OPTI Canada bonds steady to better; NewPage debt pares Tuesday losses; ATP, BP notes get boost

By Stephanie N. Rotondo & Paul Deckelman

Portland, Ore., June 16 - Strength remained in the distressed debt market on Wednesday, according to traders.

OPTI Canada Inc. saw some action in its bonds, traders said. The bonds were either unchanged to slightly better, depending on whom you asked, and one source attributed it to short covering. The company was in the news on Wednesday, following its presentation at a conference in Calgary.

Meanwhile, the firm marketplace even gave NewPage Corp.'s debt a boost, helping it to pare the losses incurred on Tuesday. The bonds had fallen in the previous session on news of a management shakeup.

As BP plc's executives met with White House officials Wednesday, the company saw its debt - as well as those of ATP Oil & Gas Corp. - heading upward, gaining as much as 4 points on the day. According to news reports, BP has agreed to set up a fund to cover its liabilities related to the Gulf of Mexico oil leak.

OPTI Canada steady, better

OPTI Canada bonds were "kind of unchanged" to "maybe a smidge better," traders reported Wednesday.

One trader placed the 8¼% notes due 2014 at 861/2, noting that the debt had "been trying to trade between 85½ and 871/2."

The trader speculated that action in the credit was because of "a little short covering."

Another trader said the 8¼% notes ended around 87, deeming that "maybe a teensy bit better." He also saw the 9% notes due 2012 around 101.

The activity in the Calgary, Alta.-based company's debt came one day after it had conducted a presentation at the 2010 CAPP Oil & Gas Investment Symposium. According to a report in the Calgary Herald, Christopher Slubicki, OPTI's chief executive, said that the company was planning an asset sale by the end of the year in order to raise expansion capital.

Those remarks, however, came into question when the company issued a press release to respond to the comments "erroneously" attributed to Slubicki.

In the release, the company confirmed that it was exploring its strategic alternatives, including capital market opportunities, restructuring the current credit facility, asset divestitures, an asset sale, merger or other business combination. The company went on to say that it would not disclose details about the process until it had something definitive to say.

NewPage pares Tuesday losses

NewPage's notes regained some ground, according to traders, following Tuesday's declines related to the departure of the company's CEO.

A trader said the 10% notes due 2012 were "active again," inching up a point to around 55.

Another source quoted the 10% notes at 54½ bid, 55 offered, up from 53 bid, 54 offered. The source also saw the 11 3/8% notes due 2014 closing firmer at 92 bid, 92½ offered, compared with 91 bid, 91 offered the day before.

On Tuesday, the Miamisburg, Ohio-based coated papermaker announced that E. Thomas Curley, president and CEO, was vacating his position. Mark A. Suwyn, chairman and director, and Michael Edicola, vice president of human resources, will also be leaving the company.

NewPage also said that Robert L. Nardelli, the CEO of Cerberus Operating and Advisory Co. - a controlling stockholder of NewPage - would be joining the board of directors as a director and non-executive chairman.

Nardelli will continue in his role at Cerberus.

ATP, BP notes get boost

ATP Oil & Gas and its sector peer BP both saw their bonds rallying 3 to 4 points during the midweek trading session, according to traders.

One trader pegged ATP's 11 7/8% notes due 2015 at 73 bid, 74 offered. A second trader said the bonds closed around 73, up from opening levels around 70.

The second trader also saw BP's 3 5/8% notes due 2014 "up 3 points intraday" at 86½ bid, 87 offered. That compared with opening levels of 83½ bid, 84 offered.

At another desk, a trader said that "you just have a lot of the Gulf names coming across, the BPs, the ATPs."

He noted that BP "has been very, very active," with total trading in the name on Wednesday of "close to $1 billion," but he cautioned that "most of that activity is still taking place on the high-grade desks. You're just starting to see it a little more active on the junk desks, but the volume isn't anywhere near what it is on the high-grade side."

He said that "those bonds kind of came in, and after the whole little 'beer summit' then they rebounded a little bit." The trader was referring to the four-hour White House meeting Wednesday between the president and administration officials on the one hand and BP's chairman Carl-Henric Svanberg and other executives from the oil company on the other, at which BP apologized and pledged to pay at least $20 billion into a fund to compensate people in the Gulf region for oil-related losses.

He saw BP's shorter paper up 1½ to 2½ points, helped by the news that Bill Gross, the manager of the Pimco Total Return fund - the world's biggest bond fund - has been buying BP's one-year paper, accumulating about $100 million of the notes in order to reap yield as high as 10% to 11%. "So that paper has rallied." He quoted BP bonds due in 2011 or 2012 as trading in the low 90s and meantime saw BP's 2013 and 2014 bonds down anywhere from 1½ to 2 points, "all on $100 million to $200 million traded."

He called the 3 5/8% notes due 2014 were down 2 points at 84 bid, the 3 7/8% notes due 2015 were around 85, while the 4¾% notes due 2019 were around 85¼ bid.

Also in the sector, a trader saw Transocean Inc.'s paper mixed on "pretty good volume." He saw the Deepwater Horizon owner's 5¼% notes due 2013 up 2 points to close at 93½ bid, on volume of some $25 million.

He also saw its 6% notes due 2018 down a point at 87½ bid, while its 7 3/8% notes due 2018 lost 1½ points to end at 90 bid. Transocean's 6.80% bonds due 2038 were unchanged to down slightly, trading at 87 bid.

Strength remains in market

The distressed bond market remained generally firm, traders told Prospect News on Wednesday.

"In general, it seemed to me that there were more things inching higher than not," said one trader.

Among those names trading better were Smurfit-Stone Container Corp.'s 8% notes due 2017 and 8¼% notes due 2012. A trader called both issued "up about 2 points" at 871/2.

Another trader saw General Motors Corp.'s benchmark 8 3/8% notes due 2033 - also a good market indicator - firmer at 331/2.

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