Clearwire extends recent climb; Kodak active at lower pricing; Exterran up on earnings

By Rebecca Melvin

New York, Feb. 23 - Clearwire Corp.'s convertibles continued their recent uptrend Thursday, gaining another couple of points on an outright basis, on steam seemingly provided by dimmer prospects for the high-speed internet service that LightSquared Inc. is attempting to provide to customers using airwaves previously reserved for satellites, market players said.

Eastman Kodak Co.'s convertibles were active and lower by 3 or 4 points, but in line with Wednesday's auction to settle credit default swaps referencing the company at a final price of 23.875.

Elsewhere, a windfall of earnings news from companies with convertibles failed to generate a generous amount of activity in those names. But Exterran Holdings Inc. was an exception and got a boost in terms of trade and pricing after the Houston-based oil and natural gas equipment and services company reported a narrower fourth-quarter loss that was better than expected.

Radian Group Inc.'s convertibles were steady to lower as shares gyrated early in the session - ending near their lows for the day - after the Philadelphia-based mortgage insurer posted a narrower quarterly loss.

NuVasive Inc. was weaker after the San Diego-based medical device maker reported mixed earnings after the market close on Wednesday.

"There was no flurry of activity after earnings," a New York-based analyst said of the NuVasive convertibles. "As long as the results are in line, bondholders are not terribly interested."

Clearwire extends climb

Cleawire's 8.25% convertibles due 2040 traded early Thursday at 69 bid, 69.25 offered, which was up a couple of points from previous levels. Later the bond traded higher at 69.25 bid, 70 offered, a New York-based trader said.

Shares of the Kirkland, Wash.-based wireless broadband services provider rose 14.5 cents, or 7%, to $2.265 in heavy volume.

"I'm not sure what is driving Clearwire today. I guess they've been doing better since LightSquared met its maker," a New York-based convertibles player said.

Clearwire, a subsidiary of Sprint HoldCo LLC, stands to benefit from fewer competitors in its field as it struggles financially to build out its network.

On Wednesday, the Clearwire convertibles were marked at 66 bid, 67.5 offered, and on Feb. 10, the Clearwire convertibles were at 63.

"Clearwire is trading a lot and quoted up," a trader said during the session.

The only possible catalyst cited by sources for the move was the barrage of bad news affecting would-be competitor LightSquared, which was reported on Monday to have failed to pay a $56.3 million installment to Inmarsat plc for a spectrum accord.

The default came on the heels of news that U.S. regulators are withdrawing its previously granted approval for LightSquared's network.

Last week, the U.S. Federal Communications Commission said it would withdraw preliminary approval previously granted and instead block LightSquared's attempts to build a high-speed network after finding that the wireless venture would disrupt navigation gear.

The Reston, Va.-based company said at the time that it would fight the decision. Nevertheless a group of investors also on Friday filed a lawsuit against Harbinger Capital Partners and its head Phil Falcone over a $3 billion investment in the venture.

Kodak trades lower

Kodak's 7% convertibles due 2017 traded mostly between 23.875 and 23.9375, although there were trades in a much wider range. The bonds were previously 27.

"Kodak was all over the place," a trader said.

The Creditex Group Inc. and Markit Group Ltd., joint administrators of credit event fixings for the International Swaps and Derivatives Association, Inc., administered an auction of credit default swaps referencing Kodak debt at a final price of 23.87.

Kodak, a Rochester, N.Y.-based imaging technology products and services provider to the photographic and graphic communications markets, filed for bankruptcy on Jan. 19.

Exterran adds

Exterran's 4.25% convertibles due 2014 traded at 100.192, which was up 2.129 points, according to Trace data.

The bonds had been trading generally on a 25% delta, but on Thursday they appeared to have traded on a 30% to 37% delta, a New York-based trader said.

The modest rise in the convertibles contrasted to a surge in Exterran shares, which gained 19% to $14.44.

The company posted a narrowed fourth-quarter loss and outlined workforce reductions that will save the company $20 million to $25 million a year.

"The Exterran 4.25% convertibles were much more active than unusual. People obviously got excited about [the earnings], but honestly I don't think it was very impressive and I don't think the company is very impressive," a trader said, citing the sector as competitive with slim prospects for growth.

Exterran reported a narrowed fourth-quarter loss to $66.6 million, or $1.06 per share, compared to a loss of $118 million, or $1.90 a share, in the year-earlier period.

The company's adjusted loss was 14 cents a share in the latest quarter, which was better than the 44 cents a share that analysts expected. Exterran revenue increased to $702.9 million from $616 million, which was better than the $629 million analysts expected.

Radian flat to lower

Radian Group's 3% convertibles due 2017 were seen at 63 to 64 during the session on Thursday, which was flat to lower on Wednesday's level, although these bonds have gotten better in the last several weeks, a New York-based trader said.

Shares of the Philadelphia-based mortgage insurer traded down to $3.76, which was off 13.75 cents, or 3.5%, in heavy volume.

For the fourth quarter, Radian posted a loss of $121.5 million, or 92 cents per share, compared to a net loss of $1.1 billion, or $8.55 per diluted share in the same period of 2010.

Radian expects to continue to post a loss in 2012 as claims from lenders continue to be made.

"Radian reported this morning, and the convertibles were trading around 63, which is kind of where they were. Maybe slightly better with the stock being up, which is where they looked like they were going to open, but now it's a little weaker," the trader said.

NuVasive lower

NuVasive's 2.75% convertibles were seen last "wrapped around 86," an analyst said, which was down compared to 86.25 bid, 87.75 offered at the end of the day on Wednesday.

NuVasive's 2.25% convertibles were not heard in trade but were 98 bid, 99 offered on Wednesday.

NuVasive shares ended the session down 44 cents, or nearly 3%, to $15.02 in heavy trade.

The company reported quarterly earnings that beat estimates by 5 cents and revenues that were in line. It guided below estimates for 2012 earnings, and shares were unchanged in after-hours trade.

"Unless earnings missed, it's not going to be a big factor for some of these credit sensitive names," an analyst said.

Mentioned in this article:

Clearwire Corp. Nasdaq: CLWR

Eastman Kodak Co. Pink Sheets: EKDK

Exterran Holdings Inc. NYSE: EXH

NuVasive Inc Nasdaq: NUVA

Radian Group Inc. NYSE: RDN

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