There was a slightly better tone overall in the high-yield market through last Thursday, though it was largely offset by the damage to Charter Communications. Autos were among the better-performing sectors. In the new issue market, Nevada Power priced a $250 million deal in the private market. Here is some other action.
Charter Plummets As COO Is Put On Paid Leave
Charter Communications saw its 8.625% notes of '09 (B2/B-) drop 13 points to 43 last week after David Barford, the company's coo, was placed on paid leave pending the result of a grand jury investigation into the company's accounting practices.
The bonds are now very attractive on a valuation basis at less than six times debt-to-EBITDA, according to one analyst at a bulge-bracket firm. However, he cautions that investors must be prepared to stomach the uncertainty surrounding the investigation.
Chesapeake Has Positive Energy
The Chesapeake Energy 8.125% notes of '11 (B1/B+) were up a point to 101.25 on no company-specific news. Tom Parker, portfolio manager with Barclays Global Investors, attributes the rise to bullish sentiment about the future of natural gas prices, which would benefit Chesapeake, a highly levered explorer and producer. "We had three equity analysts in here in the last two weeks saying gas is the 'end all be all'," he says. Parker is not convinced, however, as he sees signs of a warm winter, and argues that the rise in gas prices is often offset by increased costs of finding it.
Wireless Has Strong Week
Triton PCS saw its 8.75% notes of '11 (B2/B) surge from 60 to 71 Thursday afternoon as the wireless carrier missed net subscriber additions slightly but saw EBITDA soar driven by greater-than-anticipated roaming revenue, according to Katie Glass, buy-side analyst at Federated Investors in Pittsburgh.
Nextel Communications' bonds also traded higher on the back of strong numbers. The 9.5% notes of '09 (B3/B) were bid at 85 last Thursday--a four point rise on the week. Joe Galzerano, analyst at CIBC World Markets, says the company's earnings call was "another blowout," as leverage ratios continue to drop and EBITDA improves. He reiterates his buy on the credit.