Delta Air Lines bonds rose two points to 68 1/2 in technical trading as a large block of the airline's trade claims were bought by Bear Stearns, according to a trader. "It took away a lot of supply causing the bonds to trade up," said the dealer. Calls to a Bear spokeswoman were not returned.
In November, Delta's bonds dropped eight-and-a-half points to 60 after the company rejected US Airway Group's takeover bid (CIN, 11/27). US Airways offered to pay Delta's unsecured creditors approximately $8 billion in cash and stock in November. In rejecting the offer, the company said it wanted to emerge from bankruptcy as a standalone entity. The merger still has hope, however, because the deal has the support of some of Delta's creditors, which have organized a group to back the bid. Calls to a Delta and US Airways spokeswoman were not returned.
Northwest Airlines bonds fell a couple of points to the mid-90s last week. The bonds had run up to the high 90s on speculation Northwest could also be a takeover target. "The bonds had run up too much. People were looking for headlines saying they were going to be bought. When it didn't happen, people got nervous," said the trader.
Last week, UAL Corp. and Continental Airlines were reportedly in talks over a possible merger. An airline trader, who speculated in November the two airlines would be the next to merge (11/22), said both airlines have only a small amount of unsecured debt and little traded after news of the possible deal. A Continental spokeswoman declined comment. A UAL spokeswoman did not return a call.