AMD bonds improve after earnings, joint venture news; Peabody active; oil preferreds gain

By Stephanie N. Rotondo

Seattle, April 22 – With new issues still keeping distressed bond investors on the sidelines, fresh news from Advanced Micro Devices Inc. was drawing some back in.

AMD’s bonds got a sizable boost following news announced late Thursday. Not only did the chipmaker report first-quarter earnings that were, while not stellar, certainly better than expected, it also announced a new joint venture that got the market excited.

One trader said the name was the day’s “big outlier in price.”

Meanwhile, traders said trading in Peabody Energy Corp. – which filed for bankruptcy on April 13 – continued to be on the active side.

However, there was no particular news that was driving the volume up, the traders reported.

One trader said the 6% notes due 2018 were unchanged at 11. Another trader placed the issue in a 10½ to 11 ZIP code.

AMD notes jump

AMD debt “popped a bunch,” a trader said Friday.

The gain came after the company announced its first-quarter results, as well as a new Chinese joint venture.

Post-news, the trader said the bonds improved 7 to 10 points.

He saw the 6¾% notes due 2019 adding 7 points to close at 85. The 7¾% notes due 2020 meantime put on about 10 points to end in the low-80s.

As for the 7% notes due 2024, the trader said they moved up to a 75 to 76 context, which compared to levels around 66 on Thursday. The 7½% notes due 2022 had a similar move, pushing up to 78 from 68.

At another desk, a trader said the 6¾% notes were “pretty active,” trading around 85½. The 7¾% notes were seen at 81, the 7% notes at 76 and the 7½% notes at 77 7/8.

Yet another market source called the 7½% notes up almost 9 points at 78½ bid.

For the quarter, the Sunnyvale, Calif.-based company posted a net loss of $1.09 million, or 14 cents per share. On an adjusted basis, the loss narrowed to $96 million, or 12 cents per share.

The adjusted loss compared to a loss of $73 million, or 9 cents per share, the year before.

Revenue declined over 19% to $832 million.

However, analysts had forecast an adjusted loss of 13 cents per share on revenue of $818.2 million.

AMD also said that it expects second-quarter revenue to increase by as much as 15% sequentially.

But perhaps even better news was word that AMD had inked a deal to form a joint venture with China-based Tianjin Haiguang Advanced Technology Investment Co., Ltd. to develop SoCs – or systems on a chip – tailored to the Chinese server market.

The deal will garner AMD an extra $298 million.

As for the earnings, Gimme Credit LLC analyst Dave Novosel noted that while the numbers on their face were not overly impressive, there were some positive signs, such as the fact that revenue was down only 19%, versus the 20-plus% declines seen in the last five quarters. Novosel also noted that cash burn was less than it has been of late, helped in part by expense cutting efforts.

Oil names rise

As crude prices ended the week with a strong tone – in fact marking its third straight week of gains – oil and gas-linked preferreds were also trending higher.

Legacy Reserves LP’s 8% series A fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYP) traded up $1.41, or 32.72%, to $5.72. The 8% series B fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYO) added $1.22, or 27.17%, to close at $5.71.

Those issues were among the day’s top percentage gainers.

Vanguard Natural Resources LLC was also on that list. The 7.625% series B cumulative redeemable perpetual preferred units (Nasdaq: VNRBP) rose 46 cents, or 15.18%, to $3.49, as the 7.875% series A cumulative redeemable perpetual preferred units (Nasdaq: VNRAP) ended up 32 cents, or 7.32%, at $4.69.

Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) was also climbing upward. The units finished the day 8 cents, or 3.38%, better at $2.45.

For its part, crude prices improved by 1.27% for the day, as strong U.S. gasoline demand and signs of slowing global production encouraged investors.

Also helping matters was new data that showed strong crude imports to China in March.

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