Exide bonds hang in as CEO resigns; Homex weaker on earnings miss; OGX dips as exchange mulled

By Stephanie N. Rotondo

Phoenix, July 26 - The distressed debt market finished the week with a mostly softer tone, traders reported Friday, though some names managed to buck the trend.

Exide Technologies Inc.'s bonds were holding at recent levels, despite news of the resignation of the company's president and chief executive officer.

Meanwhile, in the distressed emerging market arena, Desarrolladora Homex SAB de CV debt dropped several points on the day after the Mexican homebuilder reported dismal earnings.

OGX Petroleo & Gas Participacoes SA was also down, giving back some of the gains earned earlier in the week. The decline came as it was reported that majority-shareholder Eike Batista was considering a potential distressed debt exchange.

However, Chilean grocery store operator SMU SA saw its bonds rising a deuce, even as it was downgraded by Moody's Investors Service.

Exide steady on CEO exit

Exide's 8 5/8% notes due 2018 were "about the same," a trader said, as the company's president and CEO tendered his resignation.

The trader pegged the bonds at 59.

"Nothing really traded despite the news," another trader said, stating that the debt was "still in the high-50s."

James Bolch's exit will take effect on Wednesday. Robert Caruso, chief restructuring officer, will assume Bolch's roles.

Additionally, Ed Mosley will take over Caruso's position. Mosley and Caruso work together at Alvarez & Marshal.

Exide, a Milton, Ga.-based battery manufacturer and recycler, filed for bankruptcy protections last month.

Homex numbers disappoint

Homex debt dropped as much as 4 points on the day after the company released its quarterly results.

A trader saw the 9¾% notes due 2020 falling the most, slipping all the way to 27 from 34 before going out closer to 29.

The 9½% notes due 2019 were meantime down 1½ points at 301/2.

Homex reported a net loss of 10.1 billion pesos, or $794 million. Analysts polled by Bloomberg had been expecting a loss of just 29 million pesos.

Revenue declined 84% to 1.1 billion pesos.

Homex, along with sector peers Corporacion GEO SAB and Desarrollos Urbanos SAB, has struggled this year, as the Mexican government has supported an increase in multi-family dwellings instead of single-family homes.

The housing industry is largely subsidized by the government and its policy shift has caused uncertainty throughout the sector.

All three companies have hired advisors to restructure their debt.

For its part, Urbi saw trading of its common stock suspended by Mexican regulators on Friday, as the homebuilder failed to report its quarterly earnings in time. GEO postponed its release, but its stock continued to trade.

OGX gives up gains

OGX's 8½% notes due 2018 traded off 1½ points to 211/4, according to one trader.

But another trader said the debt was "about where it's been," trading in a 21 to 22 ZIP code.

"It was not overly active," the second trader remarked.

Bloomberg reported Friday that Eike Batista has been meeting with potential partners to fund a distressed exchange of the notes at as much as 30 cents on the dollar.

The news outlet said the buzz was first reported on Wednesday in newspaper Folha de S.Paulo.

Earlier in the week, OGX paper had rallied from its July 18 lows around 131/2, on chatter Batista was looking into potential asset sales. An opinion piece written by Batista and published in a Brazilian publication also helped, as Batista said he intended to honor all of his debts.

Moody's cuts SMU

SMU's 7¾% notes due 2020 put on a deuce, a trader said, despite getting downgraded by Moody's.

The bonds closed around 711/2.

Moody's said it cut SMU's corporate family rating to B3 from B2, citing a weakening credit profile.

The ratings remain on review, given recent management changes and a review of the company's ongoing strategy.

Distressed names weaken

Elsewhere in the distressed space, a trader said Affinion Group Inc.'s 11 5/8% notes due 2015 inched up 1½ points to 49.

The trader also saw Momentive Performance Materials Inc.'s 11½% notes due 2016 declining a deuce to 79.

"Lyondell [a fellow chemical manufacturer] had earnings that missed," another trader said. "[The bonds] might have leaked a little in sympathy."

Another trader said the bonds were "a smidge weaker," though he said the slip was "in line with the whole market."

The trader pegged the 11½% notes in the high-70s and saw the 9% notes due 2021 at 901/4.

Overseas Shipholding Group Inc.'s 8 1/8% notes due 2018 finished the session a little stronger, a trader said, seeing the issue moving up to 921/2.

And, Nortel Networks Ltd.'s 10¾% notes due 2016 and the 10 1/8% notes that were to have matured on July 15 continued to inch higher, ending around 114 5/8.

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