NII Capital bonds recoup some of previous day's losses; Ambac debt rises on ruling for Assured

By Stephanie N. Rotondo

Phoenix, Feb. 6 - It was a mostly firm day for distressed bonds on Wednesday.

Even NII Capital Corp. - which had lost 5-plus points in the previous session - saw a bit of a rebound during midweek trading.

Also rising were Ambac Financial Group Inc.'s bonds. The gains came after it was reported late Tuesday that a New York judge ruled against Flagstar Bancorp Inc. and in favor of Assured Guaranty Ltd. Assured Guaranty had brought the suit against the bank, accusing it of misrepresenting the quality of mortgage-backed securities.

The ruling was deemed as positive for Ambac and others of their ilk, as several bond insurers now have lawsuits pending for similar reasons.

NII recovers some losses

A trader said that NII Capital's debt "started to rebound" on Wednesday, after "getting roughed up" in Tuesday trading.

He saw the 8 7/8% notes due 2019 moving up over a point to 751/2, while the 10% notes due 2016 rose 2½ points to 92.

However, the 7 5/8% notes due 2021 slipped a touch to 691/2.

NII Capital's debt took a big hit Tuesday after the company released a revenue forecast for 2013 that was disappointing.

The Reston, Va.-based provider of telecommunications in Latin America said it expected to see revenues of $5.7 billion to $5.9 billion. Analysts polled by Bloomberg were expecting an average of $6.1 billion.

The company also said that it was launching an offering of $400 million in bonds due 2019. Proceeds from the offering will be used for general corporate purposes, which may include network expansions and upgrades.

Ambac up on Assured ruling

News of a favorable ruling for Assured Guaranty in its case against Flagstar Bancorp gave Ambac Financial's bonds a boost.

"It was the biggest news of the day," one trader said, pegging Ambac's debt around 54, versus previous levels around 50.

Assured Guaranty has brought the suit against Flagstar, alleging that the bank had misrepresented the quality of mortgage-backed securities it was sold.

Flagstar was ordered to pay Assured $90.1 million.

The news bodes well for Ambac, which is pursuing similar charges against other banks.

Broad market ends stronger

Elsewhere in the distressed realm, a trader said ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 were holding in a 3 to 3½ context.

Ameren Energy Generating Co.'s 7.95% notes due 2032 were meantime down at 58 bid, 59 offered.

Back on the upside were Overseas Shipholding Group Inc.'s 8 1/8% notes due 2018, which gained 3 to 4 points on the day, according to a trader.

He pegged the issue at 43 bid, 44 offered.

And, Dex One Corp.'s 12% PIK notes due 2017 closed around "41-ish."

"That's up a few points since the last time I saw a round-lot trade," a trader said.

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