Last week saw deterioration in a number of credits. Autos and towers drifted lower, and a number of new issues are said to be on hold. Tech issues were also weaker after bad numbers from chipmaker Advanced Micro Devices. Here is other action.
Charter Warns, Plummets
Charter Communications' 8.625% notes of '09 (B2/B-) lost eight points through Thursday to close at a 55 bid. David Allen, cable and broadcasting analyst at Morgan Stanley, says cable companies like Charter are losing low-end customers to satellite companies such as Echostar Communications. Allen says the trend is likely to continue into next year, particularly if Echostar is aggressive with its promotions at the end of this year. He advises investors to overweight Charter's structurally senior operating company bonds and bank debt.
Park Place Drops After Warning On 3Q
A one point drop in the Park Place Entertainment 7.875% notes of '05 (Ba2/BB+) caught traders' attention last Thursday morning, as it was the first sign of weakness in the red-hot gaming sector for some time. The bonds were up roughly half a point by Thursday's close, to 102.5. Jacques Cornet, analyst at CIBC World Markets, says the fundamental credit profile for Park Place is unchanged. However, he argues that MGM's bonds are a better play, as MGM has newer properties, which have more predictable cash flow. The MGM 8.375% notes of '11 (Ba2/BB+) went out Thursday at 104.
Amkor Jumps After Receiving Bank Waiver
Amkor Technology, which makes packaging for semiconductors, saw its 9.25% notes of '06 (B1/B) jump from 60 to 70 after the company received a waiver from its banks on a credit agreement. The bonds then drifted lower with the rest of the market, however, and were quoted at 66 mid-Thursday.
Ziki Slav, analyst at DrKW Grantchester, says the outlook for the company depends largely on one's view of the broader market. Optimists should buy, extreme pessimists should not buy, and for those lacking strong convictions, the bonds are slightly undervalued, he says.