After slow start to the short week, the market was stronger on Thursday. Utilities were better after Calpine Corp. received a bank loan extension. Here is selected other action.
Chemical Names Weaken On High Gas Prices
Issues from chemical companies were down slightly--a move one trader attributed to a negative story in Barron's, arguing that high gas prices were hurting margins. Bids on Millennium America's 9 ? % notes of '08 (Ba1/BB+) were down a point to 107 late Thursday. Lyondell Chemical's recent issue, the 10 ?% notes of '13 (Ba3/BB), dropped two points to 97.5, before settling at 99. Avecia Group's 11% notes of '09 (Caa1/B-) were 3 points weaker at 87.5.
One sellside analyst blames technical pressure, rather than industry fundamentals, for the drop. He points to a recent wave of new issuance, causing the postponement of a deal from Huntsman International.
Triton Climbs Ahead of New Deal
The Triton PCS 11% notes of '08 (B3/B-) jumped to 105 ? from 104. The issue will be taken out by new paper set to price this week. The 9 3/8% notes of '11 (B3/B-), which will not be called, were unchanged on the week.
AK Steel Gets Pounded
Bids AK Steel on 7 ?% of '12 (B1/BB-) dropped some 10 points to 77 ? and recovered slightly to an 80 bid. AK has struggled lately due to investor concerns about high labor costs after the company failed to reach an agreement with its unions, according to Kip Penniman, analyst at KDP Investment Advisors. Penniman attributes the latest drop to gloomy statements from industry executives that have circulated in the trade press in recent weeks.
Nonetheless, Penniman is a bull on AK, arguing the 7 ? notes should trade in the mid-90's. He says the company has solid liquidity and a light maturity schedule through 2006.
Also, he thinks a weaker dollar and declining costs for raw materials will benefit the company.