Distressed debt 'solidly mixed,' trader says; OPTI most active, bonds weaker; First Data gains

By Stephanie N. Rotondo

Portland, Ore., Jan. 25 - There were more bids than offers in the secondary market, leaving the distressed debt realm "solidly mixed," according to one trader.

"All in all, I'd call it a sideways day," he said.

But another trader disagreed, characterizing the day as "a little bit weaker."

"It certainly felt like there was a lot on the blotter, but nothing really got done," he said, noting that bids outweighed offers 2 to 1.

The first trader, however, said the amount of bids around "bodes well for the market going up."

Of the day's goings-on, OPTI Canada Inc. was deemed the most active credit "by far," a trader said. Though the bonds continued to be on the weak side, the trader said that upcoming numbers from the oilsands producers could help to push levels back up - assuming OPTI performs in line with market expectations.

Meanwhile, both First Data Corp. and Travelport LLC were solidly higher, though there was no real news out to explain why. On Travelport's part, a trader speculated that a recent strategic partnership could be the reason, but that news was announced early last week.

OPTI active, weaker

A trader said investors were "posturing" ahead of earnings season for oilsands producers - which begins Thursday with results from Canadian Oil Sands Ltd. - resulting in massive trading volume for OPTI Canada.

"They were the biggest by far," he said, estimating that $100 million to $150 million of the Calgary, Alta.-based company's various issues turned over.

The biggest OPTI trader was the 7 7/8% notes due 2014, with about $40 million changing hands. The trader pegged the bonds around the 64 level, noting that they had gotten as low as 63 before climbing back up.

The 8¼% notes due 2014 meantime closed at 64¼ bid, 64½ offered, while the 9% notes due 2012 finished at 99¾ bid, par¼ offered.

He added that all issues were about a point weaker, as investors sold subordinated issues to grab senior paper.

Another trader saw both the 7 7/8% and 8¼% notes at 633/4, which he deemed down almost 1½ points.

The market is expecting fourth-quarter results from the oilsands sector to be better than 2009 comparables. In some cases, the results could be as much as 45% better, given the 12% increase in crude prices from 2009 to 2010.

Still, OPTI - which will release its quarterly results on Feb. 10 - could come in below expectations, as its Long Lake joint venture with Nexen Inc. has struggled to bring the project up to capacity. OPTI has previously said on numerous occasions that its financial health relies heavily on the project.

First Data climbs

First Data debt closed out the session "a solid 2 points and change better," a trader said.

He said about $25 million to $50 million of the Atlanta-based company's bonds moved, with the "biggest hunk" being the 11¼% notes due 2016. He placed the notes around 921/4.

Another trader called the 11¼% notes 2½ points stronger at 92½ and the 10.55% notes due 2015 up a point at 101.

At another desk, the 9 7/8% notes due 2015 were seen climbing up nearly a point to 100 bid.

There was no fresh news out on the electronic payment processor.

Travelport flies high

Like First Data, something was pushing Travelport's 11 7/8% notes due 2016 up, though it wasn't clear exactly what.

"Something is going on," a trader said, seeing the paper gain 4½ points to 961/2.

Another trader saw "$20-odd million" of the notes changing hands around the 96 level. He called that "up fairly significantly, like 3 to 4 points."

Travelport is a New York-based provider of critical transaction processing solutions to companies operating in the global travel industry.

Broad market 'solidly mixed'

In the rest of the distressed debt arena, paper names continued to gain ground in the wake of Monday's announcement that Rock-Tenn Co. was looking to buy Smurfit-Stone Container Corp.

A trader saw Catalyst Paper Corp.'s 7 3/8% notes due 2014 moving up over 2 points to close around 86, while NewPage Corp.'s 10% notes due 2012 improved by 1½ points to around 65.

Away from paper, a trader said Energy Future Holdings Corp.'s 10% notes due 202 traded in good size - about $10 million to $20 million - at 1051/2.

Nortel Networks Corp.'s 10¾% notes due 2016 lost half a point Tuesday to end at 88 bid. There was no fresh news seen out on the bankrupt Toronto-based communications systems manufacturer, which is in the process of selling off its various assets and winding the company down.

Paul Deckelman contributed to this article

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