Visteon pops on case news; OPTI Canada bonds firm; ATP Oil gyrates; WaMu up, puts off hearing

By Stephanie N. Rotondo

Portland, Ore., June 17 - The distressed debt market "dislocated" from the equity markets on Thursday, a trader said, as it continued its rally.

"It was another really strong day," the trader said. "It's kind of nice to see we're just chugging along and kind of dislocating from the stock market" as the equities spent most of the day in the red before rebounding to end up slightly.

Visteon Corp. saw its bonds jumping as much as 4 points on the day, according to market sources. The gains came as a bankruptcy judge gave his OK on a deal brokered between the company and a group of bondholders, in which the group would provide exit financing for the automotive pars supplier.

OPTI Canada Inc. was also on the firm side. The bonds started to get active in the previous session, though they were seen largely unchanged by the end of Wednesday. Traders said the bonds improved by a couple of points by close of business Thursday.

Also in the oil and gas space, ATP Oil & Gas Corp. debt gyrated throughout the session. The bonds eventually came off of their intraday highs, but still managed to close up from Wednesday's levels.

After losing weight on Tuesday following news of a management change, NewPage Corp.'s debt has been steadily climbing back. While the company's notes remained firm, there were still concerns about what precipitated the management shakeup and whether the company could make an upcoming interest payment.

Washington Mutual Inc.'s paper headed up in trading, a trader said. The company once again postponed a hearing on its disclosure statement as it continues to talk with shareholders about the events leading up to the bank's seizure and subsequent Chapter 11 filing.

And, Rite Aid Corp. had an active day, though there was no fresh news out on the Camp Hill, Pa.-based drugstore chain. Still, the company's bonds ended about 1 to 2 points stronger.

Visteon pops on case news

Visteon's debt moved up a couple points, a trader said, as the bankruptcy judge overseeing its case approved a deal made between bondholders and the company.

The trader said both the 7% notes due 2014 and the 8¼% notes due 2010 ended around 107, versus 103½ bid, 104 offered previously.

Another trader placed the 7% notes at 107 bid, 109 offered, up from 103 bid, 104 offered in Wednesday's session.

The judge's approval of the bondholder agreement allows for senior noteholders to provide $1.25 billion in exit financing for the Van Buren Township, Mich.-based automotive parts supplier. The approval came despite objections from secured lenders and shareholders.

A hearing on Visteon's disclosure statement is scheduled for Monday and Visteon extended its plan confirmation deadline to Oct. 4.

Elsewhere in the autosphere, a trader said General Motors Corp.'s benchmark 8 3/8% notes due 2033 were on a "rollercoaster," hitting a high of 34½ before slipping back to 33½ bid, 34 offered.

"That's still better on the day," he said.

OPTI Canada bonds firm

OPTI Canada bonds headed for higher ground as a trader continued to opine that the activity in the name was "probably some short covering."

The trader placed the 8¼% notes due 2014 at 861/2, up from 84½ the day before.

But another trader saw the notes gaining even more ground then that, quoting the paper at 88½ bid, 89 offered.

OPTI's debt was "definitely one of the big traders," another source said, estimating that $30 million to $40 million of the notes traded. He called the notes 88 bid, 89 offered, up a couple points.

"You couldn't give [the bonds] away at 84 on Monday," he noted.

Earlier in the week, the company presented at an oil and gas conference in Calgary. During the company's presentation, Christopher Slubicki, the president and chief executive officer of OPTI, reiterated that the company needed to find some way to raise cash or restructure to deal with it overwhelming debt burden.

The Calgary, Alta.-based company has about $2.2 billion in debt on its books. OPTI is currently reviewing its strategic alternatives, which could potentially include an asset sale or merger.

ATP debt gyrates

Also in the oil and gas arena, ATP Oil & Gas paper slipped in intraday trading, breaking the trend of the overall marketplace.

One trader noted that volume in the credit was "way off," after having all but dominated trading during the rest of the week. He said the 11 7/8% notes due 2015 ended "down a little bit from the open, but still above yesterday's start" at 73 "locked."

"I think it ran [up] a little too much too quickly," he said, giving an explanation of the price gyrations.

Another trader also saw the bonds "a little lower" at 71½ bid, 73 offered. He added that the debt had opened at 73 bid, 75 offered and had gotten as good as 74 bid, 76 offered before hitting its closing levels.

However, another trader said the bonds were slightly firmer round the 73 mark.

"There was a lot of ATP and BP [trading]," he said. "Those really tend to make up the lion's share of activity."

Sector rival BP plc also saw its bonds taking a ride, according to a trader.

"They were up 2 to 3 [points], then down 1, now they are finishing back near the highs," he said, placing the "real active" 1.55% notes due 2011 at "95 to start, then down to 94, and then back to 95 again."

The trader also saw the 5¼% notes due 2013 around 93, down from the intraday high of 96, but "still up a point or 2."

On Thursday, Standard & Poor's dropped its rating on BP, following news that the company had agreed to set aside $20 billion to be used to compensate victims of the Gulf of Mexico oil leak. Word on the street is that BP is seeking to raise at least $5 billion via the issuance of new debt, the proceeds of which would be used for the compensation fund or the cleanup effort.

NewPage regaining ground

NewPage paper remained active, traders reported, and a tad bit better than Wednesday's levels.

A trader saw the 11¾% notes due 2014 improving half a point to 92½ bid, 93 offered and the 10% notes due 2012 gaining just as much to close around 551/2.

Another trader also deemed the 11¾% notes half a point better at 923/4.

The Miamisburg, Ohio-based coated papermaker saw its bonds fall during Tuesday trading on news of a management shakeup, including the departure of its CEO. However, the bonds have been paring those losses ever since.

But some market watchers are still wondering why E. Thomas Curley, NewPage's outgoing CEO, left after only four months. In a conference call held Tuesday, Robert Nardelli, NewPage's new non-executive chairman and CEO of Cerberus Operating and Advisory Co., told listeners they should not "read into the changes other than what we announced."

Earlier this month, NewPage nixed its plan to launch an initial public offering later this year, scrapping two years of work. NewPage also has an interest payment on about $1.7 billion looming on the horizon.

WaMu up as hearing postponed

Washington Mutual's notes "continue to be somewhat active and better on the day," according to a trader.

He placed the bank seniors - such as the 0.56% notes that were supposed to come due November 2009 - around 42.

The trader noted that "they were supposed to have a court hearing, but it got pushed off."

The trader was referring the Seattle-based thrift's hearing on its disclosure statement, which was scheduled for Thursday. The hearing has been postponed more than once as WaMu and its shareholders fight over documents related to the bank's seizure and ultimate bankruptcy filing.

Rite Aid heads up

A trader said Rite Aid's 9½% notes due 2017 were "pretty active," and also stronger with the market around 80.

The trader called the bonds up a deuce.

Another trader said that "$20-odd million" of the 9½% notes turned over, also seeing them gaining 1½ to 2 points to end around the 80 mark. The 7½% notes due 2017 inched up half a point, he added to around 89, with about $10 million to $15 million changing hands.

Also in the retail space, a trader said Blockbuster Inc.'s 9% notes due 2012 were better at 9½ bid, 10 offered, while the 11¾% notes due 2014 firmed to 64 bid, 65 offered.

Realogy notes gain

Also going on in distressed territory, Realogy Corp.'s 10½% notes due 2014 "was a busy one," a trader said. He called the bonds up 2 points at 891/4, on $25 million to $30 million traded.

He also saw about $10 million to $12 million of the 12 3/8% notes due 2015 trade "up a solid 2 points" to 80 bid, 81 offered.

There was no news out on the Parsippany, N.J.-based real estate services company.

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