NII bonds, shares gain on product rollout; distressed market quiet amid northeastern snowstorm

By Paul Deckelman

New York, Jan. 21 - Traders said the distressed-bond market - like the overall high-yield bond realm - was relatively quiet on Tuesday, with most activity stymied by a fast-moving weather system that threatened to dump as much as a foot of snow on New York and other northeastern business centers, combined with a sharp fall in nominal temperatures and an even sharper slide in wind-chill readings.

They said the impending storm sent many participants heading for the exits early in the session.

As it was, things were relatively quiet anyway, even without weather-related factors, as participants straggled back into their offices and got re-acclimated after a three-day holiday weekend that saw U.S. debt markets closed on Monday for the Martin Luther King Day observance.

Among the names that were seen doing anything, several different issues of NII Holdings, Inc.'s bonds were seen having gained solidly in fairly heavy trading, in line with a rise in the international wireless provider's shares and helped by the latest in a recent string of corporate announcements, this one involving the rollout of a new cellphone app aimed at customers in the United States as well as its usual Latin American turf.

Elsewhere, there was fairly brisk trading - but little real movement - in Caesar's Entertainment Corp.'s legacy Harrah's Operating Co. bonds.

In the retailing world, RadioShack Corp.'s bonds were seen better, along with the electronics store chain's shares, although there seemed to be no fresh news out on the company.

But a trader said that J.C. Penney Co. Inc.'s bonds continued to weaken in the wake of the company's mostly unconvincing recent assertions that it is pleased with its turnaround progress.

In the convertibles arena, NQ Mobile Inc. gained ground, as recent investor jitters about the mobile internet services company appeared to be subsiding.

NII bonds trade up

A trader said that NII's bonds "seemed a bit better today," quoting the Reston, Va.-based company's 8 7/8% notes due 2019 as having moved up to around the 50 bid level, while its 7 5/8% notes due 2021 gained 1½ points, to go out at 46 bid.

A market source at another desk said that the company's NII Capital Corp. bonds were among the biggest gainers and most actively traded junk issues on Tuesday. For instance, he saw its 10% notes due 2016 jump as much as 3 points on the day to go home at 65¾ bid on volume of over $24 million.

He also saw the 7 5/8s gain 1 3/8 points to finish at 45 7/8, with over $13 million of those bonds having changed hands.

And he saw the 8 7/8s up some 2½ points, at 50¼ bid, on volume of over $8 million.

Another source said there was "active institutional buying this morning."

The rise in the bonds replicated a jump in the company's Nasdaq-traded shares, which rose by 14 cents, or 4.66%, to end at $3.12 on volume of some 18.9 million shares, more than three times the norm.

NII's paper got a boost as the company, which sells wireless service in Latin America under the Nextel brand, announced that its PRIP Push-to-Talk app would be available on iPhones in the United States. It already has a version of the app out that is compatible with the popular Android phones.

It was the third significant announcement in the past 10 days from NII. On Friday it declared that it has entered into an agreement with Apple Inc. that will allow NII to offer Apple iPhone 5S and 5C to its Nextel customers in Brazil as early as the end of this month.

And last Monday, NII said it had inked a pact with Spanish telecom company Telefonica SA that will allow it to use Telefonica's existing 3G networks in Mexico and Brazil, saving itself the necessity of a costly infrastructure buildout to reach remote customers.

Caesars seen busy

A trader said that the Harrah's Operating 10% notes due 2018 saw some action on Tuesday, with round-lot dealings of over $7 million.

However, those bonds - assumed by Las Vegas-based casino giant Caesars Entertainment when it bought Harrah's several years ago - were little changed, ending around 51½ bid.

Mixed bag for retailers

Among the credits in the recently underperforming retailing sector, a trader said that Radio Shack's 6¾% notes due 2019 were up a little on the session, at 58½ bid, 58¾ offered.

He said that "it seemed like they traded up a little on Friday, but still went higher."

There was no fresh news seen out about the Fort Worth-based electronics store chain operator.

And while Radio Shack was improving, the trader said that J.C. Penney's longer-dated paper, like its 7.4% bonds due 2037, traded down around the 70 mark. That paper had been around 71½ or 72 bid last Thursday, "so J.C. Penney continues to get weaker."

The underperforming Plano, Texas-based department store operator last week released a status update, in which its management said that it was pleased about how it's doing - but, investors complained that the statement was short on actual concrete data points that would prove the company's claims. Its stock dropped 10% that day.

NQ Mobile improves

In the convertible bond market, traders watched NQ Mobile Inc.'s converts, which improved by about a point on the day, and shares of the Beijing- and Dallas-based mobile internet services company. NQ Mobile's 4% convertibles due 2018 were up about a point at 82 bid, 84 offered, with the company's shares in the $16.50 area, a trader said.

Shares actually jumped a little higher, gaining $1.46, or 9%, to $17.07.

The NQ convertibles have improved, a New York-based trader said, adding that "fear in the name is dissipating."

NQ Mobile sold $150 million of the notes on Oct. 9, only a couple of weeks ahead of a report on Oct. 24 by Muddy Waters LLC, a Hong Kong-based research firm, alleging that the company was engaged in "massive fraud." The company denied the accusation, but the criticism sent the new issue down to around half of par value.

Rebecca Melvin contributed to this review.

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