Overseas Shipholding dives on bankruptcy fears; GFI bonds fall ahead of earnings; AMD rallies

By Stephanie N. Rotondo

Phoenix, Oct. 24 - The distressed debt market was "up a little" in midweek trading, on "pretty good volume."

There were, however, a couple of credits that got slammed.

Overseas Shipholding Group Inc. "got crushed," a trader said, falling another 3 to 4 points. The debt had dropped as much as 18 points on Monday on news that the company might have to restate certain earnings statements due to a tax issue. Upon announcing the problem, the company also warned that it could be forced to file for bankruptcy.

Meanwhile, GFI Group Inc.'s bonds were also declining. There was no news out on the brokerage, but earnings are expected on Friday.

Overseas Shipholding sinks

Overseas Shipholding Group saw its bonds take a dive yet again this week, following news on Monday that the New York-based oil transporter might have to seek Chapter 11 protections.

A trader called the 8¾% notes due 2014 down 7 points to 34, while the more actively traded 8 1/8% notes due 2018 dropped 4 points to close around 30.

Another trader also placed the 8 1/8% notes around 30, down 3 to 4 points on the day.

The second trader also noted that the paper "gyrated all over" before reaching its closing price.

On Monday, company first said that it was reviewing tax issues, which may result in the restatement of previous earnings.

The company then said that that it was looking into its strategic options, which includes the viability of a Chapter 11 filing.

The company has reportedly hired Chilmark Partners and Proskauer Rose for financial and legal advice.

Overseas Shipholding has been troubled of late by lower rates for transporting oil, due to a wealth of vessels being available for such trips.

GFI dips ahead of earnings

New York-based brokerage GFI Group is expected to report its third quarter results on Friday and investors might not be too keen on what they will hear.

"It's not looking good," a trader said, seeing the 8 5/8% notes due 2018 fall 3 points to 82.

Another trader noted that "counter-party credit issues are always a problem."

AMD, Supervalu rallying

In recently topical names, Advanced Micro Devices Inc.'s debt "bounced back" again on Wednesday, following the trend set Tuesday.

The trader saw the 7¾% notes due 2020 rise 1½ points to 841/2, while the 7½% notes due 2022 put on "a couple [points]," finishing around 81.

The trader also said that Supervalu Inc.'s paper was moving higher again, after losing some ground in the previous session.

The 7.45% notes due 2029 were up a point at 59 and the 8% notes due 2016 earned "almost a point" to end at 941/2.

Another market source pegged the 8% notes at 94 bid, up marginally.

Broad market largely firm

Also in the distressed arena, a trader said Caesars Entertainment Corp.'s 10% notes due 2018 gained half a point to 641/2.

Another trader saw fellow casino operator Circus and Eldorado JV moving around as the company and its creditors had agreed to a plan of reorganization.

He said the 10 1/8% notes that were to have matured March 1 were trading around 86. Based on the agreed-upon plan, recovery on the debt is expected around 88, he said.

Also, the first trader called Travelport LLC's 11 7/8% notes due 2016 half a point higher at 38.

At another desk, a trader said ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 were off half a point to a point at 16 bid, 16½ offered.

The trader also said that NewPage Corp.'s 11 3/8% notes due 2014 were "quoted lower," pegging them at 50 bid, 52 offered. He said that trades occurred around 51 7/8.

"There was no news other than paper products are kind of cruddy," he said.

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