OPTI Canada gains on production report; Edison, Dynegy powering up; Harrahs still busy, better

By Stephanie N. Rotondo

Portland, Ore., March 16 - Distressed debt trading during Wednesday's session was "the reverse of yesterday," according to a trader.

Instead of starting weaker and ending a bit higher, "everything started higher and traded down," he said.

Still, he said that overall trading in the secondary space was "very busy," with about $1.6 billion trading.

OPTI Canada Inc. was the nom du jour after the company released a production report from its Long Lake joint venture project. The numbers from February came in below those seen in January, but instead of dropping, the bonds headed upward.

Nuclear concerns out of Japan continued to create action in the power sector. Edison International Inc. and Dynegy Inc. both saw their bonds trending higher, as investors realized the newfound nuclear scrutiny likely meant that other power generators - such as coal and natural gas - would see higher demand.

Caesars Entertainment Corp. also remained active, though there was still no credit-specific news out.

OPTI up on production report

A trader saw "a couple hundred million" of OPTI Canada bonds trading the session on the back of the release of a monthly production report from its Long Lake joint venture project.

The 7 7/8% and 8¼% subordinated notes due 2014 were "up a little bit" at 51 bid, 51½ offered, the trader said. The 9% "super seniors" due 2012 were also better at par bid, par ½ offered and the 9¾% notes due 2013 at 98 bid, 99 offered.

Another trader called the subs a quarter-point higher around 51.

Bitumen production at the Long Lake oilsands project fell to 23,100 barrels per day in February, due in part to a 10-day maintenance shutdown. The company had reported production of 27,000 barrels per day in January.

The project - with partner Nexen Inc. - has continued to produce at lower-than-expected levels, due mostly to operational problems. OPTI and Nexen have yet to produce at capacity, which is 72,000 barrels per day.

OPTI is currently attempting to sort out its balance sheet and has said several times that its financial health depends heavily on ramping up production at Long Lake.

OPTI Canada is a Calgary, Alta.-based oilsands producer.

Edison, Dynegy power up

As Japan's nuclear crisis brings U.S. reactors under the microscope, power producers have become a go-to for investors.

Traders therefore have seen decent activity in credits such as Edison International and Dynegy. On Wednesday, both companies saw their bonds gaining ground "on the back of the fact that the nuclear world is under a bit more scrutiny than it has been," a trader said.

The trader also noted that because of the renewed nuclear concerns, many believed that other power generating methods - such as natural gas and coal - would remain the favored methods.

Edison, he said, was the day's "big winner." He saw the 7¾% notes due 2016 "up a couple points" at 82½ bid, 83 offered, on $40 million to $50 million traded.

Dynegy's debt also gained "a couple points across the board," he said, seeing the 7¾% notes due 2019 at 73½ bid, 74 offered and the 8 3/8% notes due 2016 around 80.

He added that about $60 million to $70 million of Dynegy's assorted issues changed hands.

Another trader said Edison's debt was "all higher," the 7¾% notes at 823/4, the 7½% notes due 2013 at 98½ and the 7.20% notes due 2019 at 753/4.

The bonds were up anywhere from 1¾ points to 2½ points, depending on the issue, according to the trader.

Dynegy was also better, the second trader said. He deemed the 7¾% notes 2 points firmer at 73½ and the 8 3/8% notes up 1½ points around 80.

He pegged the 7½% notes due 2015 at 811/4, up a deuce.

At another desk, Dynegy's 7¾% notes were seen climbing up nearly 2 points to 73¾ bid.

Also, Texas Competitive Electric Holdings Co. LLC's 10¼% notes due 2015 were seen ending around 49 bid, 50 or 51 offered, which a trader called up half a point, with "good volume in that issue."

He also saw the 6½% notes due 2024 issued by the company's corporate parent, Dallas-based utility operator and merchant power generator Energy Future Holdings Corp. - the company formerly known as TXU - pretty much unchanged on the day at 42½ bid 43½ offered.

He saw Energy Future's 10 7/8% notes due 2017 at 78½ bid, 79½ offered, but he said it was only quoted higher, "but there was really no volume, it wasn't an active one."

At another shop, the Texas Competitive Electric 101/4s were up 1 7/8 points to just under 51 bid - although that was still below the 53ish levels seen last week.

Harrahs' debt gains

A trader said Caesars Entertainment's 10% notes due 2018 were "again very busy," with about $50 million to $60 million trading.

He said the paper was "up a little bit, but off the highs" at 88 bid, 88¼ offered.

He noted that the bonds hit an intraday high of 891/2.

Another trader called the notes a quarter-point better at 881/4.

There was no news out on the Las Vegas-based casino operator.

Sorenson slips

A trader said that Sorenson Communications Inc.'s 10½% notes due 2015 were at 68½ bid, 69½ offered.

He said that the bonds of the Salt Lake City, Utah-based company - a provider of special equipment and services that allow hearing-impaired people to communicate by phone - "were a little active last week," but he didn't know how much activity was still going on in them.

Current levels, he said were "a little lower" than where the bonds had been last week but theorized they may have eased on Monday and just stayed at those slightly lower levels after that.

"It's not one that you can tell how much traded."

Paul Deckelman contributed to this article

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