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Distressed market finishes week firm, but new issues remain in focus; OSG rises; AMR stays up
By Stephanie N. Rotondo
Phoenix, Sept. 13 - Distressed bonds were strong as the week came to an end, even as investors kept a focus on new high-yield bond issues.
After reporting lower operating income for July on Friday, Overseas Shipholding Group Inc.'s 8 1/8% notes due 2018 were "stronger," a trader said, seeing the paper "trade as high as 93."
Though operating income was down from June, net income was better and cash and equivalents increased month over month, according to court filings.
Meanwhile, AMR Corp.'s benchmark 6.25% convertible notes due 2014 were quiet after rising to "103ish" on Thursday. The gains in the previous session were based on a bankruptcy judge's approval of the company's reorganization plan, which includes a merger with US Airways.
In other topical names, Ambac Financial Group Inc. and MBIA Inc. continued to firm, according to a trader.
The trader saw Ambac's 5.1% notes due 2020 put on "another 1½ points" to end around 88, while MBIA's 14% surplus notes due 2033 gained a point to close around 74.
Elsewhere in the distressed realm, ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 were "continuing to hang" around three-quarters of a point.
"There's just a ton of shorts left," a trader said.
Exide Technologies Inc.'s 8 5/8% notes due 2018 traded around 72, as Nortel Networks Corp.'s 10¾% notes due 2016 finished the day around 116.
One trader noted that the market was keenly focused on recent new deals. Tenet Healthcare Corp., for instance, priced a $4.6 billion private placement of senior secured and senior unsecured notes that was getting a lot of attention.
The trader said the bonds were up a few points post-pricing.
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