air carriers Delta Air Lines Inc. and Northwest Airlines Corp. better, in line with the continued slide in world crude prices, seen by some as an indicator of the future direction of jet fuel prices. High fuel prices helped send both companies spiraling down into bankruptcy last year.

He quoted Atlanta-based Delta's 8.30% notes due 2029 at 26.25 bid, 26.75 offered, up ½ point on the day and 2 points on the week.

Eagan, Minn.-based Northwest's 8 7/8% notes due later this year were also up ½ point on the day and 2 on the week around the 50 bid level.

Light, sweet crude, which has recently dipped below $70 per barrel in New York Mercantile Exchange dealings as supply concerns eased, was down another $1.07 Friday to $66.25 a barrel - the lowest it has been in several months.

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