ATP Oil falls for second session; AMR rises on merger hopes; Nokia notes unfazed by new iPhone

By Stephanie N. Rotondo

Phoenix, Sept. 12 - The distressed bond market was again firm Wednesday, according to market sources.

One trader said that "everything was up," seeing bonds generally half a point to three-quarters of a point stronger.

"Anything offered, somebody was trying to buy it," another trader said.

"Everything is moving higher," said another trader. However, that trader also lamented a lack of focus and supply in the distressed realm.

"It's almost like the distressed world is going away," he remarked. "We need some volatility."

On Wednesday, the market was further upstaged by news that Chesapeake Energy Corp. was selling off assets to the tune of $6-plus billion. As a result, the company's bonds dominated trading, rising several points across the board.

Back in distressed land, investors remained focused on ATP Oil & Gas Corp. The debt experienced its second day in a row of declines, though on no particular news.

Meanwhile, a trader said AMR Corp. was on the positive side. The company is struggling to ink a deal with its pilots union, which could delay its bankruptcy exit and possibly increase the likelihood that it won't exit as a standalone company.

ATP, oil weaken

It was another down day for ATP Oil & Gas' bonds Wednesday, though there was no fresh news out to explain the dip.

"ATP did not participate in the [general market] rally," a trader said, seeing the 11 7/8% notes due 2015 opening with a 26 handle, only to fall to level near 231/2.

He also noted that there were only "a handful of trades."

The trader also saw Petroleos de Venezuela SA's 9¾% notes due 2035 losing a point to end around 82.

A second trader pegged ATP's bonds around 24. A third quoted the issue at 24 bid, 24½ offered.

Both deemed the issue lower on no particular news.

Oil prices, however, were weaker on the day. The price per barrel for U.S. crude dropped 30 cents to $98.66.

AMR paper gains

A trader said AMR's benchmark 6¼% convertible notes due 2014 flew up to 66½ bid, 67 offered.

The gain came a day after the Fort Worth-based bankrupt airline reported an increase in customer traffic for August.

However, the gains might also be attributable to on-going contentious talks with pilots. AMR has yet to ink a deal with the union representing that group, fueling chatter that a merger with U.S. Airways is inevitable.

Though the flights attendants' union has reached a deal with the parent of American Airlines, it has continued to be vocal about its support for a combination with U.S. Airways, as has the pilots' union.

Additionally, investors might be hesitant to get involved with AMR if it cannot reach a deal with pilots before its emerges from bankruptcy, as it would place a sizeable question mark over future costs.

Nokia unfazed by iPhone

Nokia Corp.'s 5 3/8% notes due 2019 were "still active," a trader said, as rival Apple Inc. revealed its new iPhone 5.

However, the trader said there was "nothing real notable in terms of price action," calling the issue "maybe a little bit better" around 841/2.

Last week, Finnish wireless telecommunications equipment manufacturer unveiled its new Lumia product line, though investors failed to be impressed. Apple's new iPhone - which JPMorgan Chase analysts said could add as much as 0.5% to the U.S. GDP during the fourth quarter - is also slated for an earlier release than Nokia's phones, which could put a damper on the company's turnaround effort.

Market stays firm

Among other distressed issues, a trader said Clear Channel Communications Inc.'s 10¾% and 11% notes due 2016 were on the rise again, placing the paper around 71.

He also saw Momentive Performance Materials Inc.'s 9% notes due 2021 moving up "a point and change" to the 77 area.

Another trader called Ambac Financial Group Inc.'s bonds "quite a bit stronger," seeing the bonds generally trading around 38.

Also in the financial sphere, MF Global Holdings Ltd.'s debt "much stronger as well," at 47 bid, 48 offered.

He called that up about 2 points.

And, after slipping the previous session, Edison International Inc.'s paper "came back a little bit," according to a trader.

He saw the notes trading at 51 across the board.

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