Nokia Bonds Have Run Up, Look to Exit


Michael Terry – Seeking Alpha

August 28, 2012

As many readers know, I have written a couple of articles on Nokia’s (NOK) bonds as they have been an overlooked way to position the troubled telecom. Just to recap some of my opinions:

June 6, 2012: “If you really like the company and think everyone has gotten it wrong — buy the bonds and let the coupon pay for longer dated call options, or hedge with bonds and puts.”

June 28, 2012: “Ultimately, I continue to believe that investors who want exposure to Nokia might consider the bonds and possibly a call option.”

July 20, 2012: “The company continues to be focused on managing for cash and NSN has continued to add value to cash and to overall results, both of which are a positive and should help support bond prices. I continue to believe that the best way to position this company is through the 2019 debt (unfortunately, I don’t have pricing for the EUR issues), as the yield is 10% and there is significant upside should the company get through their transition sooner than later.”

If we look at a graph of the NOK 5.375% 2019 (CUSIP: 654902AB1), we see the following price action (Source: FINRA Trace):

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