Allegheny Energy made a move from 101 to nearly 102 in trading in the last week as a number of energy names and wireless names moved higher. Dynegy Holdings “B” loan was seen at 101 3/4-102 1/4 and Centerpoint Energy’s “B” was said to be bought at 102-102 1/2. One trader explained that the names all caught a bid as they offer a higher coupon than other paper in the market and after investors placed big trades, it left the dealers short.
Wireless names such as Nextel Partners, Centennial Cellular and Dobson Communications were also seen higher. Cent Cell and Dobson were trading at 100 1/2 and 100 1/4 respectively last week, but now Cent Cell has edged to 100 3/4-101 1/4, said traders. Nextel Partners was trading as high as 101 7/8 a trader added.
A host of names also broke into the secondary market. The $225 million “B” loan for BWAY broke at 101 5/8-7/8, and Coinstar broke at 101. “No one is selling,” traders said. According to one loan market participant, over 70% of all institutional loans are trading over par, and 30% of all loans in the market are over 101. Since many of these loans do not have call protection, there is potential for a number of investors to be burned, a source said.
Finally, Pegasus Media & Communications’ loans have been higher with hedge funds and bond investors said to be taking out some senior secured lenders. The $300 million “D” loan was being quoted at 98 1/2-100, a couple of points higher than last week. The incremental term loan is also being bid slightly higher at 95-97 1/2, a trader added. Market participants maintain there is a strong belief the senior lenders will receive par, but there are questions over the length of the bankruptcy process.