RadioShack CDS climb higher, bonds fall; Nokia gains as CEO buys stock; Clear Channel softens

By Stephanie N. Rotondo

Phoenix, July 31 - Distressed bonds were mixed Tuesday, as news acted as a catalyst to recently topical names.

RadioShack Corp. was again in the headlines, as the company's credit default swaps indicated an 84% chance of default within the next five years. The gain in default risk was notable, given that Eastman Kodak Co. and AMR Corp.'s CDS hit 84% within six months before the company filed for bankruptcy.

Meanwhile, Nokia Corp. was on the rise as the company's chief executive and a few directors reported buying up shares of the Finnish cellular phone manufacturer - something typically seen as a sign of confidence.

Clear Channel Communications Inc. is expected to report earnings on Wednesday. Investors are likely expecting the numbers to not meet expectations, given that paper was trading down on Tuesday.

RadioShack slips as CDS jump

RadioShack's CDS have recently climbed up, indicating an 84% chance of a default within the next five years.

The CDS jump is notable given that both Eastman Kodak and AMR's CDS was also at 84%, within six months before the company filed for Chapter 11 protections.

Already concerned investors were further spooked by the development and thus pushed the Fort Worth, Texas-based electronics retailer's debt lower.

One trader called the 6¾% notes due 2019 nearly a point weaker at 641/4.

Another trader quoted the issue at 63 bid, 64 offered.

Last week, RadioShack reported dismal quarterly results and a clear lack of vision for the company going forward seem to be increasing fears that the company will soon find itself burning through the $517.7 million of cash it has on hand.

Nokia up on stock purchases

Nokia's management gave a clear sign that it had confidence in its company Tuesday, as Stephen Elop, CEO, and several board members reported purchasing 1 million shares of stock.

"The purchases underscore the board and our leaders commitment to Nokia and confidence in our future," Nokia spokeswoman Susan Sheehan said in an email, the Wall Street Journal reported.

The confidence also encouraged investors.

A trader said the company's 5 3/8% notes due 2019 saw "late-day activity," in which the bonds gained nearly 1½ points to end at 78.

Another trader called the notes higher as well. He pegged the 5 3/8% notes at 78 bid, 79 offered and the 6 5/8% notes due 2039 at 76 bid, 77 offered.

Nokia has had a rough few quarters, as the company's telephonic devices attempt to compete with Apple and others in the wireless communications realm. The company is attempting to revive itself via cost-cutting efforts.

Clear Channel weak ahead of numbers

Investors might be expecting a poor quarterly performance from Clear Channel Communications on Wednesday, as they put pressure on the bonds during Tuesday trading.

A trader said the 10¾% notes due 2016 were down a deuce at 58, while the 11% notes due 2016 fell nearly 2 points to 571/4.

Another trader said the 10¾% notes were "down a couple [points]" at 58.

Clear Channel is a San Antonio-based multimedia company.

Broad market mixed

In other distressed credits, a trader said Springleaf Financial Inc.'s 6.9% notes due 2017 continued to rise, gaining a touch to close at 811/4.

Arch Coal Inc. was also firming again, the 7¼% notes due 2020 at 87 1/8.

A trader said that was up over 1½ points.

Another trader said ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 were "a little bit lower" at 383/4.

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