Distressed market firms on government debt deal; OGX hires Angra, appoints new CEO; NII rises

By Stephanie N. Rotondo

Phoenix, Oct. 17 - Distressed debt gained strength on Thursday, helped partly by credit-specific news and partly by the government inking a deal to avoid the debt ceiling and end the shutdown.

"The world is alright and America can pay its bills," one trader said.

OGX Petroleo e Gas Participacaoes SA saw its bonds jumping over 4 points on the day on news the company had hired restructuring consulting firm Angra Partners and had named a new chief executive officer to replace Luiz Eduardo Guimaraes Carneiro.

Meanwhile, NII Holdings Inc. debt remained active, but ended firmer, in line with the overall market.

Of recently topical names, MolyCorp's 10% notes due 2020 moved back up over par to par 3/4. The paper had previously been under pressure on word the company was experiencing a cash shortfall.

J.C. Penney Co. Inc.'s 7.95% notes due 2017 meantime bucked the day's trend, falling 1½ points to end around 80.

OGX pops as Angra hired

Brazilian oil company OGX said Thursday that it had hired restructuring counselors Angra Partners and that it had picked Paulo Narcelio Simoes Amaral as the new CEO.

Amaral will also act as CFO and investor relations.

The news gave the company's 8½% notes due 2018 an over 4-point boost, according to a trader.

He pegged the debt at 111/2.

Earlier this month, OGX - which is majority owned by Eike Batista - missed a $44.5 million coupon payment on its 8 3/8% notes due 2022. The company has 30 days to make the payment - which it has intimated that it will not do - or find itself in default. The hiring of Angra Partners has only increased expectations of a bankruptcy filing.

But even if it does file for Chapter 11 protections, OGX could still hold on to its oil blocks in Brazil, assuming the company is able to satisfy certain concessions. Keeping the blocks would be of great importance, as the Tubarao Martelo field is the only field the company has that can begin production. Without it, its chances to continue as a going concern would be in jeopardy.

In a bankruptcy, stakeholder Batista may choose to give up his 50.2% holdings in the company to bondholders.

NII regains ground

NII Holdings' bonds were inching higher in Thursday trading, following the trend of the overall marketplace.

A trader saw the 7 5/8% notes due 2021 was a touch better at 70½ and the 8 7/8% notes due 2019 gained over 1½ points to close at 75 5/8.

The Reston, Va.-based provider of Nextel mobile phone service in Latin America is scheduled to release earnings at the end of the month.

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