Alcatel-Lucent Bonds Fall as Recovery Falters

Investors are dumping Alcatel-Lucent SA ’s bonds and pricing in a three-step credit downgrade, losing confidence Chief Executive Officer Ben Verwaayen can return France’s biggest phone-equipment supplier to profit.

Its 500 million euros ($643 million) of 8.5 percent notes due in January 2016 have fallen 6.2 percent since the company said July 17 it would miss a profitability target.

Credit-default swaps on the firm, whose sales have fallen in three of the past four years, now imply a 74 percent chance of default within five years. Five months ago, the swaps pointed to a two-level credit upgrade.

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