Kodak bonds hang in despite hefty loss; ATP gives back gains; Arch debt mixed amid layoff news

By Stephanie N. Rotondo

Phoenix, June 21 - Distressed bonds "started out strong again, but [were] weakening here late," a trader said Thursday.

He noted that the downward dip came as the stock market began to lose steam.

"The stock market took the air out of everything," another trader said, adding that it was a "very, very slow day.

"Everybody's waiting to see what Moody's [Investors Service] says" about bank downgrades, the trader further remarked.

After the bell, the rating agency came out and said that it had downgraded 15 major banks, including Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc. and Goldman Sachs & Co.

Given the end-of-day tone, the news could spark more losses in Friday trading.

Of the day's goings-on, Eastman Kodak Co. debt held its ground, even as the company filed a report with the bankruptcy court showing a remarkable loss for the quarter.

Even ATP Oil & Gas Corp. - which had gained some ground Wednesday on news of a completed financing - ended softer. An over 4% drop in oil prices probably did not help either.

Arch Coal Inc.'s bonds were meantime mixed on the day. The company made headlines Thursday, announcing layoffs for about 500 employees.

Kodak unfazed by loss

A trader said Eastman Kodak's 9¾% second-lien notes due 2018 were "about the same" at 64 bid, 64¾ offered.

Another trader also said the bonds were holding steady, placing the second-liens at 64 bid, 64½ offered. He also saw the 7¼% notes due 2013 "straddling 15."

However, he added that the bonds "didn't trade very much."

In a filing with the bankruptcy court on Thursday, the Rochester, N.Y.-based company said that it had a net loss of $325 million for the quarter ended March 31.

Revenues were $441 million and cash and equivalents were $661 million.

ATP gives up gains

ATP Oil & Gas' 11 7/8% notes due 2015 gave up some of the gains incurred Wednesday on news of a completed $35 million private placement of convertible notes.

The declines during Thursday's session were attributed to weakness in the broad market, as well as to a hefty drop in oil prices.

One trader called the debt down 1½ points at 471/2. Another saw paper going out around 47.

Meanwhile, the price of U.S. crude oil dropped $3.45, or 4.24%, to $78.00 per barrel.

ATP is a Houston-based oil and gas exploration company.

Arch mixed amid layoffs

In a press release issued late Thursday, Arch Coal said that it had "plans to idle several operations and to reduce production at other mining complexes in Appalachia due to the unprecedented downturn in demand for coal-based electricity."

About 750 workers are expected to lose their jobs.

The company did not release the statement until after the market had closed. However, news outlets had gotten wind of the story earlier in the day and were already reporting the layoffs ahead of the official announcement.

Still, the news did little to the company's debt, according to a trader.

"They're all roughly unchanged," he said.

The 8¾% notes due 2016 inched up slightly to 963/4, while the 7¼% notes due 2020 fell a tad to 843/4. The 7½% notes due 2021 were unchanged at 853/4.

Arch Coal is based in St. Louis.

Clear Channel down with market

Clear Channel Communications Inc.'s debt was declining with the market, traders reported.

One trader called the 11% notes due 2016 down a point around 61. Another trader deemed the 10¾% notes due 2016 down 1½ to 2 points at 62½ bid, 63½ offered.

There was no fresh news out on the San Antonio-based multimedia company.

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