RadioShack results disappoint, bonds fall; OGX rises on asset sale talk; Nortel still climbing

By Stephanie N. Rotondo

Phoenix, July 23 - There was "some new issue focus" in the market on Tuesday, according to a trader, leading to lackluster volumes in the distressed bond arena.

"That was definitely a distraction for the markets today," the trader said.

However, investors could not ignore RadioShack Corp.'s "pitiful earnings," as one trader put it. The quarterly results resulted in a 3- to 4-point drop in the bonds, despite the company's assertion that it will be paying off its Aug. 1 maturity in cash.

On the upside were OGX Petroleo & Gas Participacoes SA's bonds. A trader said the gains were due to talk that the struggling oil company was looking into asset sales.

Though trading in the distressed space was not all that active, the recent strength remained.

A trader said Ameren Energy Generating Co.'s debt was stronger, the 7% notes due 2018 at 84 and the 7.95% notes due 2032 at 78.

MF Global Holdings Ltd.'s 6¼% toggle notes due 2016 were also firming, as a trader pegged the issue at 45½ bid, 46 offered.

And Tousa Inc.'s 9% notes that were to have matured in July 2010 traded around 63 during the session.

"I've not seen that [name] in a very long time," a trader said.

RadioShack's earnings miss

RadioShack posted a wider-than-expected loss on Tuesday, but said it intended to pay an upcoming maturity in cash.

A trader saw the company's 6¾% notes due 2015 trading in a range of 72 to 74 all day, with the paper going out at 72 bid, 73 offered.

He called that down about 3 to 4 points from Monday levels.

Another trader said the debt was off "almost" 4 points, closing around 721/2.

For the second quarter, the electronics retailer reported a loss of $53.1 million, or 53 cents per share. That compared to a loss of $21 million, or 21 cents per share, the year before.

Analysts polled by Thomson Reuters were expecting a loss of 24 cents per share.

Same-store sales slipped half a percent during the quarter to $845 million. The company attributed the dip to store closures.

Liquidity, however, was somewhat ample at $818 million. Total debt was $713 million, including $214 million of convertible notes that come due Aug. 1.

Along with its earnings, RadioShack also said that it had appointed turnaround expert Holly Etlin of AlixPartners as its interim chief financial officer.

OGX rises on sale buzz

A trader said talk of potential asset sales helped to give OGX bonds a boost.

Another trader placed the 8½% notes due 2017 around 20, which was "up a few points," he said. A third trader called the issue "active," and up 3 points at 20.

That trader also saw the 8 3/8% notes due 2022 rising nearly 3 points to 19.

Both issues were the day's big winners, the trader said.

OGX is a Brazilian-based oil producer majority-owned by Eike Batista.

Nortel noses up

Nortel Networks Ltd.'s bonds have been on a tear recently, though there has been no fresh news to act as catalyst.

A trader said the debt "continues to move up," seeing the 10¾% notes due 2016 at 114.

Another trader called the paper "up a little bit," also around the 114 mark.

Nortel is a Canadian manufacturer of telecommunications equipment. The company is currently operating under bankruptcy protections.

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