ATP bonds falter, oil prices drop; Patriot Coal falls amid restructuring buzz; Kodak hangs in

By Stephanie N. Rotondo

Portland, Ore., May 22 - Distressed debt was again rallying Tuesday, though the day's most notable names were not following that trend.

"Everything that was off a little bit came back," a trader said.

That could not be said for ATP Oil & Gas Corp. and Patriot Coal Corp.

ATP bonds dropped at least 4 points on the day, though on no particular news. Oil prices did experience a plunge, however.

Patriot Coal meantime was "getting beaten up," a trader said, noting that the coal producer's debt was gyrating throughout the session. The move came on reports that the company was looking at restructuring advisors, even as it said its quest for financing continued.

Elsewhere, Eastman Kodak Co. paper continued to be quoted a lot following the issuance of a preliminary ruling in its patent infringement case against Apple Inc. and Research in Motion Ltd. on Monday. The bonds managed to end about unchanged from the previous day's levels, when the debt had dropped 10 to 12 points.

ATP 'down a bunch'

ATP Oil & Gas' 11 7/8% notes due 2015 took an at least 4-point hit in Tuesday trading, though there was no name specific news out to act as catalyst.

One market source quoted the issue at 53 bid, 54 offered, down 4 to 5 points on the day. Another trader called the day's performance "interesting," as the bonds were "down a bunch" to a 53-54 context from the high-50s previously.

There was no fresh news out on the Houston-based offshore oil and gas exploration company. However, oil prices were declining on fears of a European recession and optimism that tensions with Iran were easing.

U.S. crude oil dropped 91 cents to $91.66 per barrel - a level near the year's lows.

Patriot debt pressured

Patriot Coal confirmed that it was continuing its refinancing efforts on Tuesday, having engaged Blackstone Group LP on the project.

But reports that the St. Louis-based coal mining company was looking for restructuring advisors did little to help the company's debt.

A trader said the 8¼% notes due 2018 were "all over the place," opening in the mid-50s and trading as low as the high-30s before settling in the high-40s.

Patriot "went on a wild ride," another trader said, quoting the 8¼% notes as having nosedived 14 points, ending around a 47-to-49 context, with over $25 million changing hands.

In a statement issued Tuesday, Patriot said that it was working with Blackstone and law firm Davis Polk & Wardwell LLP "to achieve an optimal financing package." Patriot has hefty debt obligations coming due in March 2013 and its recent financial performance - the company reported a net loss of $75.3 million for the first quarter - spooked investors. The company then announced a series of cost-cutting endeavors, including shutdowns and job cuts.

A trader added that "James River [Coal Co.] was down, other coal names were down as well," as investors worried about the viability of the whole sector; Patriot, James River and other sector peers like Arch Coal Inc. and Peabody Energy have been hurt by a falloff in the domestic use of coal as unusually low natural gas prices have caused gas to displace coal in many regions as the inexpensive fuel of choice.

The coal companies have pinned their hopes on making up for the lost domestic sales with orders from overseas, particularly the heretofore booming BRIC economies, including China and India, but a recent slowing of the Chinese economy has endangered that strategy.

Kodak actively quoted

Eastman Kodak bonds continued to be quoted a lot, according to a trader, as investors reacted to an unfavorable ruling from an International Trade Commission judge on Monday.

The trader pegged the 7¼% notes due 2013 at 12 bid, 15 offered, the 9¾% second-lien notes due 2018 around 71 and the 10 5/8% second-lien notes due 2019 at 67 bid 68 offered.

That was about unchanged from the previous session, when the paper lost 10 to 12 points on the news.

Another trader said the 7¼% notes fell to levels around 13 early on in the session, only to come back to end around 15. The second-liens hit a low of 66 before climbing back to 77, he added.

An ITC judge ruled Monday that Kodak's digital imaging patent at the center of an infringement lawsuit against Apple and Research in Motion was invalid. Though the administrative judge deemed the patent in question to be invalid, he also said that Apple and RIM had in fact infringed on the patent. The U.S. Patent and Trademark Office confirmed the validity of the patent in December 2010, according to a statement issued by Kodak on Monday.

The company also said in the statement that a previous ITC judge ruled that the same patent was valid in an infringement case against Samsung.

Kodak won that case.

The Rochester, N.Y.-based company said it intended to appeal the validity ruling.

The preliminary ruling will be looked over by the ITC, which is expected to deliver a final ruling by Sept. 21.

Greek bank boosted

In the world of preferred stocks, National Bank of Greece SA's 9% series A noncumulative preference shares (NYSE: NBGPA) climbed up over 5% in Tuesday trading, following news the bank would soon receive more bailout capital.

The preferreds gained 15 cents, or 5.28%, closing at $2.99.

Last week, Greece received €25 billion from the European Financial Stability Facility. This week, the country will pump in €18 billion into its four largest banks, including National Bank of Greece.

The increase in capital will help the banks raise funds and increase their capital cushions, but will continue to limit their ability to lend.

PDVSA active, firm

A trader said that Petroleos de Venezuela SA's bonds were actively traded on Tuesday, firming on the day.

He said that the Caracas-based state oil monopoly's 5 3/8% bonds due 2027 were finishing up 1 point, at 55 bid, on volume of over $12 million.

He saw its 8½% notes due 2017 trade even more busily, with over $30 million of turnover; the bonds ending at 84 bid, 84½ offered, also up 1 point.

Its 9% notes due 2021 firmed to 72½ bid, with over $27 million of volume.

There was no fresh news seen out Tuesday on the company.

Sprint, Caesars gain

Elsewhere in distressed land, Sprint Nextel Corp. and Caesars Entertainment Corp. were seen rebounding with the broader markets.

A trader said Sprint paper was up "a couple points," seeing the 8¾% notes due 2032 at 84¾ and the 8 3/8% notes due 2017 at 961/4.

A second source pegged the 6% notes due 2016 at 91 bid, up a point.

The first trader also saw Caesars' 10% notes due 2018 "up pretty good," rising 1½ points to end around 68 3/8.

Another trader placed the issue at "68 and change," up from levels around 66 the day before.

Paul Deckelman contributed to this article

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.