ATP gyrates, ends softer; Capmark closes steady to firm; Rite Aid active, unchanged; GM slips

By Stephanie N. Rotondo

Portland, Ore., June 9 - Distressed debt managed to eke out slight gains, generally speaking, traders reported on Wednesday.

"The market opened up like it was OK this morning," a trader said. "But it didn't really go anywhere."

The reason for that, he opined, was that "all eyes were on the equity markets, that's where the volatility is."

He added that with a "slow calendar and cash coming out of mutual funds," there was little to no urgency to buy or sell - unless there was specific news or a credit problem.

"Volume was on pace to be $1.4 billion, $1.5 billion," another trader remarked. But by the end of business, total volume hit just $1.3 billion.

"At the end of the day everyone just stopped," he said, adding that the market was essentially flat day over day.

Still, ATP Oil & Gas Corp. saw decent action in its debt, which ended weaker yet again - but not before gyrating throughout the day. According to one market source, the activity in the credit was due to differing opinions regarding the company's ability to survive amid the BP plc oil leak and its aftereffects.

Meanwhile, Capmark Financial Group Inc. saw its bonds holding their ground. The company filed a motion with the bankruptcy court overseeing its case to increase the amount of cash it can use and to extend the use of said cash.

Rite Aid Corp. was on the active side, a trader said. The bonds were mostly "flatish," he said.

And, General Motors Corp. closed the session on the softer side, as Germany rejected the company's pleas for assistance for its money-losing Opel unit.

ATP gyrates, ends softer

ATP Oil & Gas was "definitely the bond of the day," according to a trader.

The trader said about $75 million to $100 million of the 11 7/8% notes due 2015 changed hands. Initially, he saw the bonds go "straight up," but by the end of the day they "came right back down" to end at 64½ bid, 65½ offered.

Another market source quoted the notes at 64 bid, 65 offered, still softer from the previous day's levels.

"The market is so spooked by all this BP stuff," the first trader said, referring to the catastrophic oil leak in the Gulf of Mexico. The leak - which was caused by an April 20 explosion at an offshore rig, just one day after ATP released the 11 7/8% notes - has since spurred a six-month moratorium on offshore drilling in the area. That in turn has caused some speculation about Houston-based ATP and its ability to survive.

"People really have two different [viewpoints]," the trader said, explaining that some think ATP will pull through, while others think it is done for. "No one has come to a consensus yet.

"The fact is, nobody has a freaking clue because there are too many unknown variables," he continued. "It's like red or black on the roulette wheel."

And, in his opinion, ATP's debt "will either turn out to be 35 points too cheap or 35 to 40 points too expensive."

And, yet another source that "the energy names are still getting beaten up, with BP leading the way," noting that the multinational oil giant's shares fell more than 10% on the day, to their lowest levels in 14 years.

In the meantime, the junk market's favorite energy whipping boy - ATP - "went on a wild ride," seeing them fall as low as a 64ish level, and then move back up a couple of points to around a 65 bid, 66 offered context, which he called a point or 2 lower on the day, on "a lot of activity."

He said that there were "pages and pages" of ATP trades on Trace, and called it "one of the names of the day.

Capmark debt ends steady to firm

Capmark Financial Group's 5 7/8% notes due 2012 were either unchanged or better, depending on whom you asked.

One trader said the notes were steady at 30 bid, 31 offered. But another called the paper "up a little bit from [Tuesday's] close" at 303/4.

On Wednesday, Capmark sought bankruptcy court approval to increase its cash collateral cap and to extend the use of said cash through Jan. 31, 2011.

Currently, the cash collateral cap is at $20 million, but the Horsham, Pa.-based financial services provider wants it upped to $35 million. And, the current expiration on the use of the cash is June 30.

The company said that it is expecting to have to pay out more than $20 million after June 30 and therefore is seeking the extensions.

Ambac dips, MBIA holds on

Among other financials, Ambac Financial Group Inc.'s debt dipped in trading, as bankruptcy fears continued to weigh on both the bonds and the equity.

A trader called the 6.15% notes due 2037 "probably down a point" around 3. That compared to levels around 2½ at the market's open on Wednesday.

The trader also saw the 5.95% notes due 2035 trade at 25, which he said "was kind of the bid side."

Another trader said that Ambac Financial's bonds were trading in a 25 bid, 30 offered context, in the wake of the warning by the New York-based financial guaranty insurance provider that it could default on its debt and might file for a prepackaged bankruptcy.

He said he did not see much volume in the credit. He said its longer-dated bonds traded between 24 and 28 while its shorter paper, like the 9 3/8% notes due 2011, were around 30 bid, 32 offered. "Those are the quotes," he said, "but on not a lot of activity."

Sector peer MBIA Inc.'s 14% surplus notes due 2033 were around a 45 bid, 47 offered level, which he called "not that much of a difference" from where the bonds had been on Tuesday.

Rite Aid active, unchanged

A trader said "tons of Rite Aid traded," adding that the credit had "been really active lately."

He said about $30 million to $40 million of the 10¼% notes due 2019 turned over at 981/4. He also saw the 9½% notes due 2017 at 76½ and the 8 5/8% notes due 2015 at 79 1/8.

Overall, he called the bonds "for the most part, flatish."

Last week, the Camp Hill, Pa.-based drugstore chain reported its May and quarterly sales results. For the month, same-store sales fell 1.7% from the year before, while sales for the quarter ending May 29 slipped 1%.

Total sales for May declined 2.7% to $2.44 billion. For the quarter, sales decreased 2.1% to $6.37 billion.

GM slips as Opel aid denied

General Motors' debt fell nearly a point on the day, as the market learned that Germany had denied the company's request for $1.3 billion in aid to help its struggling Opel unit.

A trader said the benchmark 8 3/8% notes due 2033 were "maybe down a half" at 31 bid, 32 offered. The 7.40% notes due 2025, however, were 'kind of unchanged" at 281/2.

At another desk, a trader saw the benchmark issue falling three-quarters of a point to 311/4, with "$25-odd million" of the notes changing hands.

Germany's decision to deny aid will force GM to find other routes to prop up the Opel unit.

"I'm convinced GM has sufficient financial resources," Economy Minister Rainer Bruederle, a Free Democrat, said, according to a Bloomberg article. "The state is not the better entrepreneur."

GM is a Detroit-based automaker.

Paul Deckelman contributed to this article

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