OPTI bonds, Q2 production up; GenMar takes a hit as loans amended; Dynegy debt bouncing around

By Stephanie N. Rotondo

Portland, Ore., July 14 - The distressed debt arena was "pretty strong," a trader said Thursday.

"It had a pretty good bid to it," he said, adding that there were more buyers than sellers.

Furthermore, he said that Google Inc. "had crazy earnings at the end of the day," and opined that there could be some follow-through related to that come Friday.

Of the day's goings on, OPTI Canada Inc. continued to be busy as investors reacted to news the company had filed for creditor protections. There was even more news out Thursday, as the company announced its Long Lake production levels for the second quarter.

On Wednesday, General Maritime Corp. announced that it had amended some of the terms of its credit facilities in order to avoid a breach of covenants. Bondholders, however, did not react favorably to the news, and the bonds dove as much as 8 points in Thursday trading.

Dynegy Inc. remained a topical credit. After losing a fair bit of ground in the first part of the week, a trader said the debt was bouncing back.

And, in the world of preferred stocks, National Bank of Greece SA's paper got rocked after Fitch Ratings downgraded the bank. The downgrade came ahead of Friday's release of a second round of stress test results from the European Banking Commission.

OPTI higher again

A trader said OPTI Canada's 8¼% notes due 2014 were active and "up a few points," just one day after the Calgary, Alta.-based oilsands producer said it filed for creditor protection in a Canadian court.

The trader quoted the notes at 45½ bid, 46 offered. He added that the 7 7/8% notes due 2014 were "in the same ballpark, basically."

Another trader, however, said he "didn't see as much activity in them" on Thursday as there was on Wednesday. Still, he saw the 7 7/8% notes rebound by about 3 points, closing around 451/2.

On Wednesday, OPTI said it had reached an agreement with the subordinated noteholders. Under the terms of the restructuring agreement, the company will convert the subordinated notes into common stock. Additionally, the company will undertake a C$375 million rights offering, which will be backstopped by certain members of the subordinated noteholder group.

The senior notes must be refinanced prior to the closing of the offering as a condition of the agreement.

Existing stock will be canceled, though stockholders will receive warrants to purchase about 20% of the new shares in the rights offering.

Standard & Poor's cut the company's rating following the news Wednesday and Moody's followed suit on Thursday.

On Thursday, OPTI provided an update on its Long Lake joint venture project with Nexen Inc. In the second quarter, bitumen production rose to 27,900 barrels per day. However, the company said it remained unlikely that its 2011 forecast of between 38,000 and 45,000 barrels per day would be achieved.

"Based on lower than expected production since making this forecast, we do not expect to achieve this range," OPTI said in a statement.

GenMar dives on amendment

General Maritime's 12% notes due 2017 were "down a good bit," a trader said, seeing the paper fall to 70 bid, 71 offered from levels around 78.

The decline came as the company said it had amended the terms of its credit facilities in order to avoid a covenant breach.

"That must have had a negative impact," he said, noting that the change to the terms must "not be good for the bonds."

Another trader also saw the paper falling to 70 from 77½ bid, 78½ offered the day before.

The oil tanker company said Wednesday that it had changed the terms on its loans. Under the new terms, GenMar will have to maintain a balance of $35 million between cash and equivalents and borrowings available under its revolving credit facility through Dec. 31.

The company previously had to maintain a balance of $50 million.

Additionally, the company must have a minimum of $40 million in cash available through March 31.

Dynegy 'bounced back'

Dynegy debt "bounced back after those two down days," a trader reported.

He said the 7½% notes due 2015 and the 7¾% notes due 2019 were both up a point at 73 and 671/2, respectively.

Another trader said the 7¾% notes were "about unchanged, maybe a little bit weaker" around "67-ish."

On Monday, the Houston-based power producer said it was launching $1.7 billion of new loans to repay existing debt. Bondholders, however, are concerned that the refinancing strategy is a ploy aimed at stealing value from them via a fraudulent transfer, though the company's lawyers played down any liability risk during a conference call held Wednesday.

Greek bank plummets

Fitch downgraded National Bank of Greece's long-term issuer default ratings to B- from B+.

The ratings remain in Rating Watch negative.

The downgrade came on the heels of a downgrade of the country of Greece. Fitch also noted that the bank's creditworthiness was in question.

Along with National Bank, Fitch also cut its ratings on Efg Eurobank Ergasias, Alpha Bank, Piraeus Bank and Agricultural Bank of Greece.

National Bank's 9% series A preferreds (NYSE: NBGPA) fell 90 cents, or 12.91%, to $6.09.

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