Nokia bonds post gains as company reports profit; Nortel Networks declines as mediation falters

By Stephanie N. Rotondo

Phoenix, Jan. 24 - Distressed bonds were "dribbling up," a trader said on Thursday, though investors were mainly focused on higher-quality issues and new deals.

Nokia Corp. was the nom du jour after the company reported a quarterly profit. While the bonds were up on the news, the stock was down over 8% as sales of the Lumia phone failed to excite.

Meanwhile, Nortel Networks Corp. was trading weaker during the session, even before late-day news emerged regarding the company's mediation process. Nortel had entered mediation in order to split up $9 billion among its insolvent global units, but failed to reach an agreement.

And, Geokinetics Inc. was deemed firmer on the day. The market is currently awaiting a pre-packaged bankruptcy filing from the seismic data provider.

Nokia rises with earnings

Nokia's debt was on the rise on Thursday after the company reported its first quarterly profit in nearly two years.

One trader called the 5 3/8% notes due 2019 up over half a point at 99 3/8, while the 6 5/8% notes due 2039 rose over a point to 951/2.

The trader remarked that the paper was up more intraday, but settled back in to the closing levels.

Another trader called the name "pretty active," seeing the 2019 securities at 99½ and the 2039 issue at 951/2.

However, the company's stock (NYSE: NOK) dropped 38 cents, or 8.19%, to $4.26, as sales of the company's latest Lumia phone failed to encourage investors.

For the last quarter of 2012, the Finnish telecommunications manufacturer reported a profit of €202 million, which compared to a loss of €1.1 billion the year before.

Sales were down 20%, mostly due to a phase-out of older smartphones.

Sales of the new Lumia line improved in the fourth quarter to 4.4 million units, compared to 2.9 million units in the third quarter. However, sales of Apple iPhone and Android phones dramatically beat out the Lumia line, which runs on Microsoft's Windows 8 platform. Investors were disappointed by those numbers, given the amount of marketing that both Nokia and Microsoft had done.

The company also said that it would nix dividend payments in 2013 in order to shore up liquidity. The effort is expected to save €750 million.

Nortel mediation fails

News out late on Thursday indicated that Nortel Networks' mediation had not gone well.

A trader said that the 10 1/8% notes due 2013 and the 10¾% notes due 2016 were weaker prior to the news coming out, pegging them at 116 bid, 116½ offered.

After-market dealings had the issues trading in a 110 to 112 context post-news.

Nortel has been laboring in bankruptcy for the last four years and its third and most recent mediation attempt failed to produce a liquidation settlement regarding the remaining $9 billion of assets. The mediation included bondholders and company retirees from the United States, Canada and the United Kingdom.

Geokinetics pushes up

Geokinetics' 9¾% notes due 2014 were trading up to levels around 58, according to a trader.

But another trader said there was little going on in the name.

"It's a small deal that just doesn't trade much," he said. "Only odd-lots traded today."

The Houston-based company missed a coupon payment on Jan. 15. Last week, the company said it had reached an agreement with more than 70% of bondholders that would allow the company to shed over $300 million of debt via a pre-packaged bankruptcy filing.

A trader opined that the filing would probably come closer to the end of the 30-day grace period, if not at the last minute.

More gains for distressed

In the rest of the distressed arena, Caesars Entertainment Corp.'s 10% notes due 2018 were up a point at 701/2, according to a trader.

Another trader said MF Global Futures Ltd.'s 6¼% notes due 2016 were stronger at 67.

Eastman Kodak Co.'s 9¾% second-lien notes due 2018 were meantime slightly higher, as the company received approval on its debtor-in-possession refinancing agreement on Wednesday.

A trader quoted the issue at 82 bid, 83 offered.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.