NII Holdings debt extends losing streak; Energy Future downgraded, bonds unfazed; Alcatel dips

By Stephanie N. Rotondo

Phoenix, Oct. 9 - Trading in the distressed bond arena was muted during the midweek session, as investors worried about the ongoing debacle in the federal government.

"I think everybody is trying to see if our fearless leaders will get their issues worked out," one trader said.

The trader also noted that a lot of focus was on T-Mobile's $5.6 billion five-tranche high-yield issue, which priced Tuesday.

The issuance was the second largest in the high-yield space for the year.

But of distressed dealings, NII Holdings Inc.'s debt remained under pressure, though sources were puzzled as to what was driving the bonds down. The paper has been on the decline all week and the only fresh news out is that the company intends to release earnings at the end of the month.

Meanwhile, Energy Future Holdings Corp., along with several subsidiaries, saw their ratings cut by Standard & Poor's on Wednesday, on fears a restructuring is imminent.

And, Alcatel-Lucent was softening as the French telecommunications company said it was cutting about 14% of its workforce through 2015.

NII Holdings down again

NII Holdings' debt was weaker for the third straight session, traders reported on Wednesday.

One trader said both the 7 5/8% notes due 2021 and the 10% notes due 2021 were off over a point, at 65¼ and 921/4, respectively.

Another trader placed the 7 5/8% notes around 66 and the 10% notes around 92.

There hasn't been any news to act as a catalyst for the recent decline. However, the Reston, Va.-based provider of Nextel mobile phone service in Latin America is slated to put out earnings later this month.

TXU downgraded

S&P cut Energy Future Holdings' corporate credit rating to CCC- from CCC on Wednesday.

The rating agency also cut the ratings of subsidiaries Energy Future Intermediate Holdings Co. LLC, Energy Future Competitive Holdings Co. and Texas Competitive Electric Holdings Co. LLC.

Following the action, traders saw the associated bonds falling, though volume was thin.

A trader pegged the 10% notes due 2020 linked to Energy Future Intermediate at 1051/4, which he said was off a touch. The 15% notes due 2021 linked to Texas Competitive Electric held in a 221/2, he said.

Another trader placed the 10% notes at 1053/4.

S&P said the rating revisions were based on the belief that a restructuring is imminent for the Texas Competitive and Energy Future Competitive units.

For its part, Texas Competitive has $23 billion of debt maturities over the next four years.

Among other power producers, a trader said AmerenEnergy Generating Co.'s 7.95% notes due 2032 and its 6.3% notes due 2020 were trading around 761/2. He also saw Edison Mission Energy's bonds at 543/4.

Alcatel cutting jobs

Alcatel-Lucent's 6.45% notes due 2029 were trading off as the Paris-based telecommunications company said it was cutting jobs in an effort to shore up costs.

A trader deemed the issue down a point at 861/4. Another market source saw the bonds at 86½ bid, which was also called down a point.

Alcatel plans to eliminate 10,000 jobs, or about 14% of its workforce, through 2015 as the company works on its $1.4 billion cost-cutting plan.

Previously, the bonds had been inching higher on chatter that Nokia Corp. was considering making a play for Alcatel's wireless business.

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