NewPage active, steady; ATP, others under pressure; First Data debt dips; broad market softens

By Stephanie N. Rotondo

Portland, Ore., June 1 - The distressed debt market started out the month watching from the sidelines, traders said on Tuesday.

Some players were still away from their desks, making the most of the three-day Memorial Day weekend, sources reported. Others were watching the gyrations of the equity markets.

"It's the first day of the month," a trader said. "I think people were more interested in watching than actually doing anything."

The trader also noted that total volumes in the high-yield sphere didn't even hit $1 billion, which were well below Friday's turnover.

NewPage Corp.'s bonds, however, were on the active side, according to market sources. But the bonds ended the day about where they started and there was no news to explain the surge in trading action.

The Gulf of Mexico oil leak continues to wreck havoc on the economy, not to mention the environment. As such, oil and gas companies like ATP Oil & Gas Corp. are seeing their bonds - and their stock - decline. ATP, for example, fell from the mid- to high-70s just last week to levels in the high-60s on Tuesday.

Elsewhere, First Data Corp.'s debt continued to be active. However, after regaining some ground last week, the company's notes started the week off by giving back a point or two.

NewPage active, but steady

NewPage debt "was active, a bunch of [the bonds] traded," a trader reported Tuesday.

The trader said "probably about" $20 million of the 11 3/8% notes due 2014 changed hands, all "kind of right about where they started the day" around 93.

Another trader echoed that level, deeming it "probably unchanged."

Last week, the Miamisburg, Ohio-based coated paper manufacturer nixed its plans to an $805 million initial public offering. The IPO had been in the works for at least two years, but lackluster economic conditions prevailed and the company chose to forgo the offering.

Proceeds from the stock sale would have been used to retire outstanding 2013 and 2015 notes.

ATP, others under pressure

Oil and gas companies - such as ATP Oil & Gas - continued to feel pressured, as the leaking oil well in the Gulf of Mexico had yet to be stifled.

Traders saw ATP's 11 7/8% notes due 2015 falling into the high-60s versus levels in the high-70s on Friday. One trader said the bonds were "well offered" at 721/2, though he opined that they could be lower than that.

Other sources placed the bonds in more of a 67 bid, 69 offered context.

The bonds were originally priced around 99 in early April.

Other companies in the sector are also feeling the burn, as BP plc failed yet again over the weekend to stop the leak. A trader said Plains Exploration & Production Co.'s 10% notes due 2016 traded in a range of 102¾ to 103, with about $10 million to $15 million changing hands.

"I think [Transocean Inc.] paper was down a bunch," a trader said, referring to the company's convertible debt. "I heard [credit default swaps] was over 100 wider."

On Tuesday, BP said it had yet another plan to try to contain - not stop - the oil leak. They estimated that, if the plan were successful, it would not be able to make another attempt at plugging the well until August.

The environmental disaster could result in criminal charges to the company, as an investigatory panel has been set up to look into the April explosion that caused the well to burst and leak into the Gulf waters. The Obama administration has also placed a moratorium on offshore drilling, though that will not apply to wells that are already producing.

First Data debt dips

First Data's bonds remained on the active side, according to traders. But one trader speculated that short covering last week was what had boosted the debt, which was seen losing ground on Tuesday.

The trader said the 9 7/8% notes due 2015 were "down off the [recent] highs," falling below 80 on the bid side. That compared to bids around 82 last week.

Another trader called the notes down a point, also around that 80 mark.

Yet another market player said the 9 7/8% notes were "down a point at the most" at 80 bid, 81 offered. The 10.55% notes due 2015 were meantime "pretty close to where they have been" around 77.

First Data is an Atlanta-based electronic payment processor.

Broad market softens

Also going on in the distressed space, Realogy Corp.'s 12 3/8% notes due 2015 lost nearly 3 points to end at 75 bid. There was no fresh news seen out on the Parsippany, N.J.-based real estate brokerage company.

A trader said Visteon Corp.'s 7% notes due 2014 closed "down about a point" at 1051/2. The Van Buren Township, Mich.-based automotive parts supplier formerly rejected a bid from Johnson Controls.

Bowater Inc.'s 6½% notes due 2013 also lost a point to end at 351/2, although there was no fresh news out about its corporate parent, AbitibiBowater Inc.

Paul Deckelman contributed to this article

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