PDVSA debt active, soft after gas leak contained; Patriot Coal dips; Residential Capital rises

By Stephanie N. Rotondo

Phoenix, Sept. 18 - A distressed bond trader said that "some stuff was coming off recent highs" during Tuesday trading.

"There's hardly anybody on the upside," he said, speculating that profit takers were to blame.

Petroleos de Venezuela SA was the dominating name of the day, according to a trader. The Venezuelan oil company's debt declined, following news late Monday of a leaking gas pipeline.

Meanwhile, Patriot Coal Corp. was coming down. Late last week, the company said it was again cutting production due to weakened demand. That news was again circulating on Tuesday.

PDVSA debt declines

PDVSA debt took a hit Tuesday after the market learned late Monday that the company had contained a gas leak.

A trader said the name was by far the most active in the high-yield realm. About $45 million of the 9¾% notes due 2035 were exchanged, with the paper falling 1½ points to 801/2. The 9% notes due 2021 were down a like amount at 823/4, on about $19 million traded.

The 8½% notes due 2017 finished the day at 881/4, down over a point, on $30 million traded. And, the 5¼% notes due 2017 dipped a touch to 781/4, with $27 million bonds turning over.

During a maintenance operation, a piece of heavy machinery hit one of PDVSA's gas pipelines Monday morning. By later in the evening, the company had shut down two wells in order to contain the problem.

Last month, one of PDVSA's warehouses caught fire and raged for four days after an explosion killed several workers.

Patriot Coal dips

Patriot Coal paper was "kind of leaking," a trader said Tuesday.

He pegged the 8¼% notes due 2018 around 441/2.

Another market source echoed that level, calling it down a point.

Last week, the bankrupt St. Louis-based coal producer announced yet another cut in production. For the next two months, Patriot will curtail production at three mines in West Virginia, which will affect 250 jobs.

The curtailment will result in a loss of about 85,000 tons of metallurgical coal per month.

The company said the cut was due to weakening demand.

ResCap debt rises

Residential Capital LLC's 6½% notes due 2013 put on nearly a point in Tuesday trading, according to a trader.

He said about $14 million of the bonds changed hands, ending around 291/4.

There was no fresh news out on the Minneapolis-based mortgage arm of Ally Financial Inc.

The bankrupt company recently won the exclusive right to file a plan of reorganization through December. The company had wanted to extend the period through March, but the judge overseeing the case denied the request, lamenting that the case was taking too long.

Broad market mixed

Also in the distressed space, a trader said Ambac Financial Group Inc.'s bonds remained strong, pegging the debt generically at 42 bid, 43 offered.

And, MF Global Holdings Ltd.'s 6¼%/7¼% notes due 2016 moved up to 481/2.

Nortel Networks Ltd.'s 10 1/8% notes due 2013 were also firmer, ending up at 1111/4.

"That's just a late-stage arbitrage name," a trader said.

Rounding things out, Eastman Kodak Co. continued to soften. The 9¾% second-lien notes due 2018 closed around 64, while the 7¼% notes due 2013 dipped to 10 bid, 11 offered.

© 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.