OPTI bonds boosted by increased production; NewPage gives back gains, DirectBuy hangs in there

By Stephanie N. Rotondo

Portland, Ore., May 20 - Distressed debt trading was dubbed "kind of lackluster," a trader said Friday, as the market remained focused on recent new issues and higher-rated issues.

"It was deathly quiet," said another trader.

OPTI Canada Inc.'s paper traded higher after the company released its latest production report from its Long Lake project. The report showed an increase in the amount of barrels per day, though the figures were still well below the 2011 production target.

Meanwhile, recent notables such as NewPage Corp. and DirectBuy Holdings Inc. were moving around, but less so than has been typical. NewPage's subordinated paper gave back the gains incurred in the previous session, while DirectBuy finished unchanged to somewhat firmer.

Nortel Networks Corp.'s debt also closed higher, though there was no news out to act as a catalyst.

OPTI bonds boosted

OPTI Canada's debt traded higher after the company published a production report on its Long Lake joint venture project.

However, a trader noted that the bonds saw "very, very light trading," much like the rest of the distressed space.

The trader quoted the 7 7/8 and 8¼% notes due 2014 at 47 bid, 48 offered, the 9% notes due 2012 at par ¾ bid, 101¼ offered and the 9¾% notes due 2013 at par bid, par ½ offered.

Another trader also deemed the subs "a little bit better" at 47 bid, 48 offered.

A third trader placed the subs at 47 bid, 47½ offered.

The Calgary, Alta.-based oilsands producer said bitumen production at its Long Lake project - which it owns in tandem with Nexen Inc. - increased to 28,300 barrels per day, 9,900 bbl/d of which goes to OPTI.

In February, production was 23,100 bbl/d, with 8,100 bbl/d making up OPTI's portion. That was down from January's 27,000 bbl/d, 9,450 bbl/d of which was OPTI's take.

The company has previously said it would not make its 2011 production target of 38,000 to 45,000 bbl/d.

NewPage slips, DirectBuy hangs

Among other recent notables, a trader said NewPage's 10% notes due 2012 fell back to "43-ish" after running up to the 44-45 area on Thursday.

"Some people thought the run-up yesterday might have been short covering," he said.

The trader also called DirectBuy Holdings' 12% notes due 2017 "about unchanged" at 40 bid, 42 offered.

A second trader, however, deemed the paper "better," trading "up and down" around 40.

Nortel inches up

A trader said there was "a little action" in Nortel Networks' bonds, though there was no news out on the Toronto-based telecommunications company.

He said both the 10 1/8% notes due 2013 and the 10¾% notes due 2016 moved up a point to 92½ bid, 93 offered.

The bankrupt company is currently in process of auctioning off its patent portfolio, which consists of over 6,000 patents. Google Inc. has made the initial $900 million bid and as more parties express interest - Ericsson is the latest to reportedly be considering making an offer - the higher the price is expected to go.

Market watchers have already predicted that the price could easily climb to $1 billion or more.

Broad market mixed

In the rest of the distressed arena, Rite Aid Corp.'s notes were "very subdued today," according to a trader.

He saw the 9½% notes due 2017 holding in around 931/2, while the 9 3/8% notes due 205 slipped to 941/2.

The trader also saw Nebraska Book Co. Inc.'s debt hanging around the same levels it has been, though he opined that the credit could be due for a run.

"There are lots of people sniffing around," he said. "I expect people to sell the subs and buy the super subs and seniors."

He pegged the 8 5/8% notes due 2012 at 78 bid, 79 offered, the 10% notes due 2011 at par ¼ bid, par ¾ offered and the variable rate notes due 2013 at 16 bid, 17 offered.

"All right where it's been," he said.

Said another trader, "I didn't see Nebraska, but people were talking about it in relation to the Barnes and Noble takeover bid."

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