Dura Automotive Bonds Plunge
Dura Automotive's 8 5/8% '12 bonds fell eight points last Thursday to 29.
Dura Automotive's 8 5/8% '12 bonds fell eight points last Thursday to 29. A dealer said the bonds fell on concerns the company will miss a coupon payment, as well as the likelihood the auto supplier will have a hard time getting a debtor-in-possession loan in place if and when it files for bankruptcy. Its 9% '09 bonds traded at 4 at press time. The bonds fell as low as 1 3/4. Dura has a coupon payment due Oct. 15.
KDP Investment Advisors said in a report last week it expected the senior notes to enjoy a modest rally driven by speculation a potential investor may emerge to buy the company once it does indeed file for bankruptcy, which the market has been anticipating for the better part of a month. KDP said there has also been speculation Wilbur Ross is interested in the company. Ross did not return calls by press time. KDP said it continues to believe the sub notes will receive little, if any, recovery value in a workout (CIN, 10/6). But it added the subs may also benefit from short covering or demand from the credit default swap market as participants look to cover positions. A Dura spokeswoman declined to comment on the trading of Dura's securities. She said she had not heard of speculation that a buyer is interested in the company.