Delphi's bonds rallied and then lost ground on a news report that the auto parts maker had asked General Motors for a $6 billion aid package to help it avoid bankruptcy. Its 6.55% '06 bonds saw the most volatility, jumping two points and then falling two points to 71. A trader said the short rallying bursts were because of short covering. "People are on both sides of the coin. Some people thought [the $6 billon aid package] was too big. It caused a lot of volatility. The bonds bounced all over the place," the trader said. Delphi's bank debt, meanwhile, stayed around par. A trader said the bank debt is thought to be well covered if the company is forced to file for bankruptcy.
A General Motor's spokesman confirmed it has received a request for financial assistance from Delphi, but declined to comment on how much. "We're reviewing the request and deciding what participation, if any, we would play. At the end of the day we will act in the best interests of our shareholders," said the spokesman. Delphi declined to comment on the talks with General Motors.