Cemex sees uptick in U.S. sales, notes improve; Nokia bonds teeter; PDVSA debt gives up gains

By Stephanie N. Rotondo

Phoenix, July 20 - The distressed debt market was on the muted side Friday, as a "general lack of news" and a declining stock market kept investors at bay, a trader said.

Of those names that did make headlines, Cemex SAB de CV's bonds were rising, albeit in modest trading volume. The gains came as the company reported second-quarter earnings, which showed an improved U.S. market.

Nokia Corp.'s paper meantime started to weaken following the release of the Finnish phone manufacturer's own financial results on Thursday.

The oil arena was down generally, as oil prices declined. Even Venezuelan-based state-owned oil company Petroleos de Venezuela SA saw its bonds dropping, despite announcing a new funding agreement on Thursday.

Cemex sees U.S. sales rise

Monterrey, Mexico-based Cemex reported its second-quarter results Friday, which showed growth in U.S. demand.

The cement and aggregate manufacturer's debt rallied slightly on the report, according to a trader.

"Revenues were not up to snuff, but aside from that, the numbers were pretty good," he said.

The 9% notes due 2018 rose half a point to three-quarters to 911/2, the trader said. The 9¼% notes due 2020 inched up about half a point to 871/4, while the 9½% notes due 2016 were up a touch at 991/4.

The trader noted that there was not much action in the name.

"It's kind of a retail name," he said.

For the second quarter, net loss was $187 million, versus $209 million the year before. Cemex's U.S. business saw sales of $795 million for the year, up 15%.

U.S.-based EBITDA was $27 million, compared to a loss of $17 million in the previous year.

Sales in Mexico, however, dropped 14% to $833 million and European sales declined 18% to $1.1 billion.

The improvements in the U.S. market, as well as other smaller markets, helped offset the loss in Mexico and Europe, the company said.

For the company as a whole, EBITDA gained 11% to $702 million.

Nokia bonds slip

Nokia bonds reversed course Friday following the release of the company's second-quarter financial report on Thursday.

The paper had initially headed upward after the earnings release, but began to come in during Friday trading.

A trader said the 5 3/8% notes due 2019 were "lower," though on "not very much volume," He pegged the issue at 75, down 1¼ points.

Nokia reported a €1.41 billion net loss, which compared to a loss of €368 million for the same quarter of 2011. Sales dropped 19% to €7.54 billion.

Though sales were down massively, they beat expectations of sales of €7.36 billion.

Smartphone sales were blamed for the decline, as sales in that sector dropped 34% to €1.54 billion. Sales of lower-end phones, however, buoyed the slipping results.

Total number of phones shipped during the quarter was 84 million, better than the expected 80 million.

According to Dave Novosel, an analyst with Gimme Credit LLC, one of the things that seems to be keeping Nokia down is recurring restructuring charges.

"What is really haunting Nokia is the incessant restructuring charges," he wrote in a report on Friday. "Ignoring them seems remiss since they are a regular feature of financial results."

In the second quarter, restructuring costs amounted to €499 million. The first quarter saw charges of €1.08 billion.

"Worse yet, there are plenty more to come," he wrote.

PDVSA gives up gains

PDVSA's debt was back to being "the top two in volume," according to a trader.

About $27 million of the 8½% notes due 2017 traded, falling slightly to 843/4. Another $26 million of the 9% notes due 2021 changed hands, slipping 1½ points to 751/2.

The declines came amid declining oil prices and despite a new financing agreement inked Thursday.

On Thursday, PDVSA inked a $2 billion investment deal with Chevron aimed at increasing production at a joint oilfield.

PDVSA said the financing should last until 2025.

On Friday, prices for U.S. crude oil dipped $1.19, or 1.28%, to $91.78 per barrel.

The declining prices were also affecting ATP Oil & Gas Corp.'s 11 7/8% notes due 2015, which fell over 2 points to 421/2, on $10 million traded, a trader reported.

Supervalu, OSG decline

Among other distressed issues, Supervalu Inc.'s 8% notes due 2016 were called unchanged by a trader, who saw the notes around 87.

Another source, however, called the issue down nearly a deuce, also around 87.

Overseas Shipholding Group Inc.'s 8 1/8% notes due 2018 meantime lost 3½ points, closing around 60.

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