Higher-rated sectors such as gaming were off slightly, which traders attributed to investors raising cash to purchase new issues. But, benchmark names such as Allied Waste, Nextel Communications and Lyondell Chemical were unchanged through Wednesday. A giant $2.1 billion offering from Crown Cork & Seal found buyers despite some difficulty selling the senior tranche. Here was other action.
Pegasus Jumps On Takeover Talk
Pegasus Communications' 12.375% notes of '06 were up six points through last Wednesday. Traders attributed the rise to a report by Ty Carmichael, a Credit Suisse First Boston equity analyst, who made a case that the company could be bought by Hughes' DirecTV unit--a much stronger credit.
Utilities Stay Under Pressure
On El Paso Downgrade
The utility sector was pushed still deeper underwater after El Paso Corp. received a five-notch downgrade from Moody's Investors Service. El Paso's 7.875% notes of '12 were bid at 59.5 Thursday afternoon.
The company has significant bank maturities this year and next which are putting pressure on the company's finances, says Peggy Jones, analyst at ABN AMRO. "While I'm optimistic the company will be able to work out an agreement with its banks, I don't want to say what fair value is because it's not clear what the company could be liquidated for if it goes into default. I'm concerned there could be problems with the trading book and also creditors that had prior claims on monies. In my mind that makes it difficult to set the right price," she says.
Qwest Drops, Recovers On Earnings
Restatement Announcement
Qwest Communications saw its 7.90% notes of '10 quoted two points lower at 67 last Wednesday morning after the company announced late Tuesday it would restate revenues for 2000 and 2001. The bonds recovered by the end of the day, however.