Exide bonds remain pressured; GEO takes a wallop, Homex rebounds; Alcatel steady post-earnings

By Stephanie N. Rotondo

Phoenix, April 26 - Distressed bonds were still mostly firm as the week came to a close, with a few notable exceptions.

Exide Technologies Inc. paper remained under pressure, losing another 4 points on the day. The bonds have been steadily declining all month, but came under further pressure during the week on news of a battery recycling plant closure.

Meanwhile, among emerging market names, Corporacion GEO SAB de CV's debt took a beating as investors reacted to the Mexican homebuilder's quarterly results, which came out late Thursday.

Sector peer Desarrolladora Homex SAB also reported Thursday and took as much as a 10-point hit. But Friday saw the bonds attempting to regain some ground.

Alcatel-Lucent (USA) Inc. put out earnings on Friday. Despite posting its fourth consecutive quarterly loss, the company's debt was little changed on Friday.

Exide beaten down again

Exide Technologies' bonds continued to slide Friday, following news out earlier in the week regarding a battery recycling plant closure in California.

State regulators forced the plant's closure due to a hazardous waste leak.

A trader called the 8 5/8% notes due 2018 "down another 4 points" at 65.

The Vernon, Calif.-based plant had been leaking hazardous wastes that included arsenic emissions for some time, regulators said, due to a degraded pipeline.

The leak is not the first violation the facility has ever had. But state government officials have allowed the plant to operate on an "interim basis," despite repeated violations that include lead contamination and groundwater contamination.

Exide has reportedly allotted $10 million for the clean up efforts, but watchdog groups are concerned that will not be enough.

Exide is based in Milton, Ga.

GEO drops, Homex rallies

Corporacion GEO's bonds got slammed Friday after the company reported disappointing earnings for the first quarter.

A trader said the 9½% notes due 2020 dropped 12 points, closing around 46.

"Those things just can't get out of their own way," he said.

The 8 7/8% notes due 2022 were meantime down 6 points at 47.

Revenues dropped nearly 50% to 2.78 billion pesos from 4.48 billion pesos.

Net loss was 146.3 million pesos, compared to a profit of 279.8 million pesos the previous year.

For its part, GEO's sector peer Homex was trying to recoup some ground after falling dramatically in the previous session on the back of its earnings.

A trader saw the 9¾% notes due 2020 rising 3 points to 60, while the 9½% notes due 2019 were up 6 points at 61.

For the first quarter, Homex reported earnings of 95.27 million pesos, down from 729.97 million pesos the year before. Revenue was nearly cut in half, falling to 3.33 billion pesos from 6.18 billion pesos.

Moody's Investors Service cut its rating on the company following the earnings release.

Alcatel hangs in

Alcatel-Lucent paper held its ground Friday, despite the French telecommunications networking company reporting its fourth consecutive quarterly loss.

A trader said the 6.45% notes due 2029 were unchanged on "only a couple of trades," around 771/4.

For the quarter, Alcatel posted a net loss of €353 million, which compared to a profit of €259 million the year before.

Sales dropped 0.6% to €3.23 billion. However, that was better than what analysts were expecting.

Still, operating loss was wider than the company had forecast at €202 million. But it was narrower than the previous year's loss of €298 million.

Free-cash flow was -€533 million. The larger cash burn was attributed to restructuring costs.

NII, J.C. Penney gain

Among other notable distressed names, NII Holdings Inc.'s debt continued to gain after the market learned Thursday of a pending asset sale.

A trader saw the 8 7/8% notes due 2019 rising a deuce to 933/4, while the 7 5/8% notes due 2021 held in at 88.

The 10% notes due 2016 inched up a point to 1023/4.

J.C. Penney Co. Inc.'s 7.95% notes due 2017 were also stronger, putting on over a point to close at 951/4. The improvement came as George Soros took on an over 7% stake in the company.

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