ATP Oil continues to retreat; chemical names weaker; Patriot Coal ends higher on the week

By Paul Deckelman

New York, Sept. 21 - The distressed-debt market continued to take a backseat on Friday to activity in the junk bond market's new-issue sphere.

Traders said that, in the words of one, action was "virtually non-existent."

However, the source noted that the battered bonds of ATP Oil & Gas Corp. continued to lose ground and in relatively busy trading at that, dragged further down by the negative momentum seen on Thursday, even though there was no fresh news out about the offshore energy company.

A trader said that some chemical names, such as Momentive Performance Materials Inc. and Lyondell Bassell, were lower, also on no news.

Upsiders included Verso Paper Corp.

And Patriot Coal Corp.'s bonds were ending the week on a strong note. Even though no news was seen out about the bankruptcy mining company, traders theorized that something was definitely going on in that name.

There was no activity reported Friday in the bank debt or convertible debt of troubled companies.

ATP weakness continues

A trader said that dealings in the distressed market on Friday were "virtually non-existent. The focus [in high yield] was still on the new issues. Volume was definitely down," even from Thursday's already slow pace.

One of the few distressed names seen doing much of anything was ATP, whose issue of 11 7/8% second-lien senior secured notes due 2015 "has been one of the topical names in the distressed would" of late, languishing down in the lower 20s.

He saw the bankrupt Houston-based offshore energy exploration and production company's issue "a little bit lower again today," pegging the bonds at 22½ bid, which he said was down about a half-point from the 23 bid regions where the had gone home on Thursday.

Another market source, who saw the bonds lose almost a point on Thursday, saw them retreat another half-point on Friday.

Considering that he saw no news in the name, volume held up pretty well in the area of $17 million both days, making it among the most active credits in the junk space.

Chemical names lose ground

A trader said, "Some of the chemical names seem a little weaker," singling out LyondellBasell and Momentive Performance.

He saw Columbus, Ohio-based Momentive's 9% notes due 2014 trading down at 751/2bid.

He said that Netherlands based LyondellBasell's 5% notes due 2019 were "pretty active" up around the 108-to-108¼ bid level.

He saw that paper trading on Thursday morning at 108½ bid, 109 offered.

And he said that a week earlier, the bonds had been trading at 109¾ bid, estimating that the bonds were down 1½ points "week over week."

Clear Channel climbs

A trader said that Clear Channel Communications "came back, as lot of that stuff was weaker [Thursday]."

He saw the San Antonio, Texas- based radio and outdoor advertising company's 11% PIK toggle notes due 2016 and its 10¾% cash-pay notes due 2016 both "rebounding a little bit" from the lower levels.

He saw the 11% notes trading at 72½ bid, 72¾ offered, calling that "up a little bit from yesterday's lows."

There was no fresh news seen out about the company.

Patriot better on week

A trader saw bankrupt Patriot Coal's 8¼% notes due 2018 trading around 50 bid.

At another desk, a market source pegged the bonds at 50½ bid, calling that a gain of nearly 4 points.

"Clearly something is going on that was driving those bonds higher" the first trader said, while allowing that "no headlines have hit the tape" about the money-losing St. Louis-based coal operator.

He noted that the bonds had moved up to the half-century mark from previous levels earlier in the week in the low-to-mid 40s.

"Nothing apparent has come across the tape on those bonds," he said, "but clearly something is up."

He saw a couple of round-lot trades and contrasted them with "a couple of days ago," when the bonds were seen trading at 441/2-to-451/2.

"So it's up by 5 points on no real headlines," he observed. "Something is going on. Something must be going on."

Verso gains

Elsewhere, a market source saw Verso Paper Holdings' 8¾%notes due 2019 higher

The Memphis-based coated paper manufacturer's bonds rose 1½ points, to 51½ bid.

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