PDVSA paper rises after Chavez undergoes surgery; Nortel shakes off stock's cease trade order

By Stephanie N. Rotondo

Phoenix, Dec. 12 - As the calendar inched closer to the end of the year, distressed debt traders continued to see a flight to new high-yield issues instead of their distressed counterparts.

That being said, the overall positive tone of the market remained.

Petroleos de Venezuela SA was again topical, as it was announced that Venezuelan president Hugo Chavez's cancer surgery in Cuba was successful.

"I think all of this Venezuela stuff was better," a trader said.

Meanwhile, Nortel Networks Corp.'s debt was "not all that active," according to a trader, but was trading up despite a cease trade order the company received in regard to its stock on Tuesday.

PDVSA gains as Chavez recuperates

PDVSA bonds were "gyrating around," a trader said, as it was reported that President Chavez's cancer surgery in Cuba was successful.

The 8½% notes due 2017 ended up nearly half a point at 991/4, as did the 5 3/8% notes due 2027, which closed at 721/4.

However, the 9¾% notes due 2035 were a touch softer at 99.

Chavez shocked Venezuelans over the weekend when he announced that his cancer had returned and that he was headed to Cuba for another surgery. The resurgence of the cancer has concerned citizens and investors alike as to what might happen if Chavez were to die during his term.

On Tuesday, the Caracas-based newspaper El Universal reported that PDVSA would meet only 12% of its production goal from the Orinco belt in 2012. That information came from the Minister of Petroleum and Mining Rafael Ramirez, who also noted that PDVSA employees had pledged their full support for Vice President Nicolas Maduro, whom Chavez had endorsed himself upon announcing his latest medical crisis.

Nortel unfazed by cease order

Late Tuesday, Nortel Networks received a cease trade order on its stocks listed in Canada and the United States due to its failure to file certain regulatory documents in a timely manner.

The company had previously warned that it might be late in filing its third quarter financials in August.

But the news did little to hurt the company's bonds.

A trader remarked that while both the 10 1/8% notes due 2013 and the 10¾% notes due 2016 were "not all that active," both were trading up to a 114-114½ context.

Broad market: more up than down

Elsewhere in the distressed arena, a trader said Caesars Entertainment Corp.'s 10% notes due 2018 rose over 1½ points to close at 663/4.

Another trader said Nokia Corp.'s 5 3/8% notes due 2019 were "up a good point" at 93½ bid, 94 offered.

That same trader saw Eastman Kodak Co.'s 9¾% second-lien notes due 2018 ending "maybe a smidge lower" at 80 bid, 81 offered.

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