NII trades, though at lower volume; Thompson Creek up on stock upgrade; Dendreon converts firm

By Paul Deckelman

New York, Jan. 14 - NII Holdings, Inc.'s bonds continued to be among the more active issues in the junk bond and distressed-debt markets on Tuesday, traders said, although their volume paled in comparison with levels reached on Monday, particularly in the company's 2016 notes.

They were seen trading around, or just slightly below, the gains racked up on Monday on the news that the seller of Nextel wireless service in Latin America will be able to use Telefonica SA's networks in Mexico and Brazil to reach their customers in some remote locations, thus eliminating the need for a costly infrastructure buildout.

Thompson Creek Metals Co. Inc.'s bonds were seen firmer, in line with its shares, which surged on Tuesday after an analyst upgraded the molybdenum-mining concern's stock.

Verso Paper Corp. bonds were seen continuing to trade near the levels to which they had moved last week on the news the coated paper manufacturer will acquire sector peer NewPage Corp.

In the convertibles market, Dendreon Corp.'s paper stayed strong as its shares continued to gain after having surged Monday on positive preliminary sales figures.

But overall, traders said that activity was pretty dull.

NII volume slackens

A trader commented that "a name that was pretty active was NII Holdings. That was something that had an awful lot of volume over the last few days."

That was especially true on Monday, when the bonds and shares of the Reston, Va.-based seller of the Nextel wireless service in Latin America surged in heavy trading on the news that it had signed an agreement with a rival, the Spanish telecommunications company Telefonica SA, that will allow NII to distribute its service to customers in Brazil and Mexico - the two largest Latin American markets - over Telefonica's 3G wireless network.

That would spare NII the necessity of having to build out its own network in remote areas, a costly venture.

But while the volume in the bonds issued by the company's NII Capital Corp. subsidiary was sufficient to land them on the junk market's Most Actives list on Tuesday, it paled in comparison with Monday, when, for instance, its 10% notes due 2016 had rolled up more than $64 million traded, in rising some 5½ points to the 60 bid area.

"We had a little lower volume today," he said.

And he characterized the bonds as "holding," in terms of hanging onto most of the gains they had notched on Monday.

For example, he said the 10% notes "are holding right in that 58-59 range - that's where trades are taking place all day today. They were pretty much unchanged from yesterday."

He saw about $7 million to $8 million having traded.

He said that the company's 8 7/8% notes due 2019 were in the high 40s on Tuesday, around 46½ to 471/2, although there was "more size trading around 46 to 461/2. He saw "well over $10 million traded, at about where they had been. They jumped up from the low 40s to that low 46 range [on Monday], and they're holding."

A second trader, who also saw about $10 million of the 8 7/8s having traded, pegged them down 1½ points, at a last trade of 461/4.

Meanwhile, NII's 7 5/8% notes due 2021 traded at 461/2, down about ¾ point, on over $7 million of volume.

"There was still some activity in it," a third trader said."For the most part, it was trading around the [Monday] closing levels. - the 10s around 59, the 11 3/8% notes around 86, and the 7 7 /8% notes trading around 78.

Thompson Creek trades up

One of the traders said that Thompson Creek Metals' stock "was up a good bit; the bonds were trading a little bit better."

He saw its 7 3/8% notes due 2018 were trading at better levels, around 88 bid.

"The stock was up a ton on an analyst upgrade," as Bank of America Merrill Lynch raised it to a "buy."

"They were up something like 20-something percent at one point and finished up almost 20%."

The New York Stock Exchange-traded shares jumped by 39 cents, or 17.81%, to end at $2.58, on volume of 8 million shares, about five times the norm.

"You don't see those bonds trade too much - but they were trading up today."

Verso stays strong

Verso Paper's 8¾% notes due 2019 were seen by a trader staying in a 54-to-56 range "all day today. That's right where they've been - they were at the same spot yesterday. It's maybe 1 point down from last week, but pretty much unchanged from yesterday [Monday]."

He said $7 million or $8 million of the notes traded.

Even though the Memphis-based paper company's bonds were off from last week's levels, the trader noted that "at the end of last year, they were in the 30s, but they ran up on the NewPage news, and it's holding here in the 50s.

The bonds had surged last week on the news that Verso will acquire rival NewPage Corp. for $900 million, with debt assumption bringing the deal's value to $1.4 billion.

Dendreon trades up

In the convertibles market, Dendreon's 2.875% converts due 2016 moved up to 70 on Monday from about 65 to 66 late last week, a Connecticut-based trader said. They were about unchanged at those higher levels on Tuesday as well.

The company's Nasdaq-traded shares spiked 9% on Monday and extended their gains by another 1% on Tuesday, ending at $3.30.

The Seattle-based maker of the Provenge prostate cancer drug said that overall product revenue for the quarter jumped more than 10% from the previous quarter to $74.8 million, with growth in its oncology segment and more modest gains in urology.

Detroit developments seen

In the municipals market, investors were closely studying the latest developments to come out of the Detroit bankruptcy.

In a research note on Tuesday, Janney Montgomery Scott LLC managing director Alan Schankel wrote that "much new ground is being explored in Detroit's bankruptcy/recovery process."

He noted that one of the assets that has been listed for sale to whittle down the beleaguered city's billions of dollars of debt and other obligations has been its city-owned art collection, currently housed at Detroit's Institute of Art. The collection has been valued at anywhere from $454 million to $867 million.

However, Schankel wrote, "sale of this key city cultural component may have been averted with a plan announced by the judge who is leading mediation efforts between the city and its various creditors in the Chapter 9 proceeding underway in federal bankruptcy court. A group of Michigan philanthropic organizations, including the Ford Foundation, have pledged $333 million, with more contributions expected. Money raised would be used to offset some of the estimated $3.5 billion in unfunded city employee pension liabilities in exchange for enabling the city to forgo sale of the collection as part of an overall city restructuring plan."

Overall market quiet

Overall, traders noted how quiet the distressed-debt precincts were.

"There were not many distressed names on my pad," one said, adding "such is life, when rates are where they are."

A second trader saw "not a lot of interest today."

Another said "there weren't a lot of really active names.

"The market is just not that exciting - we need something to shake it up a little bit."

Rebecca Melvin and Sheri Kasprzak contributed to this review.

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