Trading started slow last Tuesday after the holiday, but volume was normal by mid-week. It was a soft week overall, though energy, healthcare, gaming and supermarkets were well bid. Here was other action.
AES Drops On Ratings Review
AES Corp.'s 9.375% of '10 (Ba1/BB) fell from a 66 bid to a low of 53 after Moody's Investors Service put the electric utility on review for a possible downgrade. The move followed its placement on Standard & Poor's watchlist the previous week. The bonds bounced to 60 late Thursday. Peggy Jones, analyst at ABN Amro, says investors may have been reassured somewhat by indications from the ratings agencies that the effective loss of the company's assets in Argentina and Venezuela would still not be sufficient to send the ratings below double-B.
Charter Widens As Numbers Disappoint
Charter Communications saw bids on its 8.625% notes of '09 (B2/B+) fall to 88.5 from 92.5. Weakening first quarter numbers, a drop in Charter's share price, and issues with delinquent subscribers has hurt the cable company of late, saysAryeh Bourkoff, analyst at UBS Warburg. However, he sees improving EBITDA and the relaxed regulatory environment spurring significant tightening in the name in the next few months.
Wireless Weakness Continues
Softness continued in the wireless sector. Nextel's 9.375% notes of '09 were at 59 last Thursday after closing the previous week at 62. Sprint affiliates continued to be soft, and even Triton PCS drifted lower to traders' surprise, as the AT&T affiliate is widely perceived as one of the stronger wireless credits. Triton's 9.375% notes of '11 (B3/B-) drifted 2-3 points below the previous week's closing price of 98.