Advanced Micro bonds gain ground; Chemours falls on Citron report; oil and gas debt trades mixed

By Stephanie N. Rotondo

Seattle, June 2 – Distressed debt investors were pushing around names like Advanced Micro Devices and Chemours Co. on Thursday.

Fresh news was behind the activity, according to traders.

For Advanced Micro, it was reported Wednesday that the semiconductor maker had priced its new virtual reality graphics chips. Pricing was cheaper than expected, which resulted in the company’s stock getting crushed.

The bonds, however, improved, helped in part by comments made by Lisa Su, chief executive officer, regarding the company’s aims to return to profitability.

Meanwhile, Chemours debt dropped as Citron Research – the same Citron behind “that really negative report on Valeant,” a trader said – predicted the company would enter bankruptcy in the next 18 months.

Away from those names, the energy sector continued to be in focus, as an OPEC meeting in Vienna failed to result in a production curb.

Still, domestic crude ended flat on the day. As for the sector’s debt, it was mixed.

A trader said California Resources Corp.’s 8% second-lien notes due 2022 improved a point to 73, though the 5% notes due 2020 slipped half a point to 55.

In Chesapeake Energy Corp., a trader saw the 8% second-lien notes due 2022 rising almost a point to 80 7/8. Another market source pegged the 6 5/8% notes due 2020 at 67 bid, up over a point on the day.

Advanced Micro rises

Advanced Micro bonds moved higher on Thursday, even as its stock waned.

One trader said the name was “pretty active,” as the bet “keeps moving up.”

He pegged the 6¾% notes due 2019 at 93, up a point.

At another desk, a trader said the 7½% notes due 2022 added over a point to close at 85¾.

Yet another source saw the 7½% notes ticking up almost 2 points to 85¾ bid.

As for the equity (Nasdaq: AMD), it dropped 19 cents, or 4.29%, to $4.24. That was in addition to the over 3% loss seen Wednesday after the company announced it had priced its new virtual reality graphics chip.

The chip is being sold for $199, well below comparable products that go for $399. But the cheaper pricing is part of the company’s strategy to entice customers that are complaining that virtual reality equipment is still too expensive.

Such a move is part of Advanced Micro’s plan to once again see an operating profit in the second half of the year. Lisa Su, CEO, reiterated those projections at a Computex technology trade show in Taipei on Thursday.

Citron attacks Chemours

Citron Research and its owner, Andrew Left, are taking aim at Chemours, the spin-off titanium-dioxide pigment maker of DuPont.

In a report, Citron deemed Chemours “a bankruptcy waiting to happen,” given that the former parent saddled the company with its chemical-linked liabilities. Citron estimated that Chemours could be on the hook for up to $5 billion in liabilities tied to 3,500 lawsuits against PFOA, or C-8, a chemical used for Teflon products.

In an interview with Bloomberg, Left called the issue a “monster liability.

“DuPont took all their environmental liabilities, spun it off into a company, dumped it onto America.”

In response to the report, a trader said Chemours’ debt “got active.”

He called the 6 5/8% notes due 2023 down 3 points, trading in an 85½ to 86½ context.

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