J.C. Penney ends week strong after numbers; NII Holdings investors target recovery speculation

By Stephanie N. Rotondo

Phoenix, May 16 - Two names were dominating trading in the distressed space Friday: J.C. Penney Co. Inc. and NII Holdings Inc.

J.C. Penney reported better-than-expected earnings late Thursday and on the heels of the release, the bonds were "obviously up a lot," a trader said.

Meanwhile, further speculation about "potential restructuring scenarios" were keeping NII Holdings' debt busy and strong, according to a trader.

The company reported disappointing quarterly results earlier in the week.

Elsewhere in the distressed space, the coal sector was softening as the week came to a close. A trader saw Arch Coal Inc.'s 7% notes due 2019 falling almost a point to 79½ and Alpha Natural Resources Inc.'s 6% notes due 2019 slipping half a point to 771/2.

On the up side, Verso Paper Corp.'s bonds were climbing higher, though on no fresh news.

A trader pegged the 8¾% notes due 2019 at 521/4, up "almost 2 points." The 11 3/8% notes due 2016 gained almost a point to 583/4.

J.C. Penney earnings boost bonds

J.C. Penney's turnaround effort looked to finally be gaining ground, based on the company's earnings release on Thursday.

Investors reacted positively to the numbers, which beat expectations.

One trader said the 6 3/8% notes due 2036 and the 7.4% notes due 2037 were trading in an 81 to 82 zip code, while the 5¾% notes due 2018 were seen around 90.

The latter issue had been trading around 85 prior to the earnings release, the trader noted.

The 7.95% notes due 2017 were meantime ending "close to 99," he said, which compared to a 94 to 95 context previously.

A second trader, however, called both the 6 3/8% notes and the 5¾% notes unchanged at 81 and 903/4, respectively.

He deemed the 7.95% notes up a point at 99.

Same-store sales saw its second consecutive quarterly gain, rising 6.2% during the first quarter. Online sales meantime increased 25.7%.

Total sales came to $2.8 billion, above the $2.64 billion reported a year ago and above analysts' expectations of $2.71 billion.

Net loss was $352 million, or $1.15 per share. Overall, that was wider than a year ago when net loss was $348 million, but on a per share basis, it was better than 2013's first quarter per share loss of $1.58.

Excluding certain items, the loss was $1.14 per share. That beat analysts' expectations of $1.24 per share.

NII debt rises

The market is swirling with speculation on what recovery models would look like in the event NII Holdings undergoes a restructuring, a trader said.

Amid investors' buzzing, they were pushing the company's debt mostly higher during the last trading session of the week.

"They were somewhat volatile today," a trader said, seeing the 11 3/8% notes due 2019 hit a high of 81.

However, the trader said the debt "probably went out a little lower" than the day's high. Still, that was up from Thursday's closing levels of 77 bid, 78 offered.

Another trader called the 7 5/8% notes due 2021 up over 2 points at 291/4, while the 8 7/8% notes due 2019 gained over a point to end around 441/2.

He said the 10% notes due 2016 slipped half a point to 311/2.

The Reston, Va.-based provider of Nextel mobile services in Latin America and Mexico reported earnings on Monday.

The results showed a subscriber loss of 52,000, as well as a higher churn rate and a weaker exchange rate.

Net loss was $376.1 million, or $2.19 per share. That compared to a loss of $207.5 million, or $1.21 per share, the year before.

Revenues declined 37.2% to $970.2 million.

Operating expenses fell 16.6% to $1.21 billion. Operating loss was $239.1 million, versus $79.5 million for the same quarter of 2013.

The company had $1.61 billion in cash and equivalents at the end of the quarter. At the end of fiscal 2013, it had $2.32 billion.

Total debt increased to $5.75 billion from $5.7 billion.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.