The bonds of auto suppliers took a collective hammering last week. Poor earnings caused Visteon's 7% '14 bonds to fall four points to 82. The auto parts maker reported a $200 million net loss in the third quarter, compared with a $1.4 billion net loss in the third quarter of 2004. For the first nine months, it posted a $1.6 billion net loss compared to a $203 million net loss in the first nine months of 2004. In October, Visteon transferred 23 of its North American facilities to Automotive Components Holdings, a Ford-managed business entity. Visteon expects its fourth quarter automotive and glass-related sales to decrease 40% compared to the fourth quarter of 2004. A Visteon spokesperson did not return calls by press time.
Lear Corp.'s bonds also dropped four points, as its 5.75% '14 bonds fell to 78. A trader said auto parts company's bonds fell because of the problems at General Motors. Lear is a big supplier to General Motors, which Fitch Ratings downgraded to B+ from BB last week. Both Visteon and Lear were among the biggest decliners in the credit default swap market, according to Markit Group. The spread on Visteon CDS widened 129 basis points to 638 bps, while Lear moved out 41 basis points to 660 bps (see chart, page 7).
Delphi Corp.'s bonds tumbled after they were artificially bid up to be delivered into credit default swap contracts. The deadline to deliver single-name bonds was Nov. 10. A trader said all of the company's bonds fell around 14 points to prices in the range of 63. "Now the bid has gone, they have settled back to where they were trading after they filed," said a trader.