Most of the focus was on the new issue market, and most new issues performed well out of the box. Technicals remained strong after big inflows to mutual funds the previous week. Steel issues struggled mid-week, except for AK Steel. Here is selected action.
Charter Climbs On Vogel Comments
Charter Communications' 8 5/8 of '09 (Ba2/BB+) rose 1 1/2 points to 72 1/4 . A buyside analyst attributes the move to comments by company CEO Carl Vogel indicating that a restructuring is not imminent. "Anything that makes people believe they're going to get another coupon out of these things is encouraging," says the analyst.
Calpine Climbs After Pricing Secured Deal
Calpine Corp.'s unsecured issues were up after the utility priced a two-part secured deal for $802 million. The 8 1/2% notes of '11 (B1/CCC+) jumped from 70 to 73 on Thursday, before settling to a 71 1/2 bid. One analyst says it makes sense that the unsecured bonds would rally, as the pricing of the secured deal is an indication of improved liquidity.
New Issues Strong Out The Door
Despite grumbles from investors that new deals are getting dicier, most traded up on the break last week. CBD Media's 8 5/8 of '11 (B3/B-), which priced at par, was trading at 104 last Wednesday. Omnicare Inc.'s 6 1/8% notes of '13 (Ba2/BB+) was at a 101 3/4 bid. Tenneco Automotive's 10 1/4% notes of '13, which priced at par, climbed to 104 1/2, before settling at a 102 bid. One exception was the RJ Tower Corp. 12% notes of '13 (B1/B), which came at 97 1/4 and dropped to a 96 1/2 bid last Wednesday.
Sandy Rufenacht, portfolio manager at Janus Funds, says he put in an order for the Tenneco deal, despite his conservative bent (see story, p. 9). "It hasn't taken a rocket scientist to see you can get one to three points out of a new issue on the first trade. We've been playing heavily in that market."