The secondary market was strong last week, with more active levels of trading than usual for this time of the year. Despite expectations of a relatively large new issue pipeline, investors expect the new deals will create better liquidity and outstanding bonds of those issuers are actually trading higher in anticipation of the increased tradability, according to Marty Fridson, strategist at FridsonVision.
Brazilian Utility Fizzles
Bonds of AES Corp. dropped a couple points last week on fears the electric utility faces a possible back-down by Brazil's development bank to refinance $1.2 billion in debt. The 9.5% notes of '09 traded at 109.25 last Wednesday, down from 111 earlier in the week. Shares in the company, which is Brazil's largest electricity utility, also dropped up to 6%.
Levi's Fades
Bonds of Levi Strauss & Co. were active last week with its 12.25% notes of '12 dropping to 69 cents on the dollar, compared to a high of 96.5 cents in September, after the company's cfo left and it hired an advisor known to work on bankruptcies. Tim O'Hara, head of high-yield capital markets at Credit Suisse First Boston, attributes the falling bond prices to the management change and the retaining of Alvarez & Marsal, a restructuring firm.
More Is Riding On Their Tires
Goodyear Tire bonds rose several points on news that the company cut a deal with its unions that requires it to do a financing by the end of the year. CSFB's O'Hara notes that this has "created a certain amount of curiosity," raising its benchmark 7.85% note of '11 about five points up, from 86.