Dura Operating Corp.'s 9% '09 bonds saw a slight short squeeze as buyers of credit default swap protection bought bonds to deliver into CDS contracts. The subordinated bonds traded up three-quarters of a point to 7 3/4. Dura's senior 8 5/8% '12 bonds fell four points to 29.
A source familiar with the credit said CDS is most liquid on the subordinated bonds because CDS referencing these notes were previously traded as part of the CDX High Yield Index series. Dura's second lien traded up a point to the 85-86 context. Dura Automotive' Systems' U.S. and Canadian subsidiaries filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware on Monday. A spokeswoman did not return a call.
Michaels Stores Hits Secondary
Michaels Stores' $2.4 billion term loan backing Bain Capital and The Blackstone Group's leveraged buyout of the retailer broke into the secondary market last Monday. The term loan broke at 100 3/8-5/8, traded a little stronger at 100 5/8-3/4, before settling back to the 100 3/8-5/8 context.
A buyside trader said the deal was very active on its break; at least eight dealers traded in the name, he said. His own shop passed on the credit, however, because of its low rating. "It is a low B-rated name. If it were downgraded it would be in the triple C range," said the dealer. A call to Lisa Klinger, treasurer, was not returned.
Buyers Take Their Fill Of Restaurant Deal
Restaurant chain Buffets Holdings' $530 million term loan debuted in the secondary market at 100 1/2-3/4. The Credit Suisse-led deal backs the company's acquisition of Ryan's Restaurant Group for $876 million and will also pay down debt.
A buyside trader, who bought into the loan, said the company's acquisition of Ryan's will benefit the MN-based restaurant chain. "It is a stable, predictable business. The acquisition will create synergies," he said. The term loan has a LIBOR plus 3% coupon. Keith Wall, cfo, did not return calls.
Spansion Credit Debuts
Spansion's $400 million term loan broke at 100 3/8-5/8 last week. There was modest trading activity on the break, said a dealer. The Bank of America-led credit also includes a $175 million asset-based revolver. The Sunnyvale, Calif-based technology services provider is using the proceeds primarily to buy manufacturing equipment at its factory in Japan.
A buyside trader said the ABL revolver is the tricky part of the credit because of its first lien on certain assets of the company. But he said the existence of an ABL revolver above the term loan has not harmed its performance in the secondary. "Just because there is an ABL doesn't mean it won't trade well. But we are conscious that the loan is junior to the ABL." A call to a Spansion spokeswoman was not returned.