One trader says nearly all of the trading last week was in five names: WorldCom, Tyco, Dynegy, Calpine and Adelphia. "If you didn't trade one of those names you could throw a line in the water and start fishing it was so slow," he added. Spread sensitive names backed up with Treasury yields, and telecommunications towers were weaker after poor numbers. Below is some of the action.
WorldCom Softens As $32B Joins Junk Index
WorldCom 7.5% notes of '11 dropped from a 45 bid to 43 last Thursday after Moody's Investors Service cut the company to a junk rating. With $32 billion in high-yield paper now set to join benchmark Merrill Lynch high-yield indices, some traders expect to see weakness in other names as portfolio managers sell other positions to make room for the massive issuer.
Another trader explained the price drop by the fact that many investment-grade accounts were forced to sell and junk traders knew it.
Tech Names Stronger
Technology names were better bid on the back of Cisco Systems surging stock price on Wednesday. Avaye 11.125% notes of '09 (Ba2/BB-) went out on Thursday at a 97 bid, having opened the week at 93.
Adelphia Strengthens On Reports Of Asset Sales
Adelphia Communications 10.875% notes of '10 were stronger after the company announced it would sell assets, including its highly valuable Los Angeles properties. The bonds opened the week at 86.5, strengthening a roughly point both Wednesday and Thursday. At Thursday's close, the bonds were bid at 89.75.
Calpine, Dynegy, Soften On Price Fixing Investigation
Allegations of price fixing hurt bidding on the bonds of energy traders Calpine and Dynegy. Calpine's 8.5% notes of '11 hit a low of 79 on Wednesday before rebounding slightly to 81.75 last Thursday. It started the week at 86. Dynegy's 8.75% notes of '12 were bid at 81.5 last Thursday, down from 85 on Wednesday.