Mexican homebulders suffer amid restructuring news; PDVSA drops; NII, J.C. Penney stay topical

By Stephanie N. Rotondo

Phoenix, April 12 - Disappointing economic data was not doing much to improve the distressed debt market on Friday, a trader reported.

"Everything wasn't up, up and away," he said. "With those bad [job and retail] numbers, we were just kind of treading water."

Mexican homebuilders were starting to enter the distressed radar, as several of the emerging market names - such as Corporacion GEO SAB and Urbi Desarrollos Urbanos SAB - were "getting crushed," a trader said. Both companies are facing potential restructurings and a concern about the industry at large was spreading to other names as well.

But away from the Mexican homebuilders, most of the day's activity was centered on recently topical names such as NII Holdings Inc. and J.C. Penney Co. Inc.

One trader, pegging the issue at 831/2, called NII's NII Capital Corp.-linked 7 5/8% notes due 2021 down half a point. But another trader said the paper "continues to run up," seeing the notes trade around 84.

J.C. Penney was meantime firming, though in thin trading, according to a trader. The trader saw the 7.95% notes due 2017 rising over a point to 941/2, while the 5.65% notes due 2020 inched up almost a point to 823/4.

Mexican builders take hit

Mexican homebuilders were taking a beating on Friday, falling anywhere from 4 to nearly 10 points depending upon the specific name and issue.

Corporacion GEO said Friday that it planned to seek a restructuring of its debt as its cash flows faltered. That announcement came on the heels of news regarding the hiring of Rothschild as advisors by Urbi Desarrollos.

The sector at large has been under pressure anyway, a trader noted, given that the "Mexican president has been more favorable to the building of apartments than single family homes."

A trader said GEO's bonds were the "top down movers," with both the 8 7/8% notes due 2022 and the 9¼% notes due 2020 off at least 9½ points.

Both issues closed around 71 7/8, he said.

Urbi's debt was meantime off 6½ to 7½ points, the 9½% notes due 2020 at 39 and the 9 ¾% notes due 2022 at 401/2.

And, Desarrolladora Homex SAB's 9¾% notes due 2020 dropped 4 points, finishing around 741/2.

PDVSA down pre-election

In other emerging market names, Venezuela's Petroleos de Venezuela SA was dominating overall trading.

"Those bonds occupy almost all the top five slots," a trader said.

All the issues were trading down slightly, as the country prepares for an election on Sunday. Nicolas Maduro, the current interim president and vice president to the now-deceased Hugo Chavez, is expected to win. But regardless of who wins, buzz is that things will have to change at the state-owned oil company in order to increase production and revenues.

A trader called the 9¾% notes due 2035 down half a point at 971/2. The 9% notes due 2021 were also off half a point at 96 5/8.

The 8½% notes due 2017 slipped a touch to 983/4.

Earlier in the week, Caracas-based El Universal reported that PDVSA had ended the 2012 fiscal year with $7.78 billion in debt, an 80% increase from the prior year.

Broad market tidbits

Among other distressed issues, a trader said Clear Channel Communications Inc.'s 11% notes due 2016 were holding around 84.

Another trader said Ameren Energy Generating Co.'s debt "continued to be stronger."

He pegged the 7½% notes due 2018 at 86½ bid, the 6.3% notes due 2020 at 78½ and the 7.95% notes due 2032 at 77.

The trader also said that he saw Geokinetics Holdings USA Inc.'s 9¾% notes due 2014 trade at 52½ bid, 53 offered.

"I haven't seen that in awhile," he said of the bankrupt name.

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