Delphi Corp (fka DPHI)

[tradetracker]

US Corp Bonds - Market firms on strength in autos

By Karen Brettell
NEW YORK, Dec 12 (Reuters) - U.S. corporate bond prices
opened firm on Monday led by General Motors Corp. as
investors gained confidence the automaker would find a buyer
for its finance unit as the deadline for initial bids loomed.
The deadline for initial bids to purchase a controlling
stake or smaller parts of General Motors Acceptance Corp.
expires on Monday. GM is seeking to sell its controlling stake
in the unit in order to restore GMAC's ratings to investment
grade status.
The market has taken comfort in the bid deadline, "as a
signal that people are working on this transaction," said
Thomas Eggenschwiler, co-head of fixed income research at
Aladdin Capital in Stamford, Connecticut.
"Investors had gotten hesitant over whether someone was
looking at it," he said.
GM's 8.375 percent bond due 2033 rose to 74 cents on the
dollar on Monday, from 73.25 cents on Friday, according to
MarketAxess. GMAC's 8 percent bond due 2031 jumped to 100.25
cents on the dollar. It has risen from 94.75 cents on Thursday,
before reports of the pending deadline broke.
Robert "Steve" Miller, the chief executive of GM's key part
supplier Delphi Corp. , was reported by The Wall
Street Journal on the weekend as saying the company is forming
a new contract proposal to present to the United Auto Workers
union.
GM had weakened on fears that workers at Delphi would
strike, which would halt production at GM and burn through the
automaker's cash reserves.
The market probably takes comfort that Delphi is trying to
find an agreement with the workers, Eggenschwiler said.
Ford Motor Co. corporate bonds also rallied after the
UAW said on Saturday that it had agreed to higher payments for
health care for hourly employees, duplicating an agreement the
union had already forged with GM.
Ford's 7.45 percent bond due 2031 rose to 73.375 cents on
the dollar, from 73.25 cents on Friday. Ford Motor Credit Co.'s
7 percent bond due 2013 rose to 89.375 cents on the dollar from
89.25 cents on Friday.
In the investment grade grade debt market, spreads of
ConocoPhillips bonds widened after The Wall Street
Journal reported on Sunday that the company is in talks to buy
oil and gas producer Burlington Resources Inc. , from
more than $30 billion. The company has a market value of about
$28.7 billon, according to Reuters data.
ConocoPhillips' 6.95 percent bond due 2029 widened to 0.78
percentage point over Treasuries on Monday, from 0.73
percentage point on Friday.
Average investment grade corporate bond spreads ended last
week one basis point wider, at 0.98 percentage point over
Treasuries, according to Merrill Lynch.
In other markets, U.S Treasuries reversed early gains ahead
of a Federal Reserve policy meeting on Tuesday. Benchmark
10-year notes were unchanged to yield 4.54 percent.
(To see upcoming and recent corporate bond sales, click on
[nNEUBD4].
((Reporting by Karen Brettell; editing by Ted d'Afflisio;
Reuters Messaging: [e-mail];
email: [e-mail]; Tel: [phone]))
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