A jumpy market created an especially big divide in the volume handled by distressed shops versus par desks this week. Distressed players boasted heavy trading among players hungry for credits priced at a discount, while par dealers said "there was a whole lot of nothing going on."
An estimated $50 million of Pacific Gas & Electric's bank debt traded in the high 80s, low 90s on Tuesday, which is up from the 87 range. Xerox Corporation's debt notched up to 85 ½-86 ½ from 85. The company's cost reduction measures are said to bode well with market players anticipating a turnaround.
Meanwhile, the par market has been operating at much weaker volume, with dealers reluctant to take positions on credits that could nosedive. Dealers who rely on ¼ of a point uptick to make a profit fear that a market with uncertain levels would create sizeable money losses. "If you get into a credit and it drops three points, you have to do 12 trades just to make up for it," as one trader put it. Normally defensive credits have softened this week, including Allied Waste, which last traded at 96 5/8 and Charter Communications which has traded as low as 95 ¾ before notching back up to 96 ½.