Dura Automotive Systems bonds continued to fall amid speculation of a looming bankruptcy. Its 8 5/8% '12 bonds dropped two points to 56, while its 9% '09 notes were down two points to 7. Its second-lien bank debt fell three points to 95.
Moody's Investors Service downgraded Dura Automotive's corporate family rating to Ca from Caa1 and assigned a Caa3 probability of default rating. It also downgraded Dura Operating Corp.'s senior secured second lien ratings to Caa2 from Caa1, the senior unsecured notes to Ca from Caa3 and the senior subordinated notes to C from Ca.
The downgrades reflect continued poor conditions in the auto supplier industry. Dura's large exposure to General Motors and Ford Motor Co. which represent 20% and 23% of its revenues, respectively also exacerbates its troubles because of production cuts at these auto companies. Furthermore, Dura has interest payments on its senior unsecured and senior subordinated notes in the fourth quarter, which will increase cash flow pressure on the company, said Moody's in a release. A spokesman did not return a call.