ATP remains volatile; Blockbuster under pressure; General Growth Properties higher; WaMu dips

By Stephanie N. Rotondo

Portland, Ore., June 3 - The distressed debt market was "kind of mixed all day," a trader said on Thursday.

He noted that the day "opened up firm," but that distressed credits gyrated throughout the session, moving "up and down by fractions." Finally, the market finished the day "mostly unchanged."

Still, market players continued to see very little going on in bond trading, as stocks seemed to be taking up the bulk of investors' attention.

ATP Oil & Gas Corp. typified the market's performance, as the company's bonds initially headed upward, only to come back in to end unchanged. As has been the case over the last few sessions, there has not been any name-specific news out, but the massive oil leak in the Gulf of Mexico continues to put pressure on the sector in general.

Blockbuster Inc.'s bonds also continued to be under pressure. Traders saw the debt losing more ground, breaking the single-digit barrier.

Meanwhile, General Growth Properties Inc. saw its notes inching up slightly. The small gains came as the company said it had identified up to 13 properties it could turn over to lenders once it leaves bankruptcy protections.

And, Washington Mutual Inc.'s debt dipped in trading. A hearing was held on Thursday and, according to market sources, what came out of that meeting was what was hurting the bonds.

ATP remains volatile

ATP Oil & Gas' 11 7/8% notes due 2015 continued to fluctuate in trading, according to traders.

"Definitely [ATP] was once again the star of the day," a trader said, seeing somewhere between $50 million and $75 million of the debt change hands. He said the bonds had "a good run-up starting the day," hitting a high around 77 before coming back in to around 73. By the end of it all, he quoted the bonds at 73½ bid, 74 offered.

Another trader said the paper was "one of the busier ones" in an otherwise quiet marketplace. He also saw the bonds on "a bit of a bumpy road." The trader saw the notes heading up to the high-70s, then settling in at 73 bid, 74 offered, about unchanged on the day.

Again, there was no news out on the Houston-based offshore driller, but both Moody's Investors Service and Fitch Ratings did downgrade BP plc for its role in the oil leak in the Gulf of Mexico.

Blockbuster still under pressure

A trader said there was "good action in [Blockbuster] subs," as "people are really starting to see these are probably worthless."

The trader said the 9% notes due 2012 were "well offered" at 10, which compared to 14 bid, 15 offered just last week.

Another trader noted that Blockbuster's debt "got hit pretty hard late in the day [on Wednesday]," and the hits just kept coming on Thursday. He pegged the bonds at 9½ bid, 10 offered, "so down a little bit more."

The Dallas-based movie rental chain is continuing to fight a proxy battle with a shareholder seeking a place on the company's board. A vote on the new directors will take place at Blockbuster's annual shareholder meeting on June 24. It is also expected that the company will give an update on bondholder negotiations regarding a recapitalization at that meeting.

General Growth gains

General Growth Properties' debt inched up a tad, as the company said it could give as many as 13 "underperforming" properties to lenders once it exits from bankruptcy.

A trader said there were "a few trades" in the credit, with the bonds up "half a point or so." He placed the 8% notes that were to have matured last year at 112, the 7.20% notes due 2012 at 112½ and the 5 3/8% notes due 2013 at 1061/2.

Another trader echoed those levels, noting that trading was "scrappy."

In a regulatory filing posted Thursday, the Chicago-based mall operator said it had two days after its bankruptcy emergence to decide whether it would unload on lenders properties that include 12 malls and a community center spread out across the country.

General Growth expects to exit Chapter 11 protections by Sept. 30.

WaMu slips, hearing postponed

Seattle-based thrift Washington Mutual saw its bonds giving back a bit, after comments made at a hearing held on Thursday were "construed as somewhat negative," a trader said.

The trader placed the bank seniors, such as the 5.55% notes due 2010, around 401/2, while the "holdco" paper, like the 4% notes due 2009, at 1041/2. He deemed the latter down half a point to a quarter-point.

At hearing on Thursday, the judge overseeing the company's bankruptcy case told WaMu's attorneys that the company must deal with shareholders looking for documents regarding the bank's 2008 collapse.

The judge was supposed to hear objections related to the company's disclosure statement, but that was pushed back to June 17, the date set for the company and shareholders to report on their discussions. The postponement could possibly mean that confirmation hearings on the plan of reorganization could be pushed back again. The hearings were expected to being in mid-July but, at this point, are expected to begin the beginning of August.

Elsewhere in the financial space, a trader said there were "better bids" in American international Group Inc.'s paper.

He said the 8 5/8% notes due 2015 were at "90-ish" bid, up "probably half a point" from the day before.

Broad market steady to firm

Among other distressed issues, General Motors Corp.'s benchmark 8 3/8% notes due 2033 were "up nicely on the day" around 34, according to one trader.

Another trader quoted the debt at 33½ bid, 34 offered, also deeming them "a little bit better."

NewPage Corp.'s 11 3/8% notes due 2014 closed around 933/4, a trader said, with about "$20-odd million" turning over.

And, Lyondell Chemical Co.'s bonds were on the active side, with about $20 million of the 11% notes due 2018 and 8% notes due 2017 trading, the trader said. He pegged the former at 106¾ and the latter at 101 bid, 102 offered.

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