ATP Oil, PDVSA bonds see high volume; Eastman Kodak debt ticks higher despite auction concerns

By Stephanie N. Rotondo and Paul Deckelman

Phoenix, Aug. 22 - The distressed debt arena experienced some midweek doldrums Wednesday, as investors' attention was focused elsewhere.

Still, the market was flat to slightly better.

That was not the case, however, for ATP Oil & Gas Corp.'s bonds. A trader said the now-bankrupt oil exploration company's debt hit its lowest level since 2010.

The company filed for bankruptcy late Friday.

In other oil names, Petroleos de Venezuela SA was moving back up, though there was no real news to act as catalyst.

Both oil names were traded on high volume Wednesday.

Meanwhile, Eastman Kodak Co. debt inched a bit higher. The company's patent auction is slated for Aug. 30, though the trustee overseeing the bankruptcy case has been asked to look into the "secretive" dealings.

ATP debt sinks

ATP Oil & Gas' 11 7/8% notes due 2015 fell to the "lowest level since 2010," according to a trader.

He placed the issue at 28 3/8, down over 4 points on the day.

"Bankruptcies will do that to you," he quipped.

Another trader also saw the paper weakening to end with a 28 handle.

Yet another trader said that the bonds were down about 4 points on the day, last trading at 28 3/8 bid, on some $29 million of volume.

"They're relatively actively going to zero," he quipped.

Another trader said that "once the initial moving around happens, then that's it," in terms of volume in the newly-bankrupt Houston-based energy exploration and production company's bonds falling from the more than $70 million seen to have traded in round lots on Monday, the first session after its Chapter 11 filing.

However, he noted that the credit was still about the most active in junk for a third straight session.

"It's still a lot, almost $30 million." He too saw the bonds fall more than 4 points on the day to a 28-29 context. He also noted that the bonds are trading flat, or without their accrued interest, leading to some unusual price moves.

PDVSA climbs higher

PDVSA paper was rising modestly in midweek trading, a trader reported.

He saw $60 million total of the company's debt change hands. The 8½% notes due 2017 closed at 873/4, while the 9% notes due 2021 finished at 82 5/8.

Another trader said that Caracas-based PDVSA's 8½% notes were trading in an 87-88 context, while the 9% notes were trading between 82 and 83. He saw over $40 million of both of those bonds having traded, attracting attention from junk, distressed and emerging markets accounts alike.

He said that both issues were up about 1 point on the day.

Kodak rises

Eastman Kodak's debt was "a touch better," a trader said.

He deemed the 9¾% second-lien notes due 2018 up half a point to a point at 71 bid, 72 offered. The 7¼% notes due 2013 meantime ended up half a point at 151/2.

Another market source called the 7¼% notes 1½ points higher at 15 ½ bid.

The bankrupt Rochester, N.Y.-based company was supposed to end a patent auction last Monday. However, the company instead elected to extend the deadline, stating that it was in talks with potential bidders.

However, earlier this week, bondholder Esopus Creek Value Series Fund LP asked the trustee appointed to oversee the bankruptcy case to look into the "unusually secretive" bidding process. Esopus said it was concerned that two of the bidders, Apple Inc. and Google Inc., were colluding in an effort to reach a deal that might not benefit creditors.

ResCap gains attention

Residential Capital LLC's 6½% notes due 2013 - which have now stepped up to an 8½% coupon - saw around $10 million or so of turnover

He said that "22-to-24 covers it today. There was a lot of volume," although he said there was not much movement in the bankrupt Minneapolis-based residential lender's notes, which were mostly trading inside 22½ to 231/2, "about where they were [Tuesday] too."

The company, a unit of Detroit-based automotive and residential lender and banking concern Ally Financial LLC, filed for Chapter 11 in mid- May.

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