ATP Oil notes near zero as investors see little recovery; Cengage bonds drop ahead of earnings

By Stephanie N. Rotondo

Phoenix, Feb. 1 - A rocketing stock market and new high-yield bond issues took attention away from distressed debt on Friday, according to traders.

"The stock market is going crazy," a trader said, referring to the massive gains seen in the equities after a positive jobs report and a round of decent auto sales. "Everybody's looking at it in disbelief."

"It's the first day of the month," another trader said as a reason for the lackluster day in the distressed space. He added that new issues were "still leading the charge."

Of the session's goings-on, ATP Oil & Gas Corp.'s debt was slipping even further into single-digit territory. A trader speculated that the bonds were "on its way to zero" as bondholders were beginning to expect little to no recovery.

Cengage Learning Acquisitions Inc.'s bonds were also weakening, due in part to a belief that an upcoming earnings report will not be stellar.

ATP nears zero

A trader said that ATP Oil & Gas' 11 7/8% notes due 2015 "continue to go lower," seeing the issue trading as low as 5.

He noted that he heard the bank debt was trading in the low-70s.

Another trader quoted the bond issue at 4½ bid, 5 offered.

"It's just on its way to zero," he said. Bondholders, he continued, were looking at current trading levels on the debtor-in-possession facility and were beginning to "think that prospects of getting any recovery in the bonds is very slim."

ATP is a bankrupt Houston-based oil and gas exploration company.

Cengage paper drifting down

Cengage Learning's debt was drifting downward again, according to a trader.

He pegged the 11½% notes due 2020 on either side of 80, while the 12% notes due 2019 were "heading close to 40," quoting them at 40 bid, 42 offered.

The trader said that the Stamford, Conn.-based education company was getting ready to release quarterly results - scheduled for Feb. 13 - and "there's an expectation of poor results."

He also said that he had heard the company had pulled out of J.P. Morgan upcoming high-yield and leveraged finance conference in February.

Broad market tidbits

In the rest of the distressed space, a trader saw Ameren Energy Generating Co.'s 7.95% notes due 2032 falling 1½ points to trade around 611/4.

Another trader saw AMR Corp.'s benchmark 6¼% convertible notes due 2014 rising up to trade around 97.

And, Caesars Entertainment Corp.'s 10% notes due 2018 were deemed unchanged by yet another trader at 68¼ bid, 681/2.

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