Volumes last week were lower than the previous week, with activity a little less frothy, according to one global head of high yield capital markets. He noted that the tone overall has been positive and there was still a good two-way flow. While most activity occurred in the primary market, there were some notable secondary market movers .
Mirant Powers Higher
Bonds of Mirant Inc. were up about four points on the week with its 7.4% notes of '04 trading at 70 last Thursday. One analyst mentioned that there has been talk of a potential asset deal in the Philippines, which would raise cash for the bankrupt power producer, although the feasibility of the operation has been called into question. One head of high yield noted there has been a lot of picking over distressed bonds as investors try to find opportunities similar to those in high yield. Mirant is preparing to conduct a balance sheet refinancing and exit Chapter 11 later this year.
If A Bond Falls In The Forest...
Tembec Inc ., a Canadian paper company, saw its 8.5% notes of '11 drop about four points over the week to 102.5 as of last Thursday. Jacques Cornet , head of high-yield research at CIBC Capital Markets , says the fall may be due to possibly weaker-than-expected performance for the fourth quarter. He mentions the strengthening of the Canadian dollar verses the U.S. dollar, as well as the anti-dumping laws and current proposals that are affecting Canadian paper imports into the U.S., as other factors for the decline. "We've had a cautious outlook on Tembec for 2004, so we aren't surprised," Cornet says.
Supermarket Chain Slips
Winn-Dixie Inc. , a supermarket chain in the Southeast, was down with its 8 7/8% notes of '08 down about 2.5 points to 102.5. One trader said investors sold the credit to book profits earned from the bonds' steady rise higher in recent months, accounting for the drop. An analyst also confirms there didn't seem to be any specific company news to account for the change, noting that profit-taking was occurring across the board in the secondary market last week.