ATP Oil debt dips; Overseas Shipholding racking up losses; Arch Coal gets boost from earnings

By Stephanie N. Rotondo

Phoenix, Oct. 26 - It was a "slower" day in the distressed bond market, a trader said Friday.

"There's not nearly as much volume" as in the previous session, he added.

Another trader said, "It's all new deals."

The slower day could be attributed to it being Friday, but the East Coast was also preparing for a possible visit from Hurricane Sandy.

Concerns about Sandy might have also been a factor in the decline of ATP Oil & Gas Corp.'s debt, as the storm could further delay production from the company's offshore oil rigs.

Elsewhere, Overseas Shipholding Group Inc.'s bonds "continued to drift," according to a trader. There has not been any fresh news out on the company since earlier in the week when it said that it might have to restate earnings due to tax issues. Those issues might also result in a bankruptcy, the company warned.

On the upside, Arch Coal Inc. paper was "up across the board," a trade reported, after the coal producer released earnings that beat expectations.

ATP bonds drift down

A trader said ATP Oil & Gas' 11 7/8% notes due 2015 were "definitely softer" on the day, trading around 15.

Another trader also pegged the issue around the 15 mark.

The second trader said that concerns about damage from Hurricane Sandy could be pressuring the Houston-based offshore oil producer's debt, though he wasn't entirely sold on that idea.

"I think people are just throwing it out," he said.

The company is currently operating under Chapter 11 protections.

Overseas Shipholding weakens

Overseas Shipholding's bonds continued to decline as the week came to a close, despite any fresh news to act as catalyst.

One trader called the 8 1/8% notes due 2018 a point weaker at 281/2.

Another trader said the company's debt traded down to "27 or so, depending on which flavor you're looking at. They're both trading a couple points from each other."

A third trader saw the 8 1/8% notes trading around the 28 level, down from levels around 30 on Thursday.

On Monday, the new York-based oil transporting company said that due to potential tax issues, it might have to restate earnings for certain periods. As such, in order to remedy any problems, the company might be forced to file for bankruptcy, OSG warned.

Arch Coal boosted by numbers

Earnings that beat estimates were helping Arch Coal's bonds rise in Friday trading, sources reported.

"They were up across the board, but there wasn't much transacting," a trader said, seeing the 7¼% notes due 2021 moving up just slightly to 881/2.

Another trader said the issue was "pretty active," deeming the debt up 1 to 1½ points at 89 bid, 90 offered.

For the third quarter, the St. Louis-based coal producer posted net income of $45.8 million, or 22 cents per share. That compared to earnings of $8.9 million, or 4 cents per share, the year before.

Revenues, however, fell 9% to $1.09 billion. Coal shipments meantime dropped 6% to 37.5 million tons.

Analysts had been expecting a loss of 15 cents per share, on revenues of $1.03 billion.

Arch Coal attributed its better-than-expected results to its cost-cutting efforts. Still, the company warned that the coming year could continue to be tough for the sector as a whole.

Supervalu chugs along

Supervalu Inc.'s 8% notes due 2016 quieted down a bit come Friday, according to a trader.

Still, the issue put on over a point, closing around 953/4, the trader said.

Another trader said there was "not much going on" in the name, quoting the debt at 94½ bid, 95 offered.

The Minneapolis-based grocery store operator is currently in talks with potential buyers to either buy parts of the company or purchase it outright. Cerberus Capital Management has reportedly been in talks with lenders to buy the company as a whole, but KKR is also reported to be preparing a bid, though only for the Save-A-Lot business.

© 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.