Good earnings and the possibility of a new bank deal have continued to boost Visteon Corp.'s bonds, which were up a further two-and-a-quarter points this week. The notes have jumped 12 points over the past three weeks. Its 8 1/4% '10 bonds traded up to 95-96 from 92 1/4 and its 7% '14 bonds were up to 85-86 from 82 3/4. Visteon's five-year credit default swaps have also tightened considerably to 600 basis points from 16+500 three weeks ago.
A trader said he expects the company will be successful in refinancing its bank debt given the success that competitor Lear Corp. had in refinancing its credit facilities in March. This January, the auto supplier replaced its $300 million revolver with an 18-month, $350 million term loan, bringing its total debt to $2.083 billion at the end of March, according to a KDP Advisors report. The bank currently has a $772 million revolver, a $241 million term loan and the new $350 million term loan. All are due to expire in 2007. The refinancing will allow Visteon to extend its maturities and possibly relax covenants, says the report. JPMorgan and Citigroup have led the company's most recent refinancings.
Visteon's first quarter earnings will likely help spur the new bank deal, which, if extended past 2010, would cover its 8 1/4% '10 bonds, said a trader. The company posted EBITDA of $178 million in the first quarter, more than the $55 million it had forecast for the quarter and stronger than the $3 million it posted in the fourth quarter of 2005. It recorded $3 million of net income, up $166 million from the same period in 2005. A spokeswoman at Visteon said in an email that the company anticipates completing the refinancing of all its facilities that expire in June 2007 in mid-summer this year.