Kodak quoted lower as patent sale pushed out indefinitely; ATP Oil debt firms with market, oil

By Stephanie N. Rotondo

Phoenix, Sept. 14 - The overall high-yield market was "just ripping," a trader said Friday.

"There's just a food fight for product," he said, noting that the market was "starved" for supply.

While the positive tone of the broader markets did trickle down to the distressed debt arena, investors continued to focus on new issues. One distressed trader recently said he was "not enthusiastic" about that side of the market because distressed supply is lacking.

In Friday dealings, Eastman Kodak Co. was not overly active, but was being quoted lower on news a patent portfolio sale hearing had been put off indefinitely.

"I don't think that news is perceived very well," a trader remarked.

ATP Oil & Gas Corp. was meantime following the trend of the market - and the movement of oil prices.

Kodak quotes slip

Eastman Kodak debt was slipping Friday, as the company put off indefinitely a conclusion to its patent portfolio sale.

One trader said the 9¾% second-lien notes due 2018 dropped as low as 60 bid, 62 offered, before going out at 62½ bid, 63½ offered. Though up from the intraday low, that was still down day over day, he said.

Another trader quoted the second-liens at 62½ bid, 63½ offered, down from 64¼ bid, 65¼ offered.

The trader noted that volume in the credit was thin.

A third trader said Kodak bonds were "a scrap weaker," the 9¾% notes "down a couple points" at 62 bid, 63 offered and the 7¼% notes due 2013 "wrapped around 13," down just a touch.

He also noted that trading activity was not all that much, opining that "I think everyone had kind of factored in at this stage that [the patent sale] was a dud," he said.

In a court filing on Friday, the bankrupt Rochester, N.Y.-based company said it was putting off a hearing on the sale indefinitely due to slow-going negotiations with potential bidders of the patent portfolio. The company said it might conclude that the sale is a no-go and that it therefore was also going to look at alternatives.

Alternatives include simply keeping the patents or possibly creating a licensing company.

A trader said that because Kodak never even released the amounts of any bids, he surmised that they were perhaps "so bad" as to eventually lead Kodak to decide to scrap the sale all together.

ATP gains with market

A trader said ATP Oil & Gas' 11 7/8% notes due 2015 were "very active," moving up to a 25-25½ context.

Another trader said at least $25 million of the bonds were exchanged, calling the debt up over half a point around 25 3/8.

There was no fresh news out on the bankrupt Houston-based offshore oil producer, but generally, the market was strong. That also meant a gain for oil prices.

The price per barrel of U.S. crude rose 62 cents in Friday trading, ending at $98.93.

Also in the oil arena, Petroleos de Venezuela SA's debt closed out mixed following a report that indicated production levels were not as high as previously claimed.

A trader said the 9¾% notes due 2035 were the most active, with a whopping $65 million trading. The notes were up nearly 4 points at 82 5/8.

However, the 8½% notes due 2017 and the 9% notes due 2021 were both down over a point, both at 833/4.

The Venezuelan government recently said that the average output per day was 3.13 million barrels, just below the target of 3.5 million bpd by the end of 2012. However, Reuters reported that internal documents show average output last month was at 2.99 million bpd.

The company stopped posting certified production reports in March 2011.

Weeks ends strong

Of other goings-on in the distressed space, a trader said Clear Channel Communications Inc.'s bonds "keep moving up."

He pegged both the 10¾% and 11% notes due 2016 with a 73 handle.

Another trader saw Caesars Entertainment Corp.'s 10% notes due 2018 gaining over 2 points to close around 71, on about $25 million traded.

In financials, a trader said Ambac Financial Group Inc. was again stronger, placing the debt generically at 42.

The trader said he had seen no news to explain the recent gains, "but it's certainly active and stronger," he said.

MF Global Holdings Ltd.'s 6¼%/7¼% notes due 2016 were meantime up half a point at 48.

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