ATP Oil debt gets clobbered again; Sprint falls despite iPhone add; William Lyon skips coupon

By Stephanie N. Rotondo

Portland, Ore., Oct. 4 - Distressed debt experienced a bit of an uptick toward Tuesday's close, but otherwise spent the day in the red.

And, even with the late-day rally, most credits were down.

"The market got off to a real ugly start, then it rallied toward the end of the day," a trader said. "At the end of the day it finally grabbed a little footing."

ATP Oil & Gas Corp. continued to lose weight on fears the company will be unable to fulfill its debt obligations in 2015. The bonds have been losing ground since early last week when Moody's Investors Service issued a report claiming that a restructuring was highly likely.

Also on a downward spiral was Sprint Nextel Corp. The company's bonds lost about 3 points on the day, despite word that the wireless carrier will soon be able to offer Apple Inc.'s iPhone. Some are wondering if the cost to provide the phone will be too cumbersome for the already struggling company to bear.

William Lyon Homes Inc. said Tuesday that it had missed its Oct. 1 coupon on its 10¾% notes due 2013. The news pushed the bonds down at least a deuce.

Hexion Inc. was also getting clobbered again, though there has been no fresh news to cause the recent weakness.

But while most credits were still trading heavy, Caesars Entertainment Corp.'s benchmark bonds inched slightly higher in active trading.

"There were big swings in stuff today," a trader said.

ATP bonds pushed down

ATP Oil & Gas' 11 7/8% notes due 2015 was deemed the day's "most active bond" by a trader as the debt lost another 3 points.

The trader pegged the notes at 593/4.

Another trader said the debt was down 6 or 7 points at 59 bid, 60 offered.

ATP's debt has been on the decline of late as investors fear the company might not have enough cash flow to fulfill its obligations. For its part, the company has said that it is well on its way to increasing production and with that, cash flows.

Though not responsible for the Deepwater Horizon oil rig explosion of last year, ATP got stuck with the fallout anyway. The day before the explosion - which occurred April 20 - the company had issued the 11 7/8% notes. Soon the bonds were trading at a deep discount to its issue price and while the bonds did regain that ground, recent concerns have pressured the debt yet again.

Elsewhere in the oil arena, OPTI Canada Inc.'s subordinated issues - the 7 7/8% and 8¼% notes due 2014 were falling, according to traders.

One trader said the notes had lost 2½ points, closing around 59. Another trader said the paper was "down a few points" to 60 from 62.

"People are worried about any Chinese company doing a takeover," the second trader said, referring to OPTI's planned merger with CNOOC Ltd.

Sprint declines despite iPhone add

Apple unveiled its new iPhone Tuesday and also confirmed rumors that Sprint Nextel would soon be offering the phone.

But while that might excite - and bring in - customers to the struggling wireless carrier, the cost of having the iPhone might prove to be too much, some market players are speculating. Over the next four years, Sprint will purchase 30 million of the phones for $20 billion.

In fact, Sprint is obligated to buy the phones even if it can't unload them.

Concerned investors reacted by pushing the company's debt lower.

A trader said the 8¾% notes due 2032 hit a low of 78 - down 5 points from the previous session - before ending around 80. He called the 6 7/8% notes due 2028 down 3½ points around 68.

Another market source saw the 6% notes due 2016 at 80 bid, down 4 points on the day.

Also in the wireless telecommunications arena, Leap Wireless International Inc.'s 7¾% notes due 2020 were called 5 points weaker at 801/2.

Sprint is based in Overland Park, Kan.

William Lyon misses coupon

Newport Beach, Calif.-based homebuilder William Lyon missed a $7.5 million interest payment due Oct. 1 on its 10¾% notes, according to a regulatory filing.

The company had also skipped a payment on its 7½% notes due 2014 in August, though the payment was eventually mad within the 30-day grace period.

Still, the news rattled investors and sent the bonds down a few points.

One trader called the issue down a deuce at 181/2. Another said the bonds lost "a few points," quoting them at 17 bid, 18 offered.

The company now has 30 days to make the payment. If it fails to do so, it will be considered in default.

Hexion paper melting away

A trader said Hexion's 8 7/8% notes due 2015 fell more than 5 points in Tuesday trading, seeing them close around 75.

Another trader also said the debt was down "another 5 points," also at 75.

Hexion, now known as Momentive Performance Materials, is based in Columbus, Ohio.

Caesars moves against the grain

Caesars' 10% notes due 2018 were "really active," a trader said, and better, bucking the overall market trend.

The trader said the bonds experienced a "late day surge," closing around 60, a gain of 2 points.

They had opened at 54 bid, 55 offered, he said.

However, he also saw the 12¾% notes due 2018 slipping a point to 651/2.

Another market source saw the 10% notes rising half a point to 58¼ bid, and a third said the notes closed at 59, up from opening levels around 55.

Elsewhere in the gaming sector, a trader said MGM Resorts International Inc.'s 6 5/8% notes due 2015 had lost 3¼ points to end at 813/4.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.