There was a firmer tone overall last week, with wireless and cable particularly strong. Several new issues were priced, including a $375 million deal for Corus Entertainment. Here was other action:
Homebuilding Heats Up
The homebuilding sector saw gains in several names. Bids on Lennar's 9.95% senior notes of '10 (Ba1/BB+) were up two points to 111.5 through by last Thursday. Hovnanian's 10.5% senior notes of '07 (Ba3/BB-) were up a point to a 107 bid. Toll Brothers' 8.25% senior subordinated notes of '11 (Ba2/BB+) rose from a 100.5 bid to 101.25.
Robert Manowitz, homebuilding analyst at UBS Warburg and the top-ranked high-yield homebuilding analyst on the 2001 Institutional Investor Fixed-Income Research Team, says the sector benefited from strong 2002 guidance from Hovnanian and Toll Brothers, and better-than-expected existing home sales numbers for January.
Rite Aid Up On Bank Agreement
Bids on Rite Aid's 11.25% notes of '08 rose five points through Thursday. Shelly Ben Nathan, retail analyst at Bear Stearns, attributes the rise to an amended bank agreement giving the company more flexibility. She says the outlook remains uncertain after two consecutive quarters of declining EBITDA. While the company projects positive EBITDA for next year, she says it is too early to tell whether the company will deliver on that promise in a very competitive environment.
Nextel Rebounds
Nextel Communications' 9.375% senior notes of '09 (B1/B) were up five points to a 63.5 bid through Thursday. One trader says a secret conference call by the company hosted by UBS Warburg may have had something to do with the rally. However, a high-yield wireless analyst believes the market has begun to focus on Nextel's domestic leverage, which is far less troublesome than the combined domestic and international debt levels that have circulated in recent negative reports about the company from equity analysts.