Cemex bonds climb; Travelport gains continue; RadioShack paper slides on earnings, downgrades

By Stephanie N. Rotondo

Portland, Ore., April 24 - Distressed bonds got "a little bounce from yesterday," a trader said Tuesday.

"For the most part things were better," he said. "On pretty good volume."

Benefiting from the positive tone of the day were Cemex SAB de CV's bonds, as well as Travelport LLC paper, which has been creeping higher of late. Cemex is expected to report better earnings on Thursday, while Travelport is gearing up to launch a new term loan on Wednesday.

But not everyone fared as well.

RadioShack Corp.'s bonds dropped as much as 3 points on the day following disappointing earnings and a round of downgrades. Edison Mission Energy's bonds meantime closed mixed - though mostly to the downside - after having its ratings cut.

Cemex paper rises

Cemex paper was up 2 points or more across the board, according to a trader.

The 9¼% notes due 2020 gained 2½ points, closing at 873/4, while the 0% notes due 2015 earned a deuce, finishing around 871/2. The 9% notes due 2018 increased 2¼ points to 90.

The Mexican cement and aggregate manufacturer is scheduled to release its first-quarter results on Thursday before the market opens. Analysts are expecting to see improved sales of $3.48 billion versus $3.38 billion the year before. The sales gain has been attributed to better performance in the U.S. and Mexico.

The company is still expected to post a loss, though a narrower one than the year before. Estimates place the loss around $109 million, down from $276 million in 2011.

Travelport higher again

Travelport's 9 7/8% notes due 2014 moved up 1½ points to 66, a trader said.

"They've been moving higher," he said, noting that paper had been in a 62-63 context "a few days ago."

Another trader also called the notes up 1½ points to 66.

On Wednesday, the company will hold a conference call to launch a $175 million 11/2-lien term loan due Nov. 22, 2015. Proceeds from the loan will be used to repay the company's non-extended term loan due in 2013.

Travelport is an Atlanta-based provider of transaction processing services to the travel industry.

RadioShack earnings disappoint

A trader said RadioShack paper ended the day weaker.

"They were downgraded, had disappointing numbers," he said.

He placed the 6¾% notes due 2019 around 75.

Another trader pegged the issue at 751/2, down 3 points on the day.

For the first quarter of 2012, the Fort Worth, Texas-based electronics retailer reported a loss of $8 million, or 8 cents per share. In the same quarter of 2011, the company posted a profit of $35.1 million, or 33 cents per share.

Analysts had been expecting a profit of at least 4 cents per share.

Revenues fell 1% to $1.01 billion, lower than market expectations of $1.06 billion. Same-store sales dropped 4.2%.

"As we anticipated, the first quarter was extremely challenging," said Jim Gooch, president and chief executive officer, in a press release. "While our results were disappointing, we are working quickly to drive top line growth and expand margins."

But the company is not working quickly enough, according to a Moody's Investors Service analyst.

"The negative trend in RadioShack's margins due to its top line being increasingly skewed toward low margin and highly competitive mobility business and the proliferation of low margin smart phones cannibalizing sales from its consumer electronics product line continues to cause deterioration in credit metrics," Moody's senior analyst Mickey Chadha said in a news release.

Moody's cut RadioShack's ratings to B1 from B2 and the outlook is negative.

Fitch Ratings also took action, dropping the company to B- from B+.

Edison mixed post-downgrade

Edison Mission Energy's debt closed the day mixed after Fitch cut the power producer's ratings to CC from B-.

"They were kind of active," a trader said. He saw the 7 5/8% notes due 2027 gain a point to 59. But the 7% notes due 2017 fell a point to 601/2, while the 7½% note due 2013 slipped half a point to 74.

Another trader said the 7% notes were weaker, ending in the low-60s, and that the 7 5/8% notes were "maybe a smidge better" at 59.

Fitch justified its actions by citing the fact that power prices are low, thus presenting an obstacle to its long-term financial viability - especially given its high debt leverage.

The rating agency also said that while near-term liquidity was fine, it was possible that a bankruptcy could come within the next year or two.

Fitch also cu its ratings on Midwest generation LLC, but affirmed the ratings on parent Edison International Inc., as well as those on Southern California Edison.

Broad market mostly firm

Elsewhere in the land of distressed, James River Coal Corp.'s 7 7/8% notes due 2019 "bounced back" from lows around 62 to end around 64, a trader said.

Homebuilders were meantime mixed, as Beazer Homes USA Inc.'s 9 1/8% notes due 2018 gained almost a point to 84 and Hovnanian Enterprises Inc.'s 8 5/8% notes due 2017 fell 2½ points to 61.

Bon-Ton Stores Inc.'s 10¼% notes due 2014 continued to drift lower, traders said. One trader placed the issue at 81 - down a point on the day - while another quoted the paper at 81 bid, 82 offered.

"They've been heavy," the first trader said.

At another shop, a trader said Ambac Financial Group Inc.'s bonds were "stronger," trading at 17¼ to 17½ across the board.

MF Global Holdings Ltd.'s 6¼%/7¼% notes due 2016 were also higher at 401/2, the trader reported.

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