The Altman NYU-Salomon Center defaulted bank loan index started the new year positively, with advancing bank loan facilities outpacing decliners in the 57-facility index, for the first month of 2003. Advances were led by Kmart, Conseco, Federal Mogul and Owens Corning, according to research by Edward Altman, Max L. Heine Professor of Finance at New York University. The defaulted bond index comprised of 121 issues rose by 6.21% in January. Adelphia, National Steel, Big City Radio and NRG Energy made the biggest advances.
Kmart's bank debt climbed up after the company released its plan of reorganization providing pre-petition lenders holding $1.08 billion in claims with roughly 40 cents on the dollar for their commitments (LMW, 2/2). Conseco, Owens Corning and Fed-Mogul have also benefited as details of reorganization plans have emerged. Declines however, were led by WorldCom and theBudget Group. WorldCom's bids sunk as low as the 19 level before rebounding into the 21 range at the end of January (2/2). The reason for the drop, traders said, was purely a case of buyers lowering their price because of a number of sellers in the market. Declines in the bond index were led by WorldCom, AMRESCO and Kaiser Aluminum Corp.