Approximately £8.5 million of Drax's A2-A3 tranche was auctioned off last week in two separate sales. The price was 142 and Bank of America was cited by a banker and investor as the dealer. A portfolio manager said the company's improved debt trading levels and the possibility of obtaining an equity stake in Drax are reasons for the market's interest in the power company.
"A lot of the original banks would have written down the debt in the 80s or 90s, now they can get 140," he said. "There is an equity component, when you buy debt you also get equity, and the valuation for generators like Drax has gone up significantly during the last week," the manager added. A trader mentioned improved coal prices as another factor that has pushed up the levels. B of A officials could not be reached by press time.