OGX paper dribbles down as company seeks cash; Rotech rises as exit nears; iPayment bonds fall

By Stephanie N. Rotondo

Phoenix, Sept. 24 - It was a softer day for distressed debt on Tuesday.

OGX Petroleo e Gas SA, an emerging market name, continued to be topical during the session. The bonds were weaker following news the company was restarting efforts to sell assets to raise cash.

Elsewhere, Rotech Healthcare Inc. paper was inching higher. A trader noted that the company is expected to emerge from Chapter 11 protections soon.

Away from distressed, investors were again focusing on new high-yield bond issues, such as a $4.5 billion three-tranche deal from General Motors Co. Deals that priced in the previous session - Dell, ADT, among others - were also actively trading.

OGX bonds giving back

OGX's 8½% notes due 2018 slipped slightly in Tuesday trading, a trader reported.

He saw the bonds falling a quarter-point to 18 5/8.

Another trader said the bonds were "a touch lower" at 181/2.

On Tuesday, The Wall Street Journal reported that majority owner Eike Batista was looking to restart talks with Malaysian oil company Petroliam Nasional, which had previously shown interest in purchasing a stake in the Tubarao Martelo field in Brazil. Petronas, as it is commonly referred to, had agreed in May to pay $850 million to OGX for a 40% stake in the oil field. However, in August, Petronas backed away from the discussion, stating that OGX needed to deal with its restructuring first.

It was also reported Tuesday that OGX had hired Lazard as a financial advisor as it looks to restructure its debt. The company had previously engaged Blackstone Group LP as a financial advisor.

Among other emerging market names, Chile's SMU SA saw its 7¾% notes due 2020 rising 4 points to 69 5/8, according to a trader.

Rotech nears exit

A trader said Rotech Healthcare's 10¾% notes due 2015 were inching upward as the company prepares to exit bankruptcy.

He pegged the debt around 106.

Upon the company's exit, the trader said investors will receive cash dispersals of par plus accrued interest.

Rotech is a Wilmington, Del.-based provider of home medical equipment.

iPayment losing ground

iPayment Inc.'s 10¼% notes due 2018 dropped 2 points during Tuesday trading, ending around 71, a trader said.

Another trader also placed the issue around 71, "which was down a couple points from the last trade," he said.

The first trader noted that the bonds had been trading in the 80s just a few months ago. At the beginning of September, he said, paper was trading around 70, but had gotten as good as 74 recently before coming back in.

There has been no fresh news to cause the decline.

iPayment is a New York-based provider of credit and debt card payment processing services.

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