The cable sector continued to dominate trading, though slightly less than in the previous week. New issue activity picked up as deals fromRoundy's,Sybron DentalandTrico Marineall traded up after issue. Here was other selected action.
Tesoro Petroleum Corporation saw its 9.625% notes of '08 (B2/B+) improve from 91 to 94 last week through Thursday. Nate Kehm, portfolio manager at Federated Investors, believes the rise was largely due to short covering by hedge funds after news surrounding the recently completed acquisition of a refinery quashed rumors that the company had liquidity troubles.
Nextel Drops, Bounces After Moody's Downgrade
Nextel Communications saw its 9.375% notes of '09 (B3/B) drop from 68 to 63.5 after a downgrade from Moody's Investors Service. The bonds had recovered to 66.5 by Thursday afternoon. Andy Green, telecom analyst at Wachovia Securities, says the bonds' quick recovery shows the downgrade was widely expected. He says the Moody's write-up that accompanied the action was not as negative as those that have followed other recent telecom downgrades by the agency.
Qwest Bonds Drop As S&P Cuts Rating To Junk
Bonds of Qwest Communications were down 1-2 points on Thursday after Standard & Poor's cut its rating to junk. The holding company debt, the Qwest Capital Funding 7.25% notes of '11 (Baa3/NR) went out last Thursday at a 71.5 bid, while the Qwest Corp. 8.875% notes of '12(Baa2/BB+) held at the firm's old US West operating company level fell to a 94 bid.
Anthony Klarman, telecom analyst at Deutsche Bank, recommends the operating company debt as the most valuable assets remaining after Qwest's sale of its directory business could be sold to pay the holders of those bonds in the event of a liquidity crunch.
Telecommunications firm Broadwing saw its trust preferred securities plummet from 45 to 20, due to what traders say were the disturbing revelations of high leverage in a recent 10Q report.