There were many more downs than ups last week, as even Wednesday's equity rally failed to give junk credits much of a lift. A number of fallen high-grade energy credits fell solidly into high-yield.
TELUS Plunges After Downgrade
TELUS, a Canadian phone corporation, saw its U.S. dollar-denominated 7.5% notes of '07 and 8% notes of '11 drop from 63 to 47 after a ratings downgrade to junk from Moody's Investors Service. One buy-side junk analyst blames the steep drop on forced selling pressure from investment-grade money managers.
Crown Cork & Seal Drops As Constar IPO Is Postponed
Crown Cork & Seal saw its 6.75% notes of December '03 drop seven points to 78 on news of the postponement of its planned initial public offering of its Constar subsidiary. Constar also has a high-yield deal on the calendar, but it is also believed to on hold. Officials at Salomon Smith Barney, the underwriter, could not be reached by press time.
The company has $600 million in public debt maturing by December of next year, and Frank Colombo, a distressed securities analyst, believes it still has a few options available, including the possibility that the IPO market will reopen. He believes the company has enough liquidity to make payments on public debt maturing this year. Its December 6.75% notes of '03 are fairly valued at 78, its April 6.75% notes of '03s are a few points overvalued at 84 and its 7% notes of '06 are one or two points cheap at 68, he says.
Cable Slide Resumes
Charter Communications saw its 8.625% notes of '09 slide 10 points to a 54 bid. One trader blamed a drop in the company's equity price following a recent downgrade by Jessica Reif Cohen, an equity analyst at Merrill Lynch. In her report, Cohen cited accounting-related concerns. Adelpia Communications' 10.875% notes of '10 dropped seven points to 30.