The market was flying last week, with a lot of secondary activity resulting from start-of-the-year money and the January effect. Last week's action was perhaps the strongest opening to a new year in as many as 10 years, and was a result of strong technicals. Combined with a general excitement for high yield credit, the junk market tightened last week. Here were some notable movers.
Williams Cos. Jumps
The bonds of Williams Companies' 8.75% notes of '32 hit 116 by late Thursday, up about five points from the end of last year. There was no company-specific move that would have fueled the rise, according to one head trader, who speculates the gain was more likely to do with a positive tone to the market as a whole.
Utility Bonds Light Up Market
AES Corp.bonds tightened with its benchmark 9% notes of '15 trading at 114.5, up about 2 points on the week. Greg Sullivan, head of sales at BNY Capital Markets, notes that the energy utility industry has been hot recently due to a perception that its bonds are undervalued. According to Sullivan, these bonds were trading at half the price a year ago. "People still feel there is an upside there," he says.
Nextel Radios For Gains
Nextel Communicationswas also "on fire," according to Sullivan. Its 6 7/8% notes of '13 were up 3.25 points on the week at 107.75. Sullivan attributes the move to the broader telecom market, which he says is hot. In particular, Nextel is highly regarded by most buy-side accounts, which could explain its tightening beyond just the overall positive tone of the market last week.