Supervalu sees modest gains amid Cerberus deal chatter; ATP bonds slip, PDVSA takes a beating

By Stephanie N. Rotondo

Phoenix, Jan. 7 - A trader said the distressed debt market was "a little bit sideways" during Monday trading.

Supervalu Inc. was moving up a touch following news that came out late Friday regarding the company's plan to sell itself. News outlets reported that the Eden Prairie, Minn.-based grocery store operator was nearing a deal with Cerberus Capital Management in which Cerberus would buy certain chains from the company and then purchase an equity stake in the remaining company.

Elsewhere, ATP Oil & Gas Corp.'s debt was weaker to unchanged, even as Israel's Isramco Negev 2 Ltd. Partnership said it had petitioned the bankruptcy court to buy out ATP's Israeli oil and gas rights.

Also in the oil and gas arena, Petroleos de Venezuela SA's bonds dropped 2 to 4 points on the day, amid concerns about Venezuelan president Hugo Chavez's ability to govern. The cancer-stricken leader has been in Cuba since mid-December, after suffering from complications related to his cancer treatments.

Good news for Supervalu

Supervalu continued to move up, at least marginally, in the wake of news out Friday regarding the company's attempts to sell itself or parts of itself.

One trader pegged the 8% notes due 2016 at 97½ bid, 98 offered. Another trader called the 2016 maturity up a touch, also at 97½ bid, 98 offered.

The second trader also saw the 7½% notes due 2014 closing around 99.

"I think you would have already seen some of the uptick in pricing if you had stuck around late Friday," he said, remarking that Monday's gains were not all that sizable.

Late Friday, it was reported that Supervalu and Cerberus were nearing a deal in which Supervalu would sell certain parts of itself to Cerberus.

Cerberus was also considering taking an equity stake of up to $500 million in what remained of the struggling company.

Supervalu is scheduled to release quarterly results on Thursday.

ATP debt slips

ATP Oil & Gas' 11 7/8% notes due 2015 were "kind of the same," a trader said, seeing the paper in a 10 to 10½ context.

However, another trader called the bonds down at 9½ bid, 10 offered.

The weakness in the debt came as Israel's Isramco announced it had petitioned the bankruptcy court overseeing ATP's case to buy out the company's gas rights in the Shimshon natural gas field.

Currently, ATP owns 40% of the offshore rights, while Isramco owns the other 60%.

If approved, Isramco will pay nearly $40 million for the rights.

PDVSA under pressure

Concerns about Hugo Chavez' ability to continuing ruling Venezuela put pressure on PDVSA bonds on Monday.

A trader saw the 9¾% notes due 2035 falling 3½ points to 963/4, while the 5½% notes due 2037 dropped a deuce to 691/4.

The 9% notes due 2021 were also 2 points weaker, closing around 971/2.

Chavez has been fighting a reemergence of cancer. Since Dec. 11, he has remained in Cuba where he was receiving treatment. He reportedly has been suffering from complications related to his fourth surgery to remove the cancer.

But Chavez, who was reelected in October, is supposed to be sworn in on Thursday. Opponents of the socialist president say that if he cannot be sworn in at that time, his ability to govern will be called into question and a succession fight will ensue.

Allies of the leader say the situation is being exaggerated in an effort to stage a coup.

Broad market mixed

In other distressed names, Nokia Corp.'s 5 3/8% notes due 2019 inched up just a bit to end at 96, as the company's top executive hinted that a Nokia Android phone was a possibility.

Meanwhile, Caesars Entertainment Corp.'s 10% notes due 2018 fell nearly half a point to 68 1/8.

A trader said AMR Corp. continued to gain strength, seeing the 6¼% benchmark convertible notes due 2014 rising to around 93.

Edison Mission Energy paper was on the quiet side, but weaker still at 48½ bid, 49 offered.

And, Ambac Financial Group Inc. was trading up to 36½ bid, 37½ offered, versus year-end levels around 35.

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