GM steady amid better numbers; Blockbuster notes take a hit; ATP Oil bonds gyrate with market

By Stephanie N. Rotondo

Portland, Ore., June 2 - Distressed debt got a small boost toward the end of Wednesday's trading session, traders reported, as the equities rallied.

"I'd say things kind of rallied toward the end of the day," a trader said, noting that the stock market had improved by more than 225 points. "So that kind of dragged it up."

However, another trader opined that the stock market gains resulted in "muted" trading in the bond world, as "nobody really wanted to sell anything."

General Motors Corp. released yet another improved monthly sales report. But one trader said that, aside from the benchmark issues that always trade, the name was "suspiciously quiet," and sources deemed the debt unchanged to just slightly firmer.

In the retail arena, Blockbuster Inc. saw its bonds falling another couple of points. Though there was no news out on the company, its troubles have been well publicized and chatter is that negotiations with noteholders are not going well. The company's top executive said last week that talks were "progressing" and that he hoped to make a more detailed announcement by the company's June 24 shareholder meeting.

But the biggest price mover of the day was ATP Oil & Gas. Market sources said the bonds opened well into the low-60s, but spent the day zigzagging back and forth before closing up as much as 6 points.

GM steady amid better sales

Automakers reported May sales on Wednesday and General Motors posted its fifth consecutive month of double-digit combined sales for its four brands, according to a press release.

But the Detroit-based carmaker's debt had little reaction to the news, as traders saw the bonds holding steady to up marginally.

One trader called GM's bonds up half a point, the benchmark 8 3/8% notes due 2033 at 32½ bid, 33½ offered and the 7.2% notes due 2011 hanging around "31 and change."

At another desk, a trader said $40 million to $50 million of the benchmark notes changed hands, with the bonds "up a little bit" around 323/4. He also saw about $10 million of the 7.7% notes due 2016 trading around 331/4.

For the month of May, GM saw a combined sales gain of 32% year over year. Sales from the beginning of the year have increased 31%, with 874,749 units being sold since January.

Steve Carlisle, vice president of U.S. sales operations, noted that the increase in sales was due in part to the emergence of new products, such as the Chevrolet Equinox and the GMC Terrain.

"Each of our brands has new products that are being received well by customers," Carlisle said in the sales release. "In fact, these new vehicles now account for about one in every four retail sales in the U.S.

"With each brand launching new vehicles in the next few months, we are optimistic about the remainder of the year."

Additionally, sales of crossover vehicles continued to climb, up 83% from May 2009 levels. In his view, Carlisle said the gains were just another example of GM's adaptability.

"We're a much leaner and more agile company today and can take advantage of movements in consumer tastes," he remarked in the release.

Blockbuster takes a hit

Blockbuster's bonds "got the crap kicked out of them," according to a trader.

The trader said trading in the credit was "very busy," with the 9% notes due 2012 seen closing around 111/2. The trader noted that the notes had fallen below 10 at one point during the session, and that about "$20-odd million" of the paper turned over.

Another trader said the debt was down "another 2" points, also pegging them at 111/2.

There was no fresh news out on the Dallas-based movie rental chain that would explain the dip. However, Blockbuster's struggles to stay afloat are not a big secret and rumor has it that talks with bondholders regarding a recapitalization are not going as well as previously thought.

ATP gyrates with market

ATP Oil & Gas' bonds took a ride during midweek trading, traders reported.

A trader said the 11 7/8% notes due 2015 started out the day at 64 bid, 67 offered and ended up finishing 72 bid, 74 offered, with lots of gyrations in between.

"So that's up like 6 points today," he said. "Quite a rollercoaster."

At another desk, a trader said ATP was "certainly the most volatile name today," placing the bonds at 72½ bid, 73½ offered, up from intra-day offers around 67.

"It's been a really wild ride," he added, noting that the bonds had been in the 90s not all that long ago.

In fact, the $1.5 billion in bonds entered the marketplace just over 99 on April 19 - the day before the oil rig explosion in the Gulf of Mexico. Adding to that disaster and its effects was an extension on a moratorium on offshore drilling.

According to a Bloomberg report, the debt has lost more than $300 million in value, making them the worst performing corporate bond of 2010 thus far.

Trident books close

Trident Resources Corp. closed the books on its $410 million four-year term loan on Wednesday, and being that the deal was fully subscribed by the deadline, the expectation is that terms will be left in line with initial talk, according to a market source.

The term loan is priced at Libor plus 950 bps with a 3% Libor floor and an original issue discount of 97.

In addition, the loan is non-callable for one year, then at 105 in year two, 104 in year three and 103 in year four.

Credit Suisse is the lead bank on the deal.

Proceeds from Trident Resources' term loan will be used to help fund its emergence from Chapter 11.

The company has already received court approval of the disclosure statement for its plan of reorganization, and the plan confirmation hearing is scheduled for June 15.

As part of the reorganization plan, the company is looking to do a $200 million equity rights offering and holders of 2006 credit agreement claims and 2007 credit agreement claims will be entitled to purchase that stock.

Trident is a Calgary, Alta.-based natural gas production company.

Broad market mixed

Elsewhere in distressed territory, a trader said McClatchy Co.'s 5¾% notes due 2017 were "just real active for some reason," as there was no fresh news out on the newspaper publisher.

However, he said the paper was "kind of unchanged" around 61.

First Data Corp.'s 9 7/8% notes due 2015 slipped just over half a point to 781/4, the trader added.

Sara Rosenberg contributed to this article

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