Distressed debt market gyrates with stocks; ATP paper drifts down; Kodak falters; Edison gains

By Stephanie N. Rotondo

Phoenix, June 11 - Like the rest of the financial markets, distressed bonds were "falling off towards the end of the day," a trader said Monday.

Initially, the bond market, as well as the equities, was trading upward on news that Spain was getting a bank bailout.

"That enthusiasm went away" as the day wore on, another trader said.

"Generally the market was down with stocks," another trader said. "It was up big [early on], then they just sold off."

ATP Oil & Gas Corp. paper continued to get pummeled during the first trading session of the week. The bonds had dropped 10 to 12 points on Friday following news that the company's recently appointed chief executive offer was leaving his post after only six days on the job.

Though the company stated that the resignation was due to an inability to come to terms on an employment contract, the rest of the market was not buying the story.

Meanwhile, Eastman Kodak Co.'s notes were "definitely lower," a trader said. The bonds were weakening as the Wall Street Journal reported that an auction of the company's patents was not looking so good.

ATP loses again

Houston-based oil exploration company ATP Oil & Gas saw its 11 7/8% notes due 2015 continue to decline Monday after losing as much as 12 points on Friday.

A trader said the debt had moved up as high as 47½ before "falling off" with the rest of the market, ending at 44½ bid, 45 offered.

Another trader called the issue down about 3 points around the 45 level.

In a statement issued late Thursday, ATP said that its new CEO Matt McCarroll - hired June 1 - was leaving his new post due to an inability to come to terms on an employment contract. Investors, however, questioned the story and several sources wondered why ATP would have announced the hiring before a contract had even been inked.

In addition to exiting his position, McCarroll also canceled share purchases of ATP stock.

Edison packs on points

In other energy-related names, Edison International Inc.'s bonds were again rising.

A trader saw both the 7.2% notes due 2019 and the 7 5/8% notes due 2027 gaining 2½ points from Friday levels. The bonds ended the day at 55¾ and 54, respectively.

The 7% notes due 2017 meantime earned 1½ points, closing around 56.

There was no fresh news out on the Rosemead, Calif.-based energy producer.

Kodak's patent auction troubled

Eastman Kodak's debt was on the decline Monday as news outlets reported that a planned auction of the company's patent portfolio was not going well.

One trader quoted the 9¾% second-line notes due 2018 at 61½ bid, 62½ offered and the 7¼% notes due 2013 at 11½ bid, 12 offered.

Another market source placed the 7¼% notes at 12 bid, down 1½ points on the day.

At another desk, a trader called the bonds "a little lower," the 9¾% notes around 62¼ and the 7¼% notes at 10 bid, 11 offered.

Yet another trader deemed the 7¼% notes down a deuce at 11½ and the second-liens down 3 to 4 points around 60.

In an article published late Friday, the Wall Street Journal reported that Rochester, N.Y.-based Kodak was having troubles attracting bidders for its patent portfolio. The sale of the patents has been deemed crucial to the company's turnaround efforts.

Add to that a recent ruling by an International Trade Commission judge that one of its digital imaging patents currently at the center of a patent infringement lawsuit with Apple Inc. that the patent was in fact invalid.

Kodak has said it will appeal that ruling.

NewPage softens

A trader said that NewPage Corp.'s 11 3/8% first-lien notes due 2014 "got rocked" after the company said it would not make its June 30 coupon payment.

The trader said the bonds traded around 59, but were quoted even lower at 57 bid, 58 offered. He called that down 3 points from previous levels around 61.

NewPage is a Miamisburg, Ohio-based bankrupt papermaker.

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