NII nears asset sale, bonds pop; Exide 'hammered' as plant closed; Homex news weighs on sector

By Stephanie N. Rotondo

Phoenix, April 25 - The distressed debt market "keeps trading higher," a trader said Thursday.

However, of the day's notable names, it was a mixed bag.

NII Holdings Inc. bonds were up as much as 5 points on the day. The gains came on news the company was nearing a sale of cellular towers in Brazil and Mexico.

Exide Technologies Inc. was meantime called "quite active," but off as much as 5 points on news of a battery recycling plant closure in California. Regulators forced the closure, stating that hazardous waste from the plant was leaking into the soil.

Mexican homebuilders were getting punished yet again during Thursday trading. The sector took as hit as Desarrolladora Homex SAB reported dismal first-quarter earnings.

NII's asset sale boosts bonds

NII Holdings' bonds "were flying," a trader said Thursday, after it was reported that the company was nearing a sale of cell towers in Brazil and Mexico.

The trader called both the 7 5/8% notes due 2021 and the 8 7/8% notes due 2022 up 4 to 5 points, at 87 bid, 88 offered and 92, respectively.

Another trader said the 7 5/8% notes were up a "staggering" 4 5/8 points, closing around 88. But he deemed the 8 7/8% notes up only a point, also around 92.

The second trader also saw the 10% notes due 2016 rising 1¾ points to 1013/4.

The Reston, Va.-based provider of Nextel mobile service in Latin America intends to use proceeds from the tower sale - as well as proceeds from a recent sale of its Peruvian unit - to focus on 3G technology investments in its core markets in Brazil and Mexico.

NII sold the Peruvian unit earlier this month to Chile's Empresa Nacional de Telecomunicaciones SA for $400 million.

Exide paper dives

Regulators in California forced the closure of a battery recycling plant owned by Exide Technologies due to a hazardous waste leak on Wednesday.

The news put pressure on the already declining debt.

One trader quoted the 8 5/8% notes due 2018 at 69 bid, 70 offered. Another placed the issue around 69 1/8, calling that down 5 points.

"Exide got hammered," a third trader said, seeing the paper in the same 69-70 context. He said that compared to levels around 75 on Wednesday and levels around 80 on Tuesday.

The Vernon, Calif.-based plant had been leaking hazardous wastes that included arsenic emissions for some time, regulators said, due to a degraded pipeline.

The leak is not the first violation the facility has ever had. But state government officials have allowed the plant to operate on an "interim basis," despite repeated violations that include lead contamination and groundwater contamination.

Exide has reportedly allotted $10 million for the cleanup efforts, but watchdog groups are concerned that will not be enough.

Exide is based in Milton, Ga.

Homex numbers pressure sector

Homex reported dismal earnings Thursday, as new homes sales have declined in Mexico amid a push for multi-family units.

The results weighed on Homex's debt, as well as that of its sector peers.

A trader called Homex' 9½% notes due 2019 off 4 points at 66, while the 9¾% notes due 2020 dropped over 3½ points to 67 3/8.

Another trader said the 9¾% were off 10 points in after-market dealings, seeing them trade around 57.

Casas Javer's 9 7/8% notes due 2021 meantime fell 2½ points to 881/2, while Corporacion GEO SAB de CV's 9¼% notes due 2020 lost over 3 points, closing around 56.

GEO's 8 7/8% notes due 2022 declined nearly 2 points to 553/4.

And, Urbi Desarrollos Urbanos SAB's 9¾% notes due 2022 fell 2½ points to 32.

For the first quarter, Homex reported earnings of 95.27 million pesos, down from 729.97 million pesos the year before. Revenue was nearly cut in half, falling to 3.33 billion pesos from 6.18 billion pesos.

Moody's Investors Service cut its rating on the company following the earnings release.

For its part, Urbi has had some troubles of its own and GEO is currently in process of working out a debt restructuring.

Last week, Urbi said it was delaying a coupon payment on its 2016 bonds. On Thursday, the company acknowledged that it was being sued by GE Capital for a failure to pay contracts.

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