A slow start to last week's holiday-shortened trading. Wednesday picked up slightly following equities. The Treasury sell-off caused some of the tighter-trading names to drop a point or so. Here is selected action.
Beverly Climbs On Asset Sales
Beverly Enterprises 9% notes of '06 (B1/B+) climbed two points to par last Monday after the Arkansas-based company, which provides nursing homes and rehabilitative services, announced that it had sold 20 of its properties to reduce patient liability risk. The bonds were as low as 77 in February.
Sell-off In Sprint Wireless Affiliates Continues
Sprint PCS wireless affiliates continued to drop through last Wednesday in a continuation of a sell-off that began a week earlier. AirGate PCS 0/13 1/2% notes of '09 (Caa2/CC) dropped to a bid of 46--three points lower on the week and some 11 points below where they were less than two weeks ago. US Unwired's 0/13 3/8% notes of '09 (Caa2/C) fell to a 41 bid--five points lower on the week, and ten points below a recent high.
Anthony Klarman, analyst at Deutsche Bank, does not see any material news event that may have sparked the sell-off. He says a decision by Verizon Wireless to cooperate with an order by the Federal Communications Commission that would allow customers to keep their wireless telephone numbers while switching carriers may have been partly responsible. Klarman believes the near-term impact of "number portability" on the Sprint affiliates is small to none. However, he has a hold on the affiliate group due to other concerns and believes investors were looking for any excuse to lock in recent gains. "The wireless affiliates ran so much so quickly, any semblance of negative to slightly negative news was probably enough to spark a sell-off," he says.
Aurora Foods Jumps On Sweet Offer
Aurora Foods' 9 7/8% notes of '07 and the 8 3/4% notes of '08 (both Ca/D) gained about 10 points each to a bid of 46 1/2 last Wednesday. The company announced a cash injection from buyout firm J.W. Childs and proposed a restructuring plan that would give bondholders a combination of cash and equity.
Arthur Roulac, analyst at Banc of America Securities, expects a contentious period of negotiations will take place before any plan is approved for the maker of Aunt Jemima and Log Cabin syrups. He says he would be surprised if the bonds trade above 50.