Sprint PCS Wireless Affiliates Hang In
Sprint wireless affiliates held on to recent gains despite overall weakness in the junk market. The UbiquiTel 0/14% notes of '10 were bid at 46, the US Unwired 0/13.375% notes of '09 were at 51.5 and the AirGate PCS 0/13.5% notes of '09 were 54.5.
One portfolio manager believes that wireless had been severely beaten down until very recently, and so was less vulnerable to the recent high-yield "correction" than pricier names.
Parker Gets Drilled, Further Downside Seen
Parker Drilling saw heavy selling after a planned asset sale fell through and the company reported weak earnings. The 9.75% notes of '06 (B1/B+) were bid at 97 last Thursday morning--some five points lower than they were before the bad news. The 10.125% notes of '09 (B1/B+) dropped nine points, to a 96 bid.
Gary Stromberg, analyst at Bear Stearns, favors the 5.5% convertible notes of '04 to the straight debt. While he believes the 9.75% notes will be called, he argues that it will require Parker to find a new buyer for its assets, and issue new high-yield bonds to take them out. "They're in a situation you never want to be in, which is that they have to make an asset sale. They were going to get a good multiple for these assets," he says. Stromberg argues that even absent a high-yield deal, an asset sale would likely be enough to retire the convertible debt, which was bid at par last Thursday.
Tenet Jumps, Falls, On Settlement News
Tenet Healthcare Corporation saw its 5.375% notes of '06 climb two points last Wednesday after the company settled a lawsuit charging it with undertaking unnecessary cardiac procedures. The bonds fell back to where they started the week, at 95.5, on Thursday, however.
Premila Peters, analyst at KDP Investment Advisors, has a hold on the bonds, but believes they are money good. "They made a strategic decision to get away from the headlines and move on. Their operations had suffered as a result of the negative publicity," she says.
Elie Radinsky, analyst at Jefferies & Co., has exactly the opposite view, arguing that operations are improving, but that the company's demonstrated willingness to settle could invite further lawsuits.