Distressed bonds firm to start week; Advanced Micro debt up on spinoff rumors; Hercules steady

By Stephanie N. Rotondo

Phoenix, June 22 – The distressed debt market was following the broader markets into higher territory on Monday, as investors were once again optimistic that a Greece deal could be inked.

However, European Union leaders warned that a deal might not come Monday.

Advanced Micro Devices Inc. was also faring better on the day, but not so much because of the Greece hopes as it was to rumors the company was considering splitting itself.

Reuters reported that Sunnyvale, Calif.-based chipmaker was looking into the pros and cons of spinning off one of its business, citing unnamed sources. But a company spokesperson later denied that the rumors had any grain of truth to it, insisting that the company was committed to following a long-term strategy it laid out at its recent financial analyst day.

Still, the company’s debt finished “better,” a trader said.

He called the bonds up 2 ½ to 3 points on the day. He pegged the 6¾% notes due 2019 at 91½, the 7½% notes due 2022 at 90 and the 7% notes due 2024 at 85.

Another market source placed the 7½% notes at 90 bid, up a deuce.

But a third source said the 2024 paper was half a point weaker at 84¼.

AMD has been struggling to take back market share from competitors like Intel. In its most recent quarterly report, revenue was reported at $1.03 billion, less than the $1.05 billion forecast by analysts.

The company’s earnings-per-share also missed expectations.

AMD held its analyst day on May 5, almost a month after said earnings were released.

Hercules holds

Elsewhere in the distressed realm, Hercules Offshore Inc. paper continued to hold on as the company reportedly gets closer to filing for bankruptcy.

One trader said both the 7½% notes due 2022 and the 6¾% notes due 2022 were a touch better, trading at 35 and 35¼, respectively. However, he saw the 8¾% notes due 2021 coming in slightly to 35¼.

Another trader placed the 8¾% notes in a 35½ to 36 context, which he said was “about the same.”

In a news release published after the market closed Wednesday, the Houston-based offshore drilling services provider said it had reached a deal with a group of its senior noteholders that would convert about $1.2 billion of debt into 96.9% of new common stock in the reorganized company.

Said creditors also agreed to backstop $450 million of new debt.

The restructuring agreement will be implemented via a pre-packaged bankruptcy, which should come within the next few weeks.

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