Energy names were softer last week as bond market pressures and sector concerns affected Calpine Corp., Mirant Corp. and Reliant Energy. At midweek, Mirant's '03 revolver was trading in the 51-53 range, down from around the 54 1/2-55 1/2 range two weeks ago, according to Mark-it Partners/LoanX. Reliant's term loan went down to the 97-98 context from the 98 1/2-99 3/4 range, and Calpine's term loan has been yo-yoing. Two weeks ago it was trading at the 91 1/4-92 1/4 context. Early last week the debt moved down to the 89 3/4-90 3/4 level, before recovering slightly to the 90 1/2-91 1/2 level, according to traders. A Calpine spokeswoman could not provide comment on the trading levels.
A number of bank loan names have been moving downward since Duke Energy Corp. announced it is selling two merchant generating assets to Matlin Patterson Global Opportunities Partners II for an average price of $89 per kilowatt of capacity. Reportedly, these gas turbines cost $500-$600 a kilowatt to build. "The lower than expected valuation put pressure in the whole energy market," one trader said. Dealers noted fears of hikes in interest rates and weak equity markets are also factors hurting the energy sector. Mirant and Reliant officials did not return calls.