Tyco International paper is being called a bargain after a Wall Street Journal article last week caused its bonds to widen. The article cited an obscure newsletter called SEC Insight, which discussed allegations of an impending Securities and Exchange Commission investigation. Tyco's 5.5% of '08 euro-denominated bonds widened by 10 basis points to about 135-145 over German bunds. The bonds usually trade between 120 and 130 over. The company's 5.8% of '06 dollar bonds widened by 30 basis points to between 160 and 165 over Treasuries.
Steve Altman, New York-based analyst at Commerzbank Securities, says the bonds should be a core holding. He echoed other analysts quoted in the media in blaming the rumors on short sellers looking to prey on investors still wary from last year's Enron fiasco. Altman notes that Tyco will have its first quarter earnings conference call this week and he is expecting the company to deliver positive news then.