LatAm market keeps wary eye on debt-riddled NII Holdings

Fri Mar 7, 2014 10:57am EST

LONDON, March 7 (IFR) - The LatAm market is keeping a nervous eye on NII Holdings after the mobile telecoms company, which is carrying US$4.35bn in outstanding debt, said it has liquidity problems that may affect its ability to meet obligations.

That could herald a whopping corporate restructuring - even larger than the US$3.6bn move by OGX - and its bonds have been paying the price in the market.

Its 10% 2016s were seen at 49.50 mid-market on Friday, down from 104.50 last May, while its 11.375% 2019s were spotted at 72.50 mid-market. That bond was as high as 111.75 in June.

The company's most liquid instrument, the 2021s, were spotted at 35.00-40.00 on Friday morning after hitting highs of 94.00 last May.

"We have never liked this company and never recommended it to our clients," one senior trader told IFR. "These levels are default levels - they're not even high-yield levels."

NII Holdings said in a statement that there were "concerns regarding the company's liquidity" and that it potentially may not "satisfy certain financial covenants under its existing operating company debt obligations in 2014".

The company had a 22% drop in quarterly revenue. Operating revenues for the year fell by 16.3% while its net losses spiked to US$1.65bn in 2013 from US$765m in 2012. Operating expenses fell 27%. It ended the year in 2013 with US$5.8bn in total debt and US$2.4bn in consolidated cash and investments, resulting in US$3.4bn of net debt at year end.

"While we are confident that we can improve our business over the long-term, our recent disappointing results have significantly impacted our liquidity position," CFO Juan Figuereo said in the fourth-quarter earnings conference call last week.

"It was no surprise to me that they delivered such bad results," said a senior emerging market portfolio manager.

"The company said in its call it would be analyzing all options, including a possible restructuring of its debt. It seems a long time coming to me, but it could be one of the biggest restructurings if it comes to that - and a lot of investors are involved."

NII Holdings is largely focused in Brazil, Mexico, Argentina, Peru and Chile but has corporate headquarters in Reston, Virginia.

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