Trading was mixed last week as the market focused on a heavy forward calendar, which traders estimate at $3 billion. Allied Waste Industriesand Echostar Communications each rose half a point. Below is some of the other notable action.
Doman Industries Shows Signs Of Life,
Puzzling Market
Bonds of Doman Industries were up, but traders said there was no news on the company. The distressed Canadian forest products company saw bids on its 8.75% notes of '04 and its 9.25% notes of '07, (both Ca/D) perk up from 18 to 22.
One high-yield paper analyst says he barely follows the credit anymore due to its low trading levels. However, he sees no events affecting the forest products industry that would benefit Doman. He says the company is unable to sell lumber in the U.S. due to an ongoing trade dispute between the U.S. and Canada. He attributes the jump in price to better bids overall in distressed land. A distressed trader did not appear to be convinced by this logic, but said, "there are so many rotten things out there that any semblance of asset value will cause something to trade up a couple of points."
Mail-Well Falls On Lowered Guidance
Mail-Well saw its 9.625% notes of '12 (B1/BB) drop 2.5 points to par after the commercial printer said its first-quarter earnings would fall short of expectations. A sell-side analyst says the company just barely missed guidance and should rebound if the advertising market, on which it is heavily dependent, turns around as expected. He believes the bonds are undervalued, and that fair value is an 8.5% yield.
Adelphia Drops As Charter Seesaws
Bonds of Adelphia Communications continued to drop in price last week. Traders made repeated reference to a Wall Street Journal article that warned about high levels of undisclosed debt in the cable industry. Bids on the 10.875% notes of '10 (B2/NA) fell 3 points on the week to 89. Charter Communications saw its 8.625% notes of '09 (B2/B+) rise 1.5 points early in the week, only to fall back to its earlier levels of 88 by Thursday afternoon.
Aryeh Bourkoff, of analyst at UBS Warburg, says he believes the companies will have to sell assets, and that "premium systems such as Los Angeles [owned by Adelphia] will continue to receive top dollar." Bourkoff declines to say where he thinks Adelphia's bonds will trade in the future.