The par market lost footing last week, with overall levels dropping 1/2 to one point. Dealers were left sifting through the names and distinguishing which credits had dropped on fundamental issues and which were just weighed down on heavy unloading of the paper. Cable and telecommunications names that had traded at strong levels before the Sept. 11 attacks are expected to find their way back up, but hotel credits are said to be dropping on concerns about their performance.
Charter Communications and Allied Waste, long touted as no-brainer defensive credits, are also trading down and with some inconsistency. Yet Suiza Foods' debt has held up around 100, trading last week in that range. Dealers say the credit has its defensive nature and strong syndication working for it. Meanwhile, Wyndham International's levels were in the 99 range prior to the Sept. 11 attacks, but a subsequent sharp decline in hotel use made the bank debt trade down to the low 80s range last week. Calls to Richard Smith, cfo, were referred to spokeswoman Elizabeth Williams, who did not return them.
Nextel Communications' bank debt came down to 83 1/2 in a series of trades totaling $10 million. Dealers reported levels rebounded to the 86 range on the "B/C" paper later in the week. Where a credit ultimately lands depends on historical volatility within the name as well as its defensive nature, a dealer said. "There's some panicked selling; credits have been beaten down to irrational levels," he noted. "People have different views: Some may say, 'Once the paper hits 83, it will go lower,' so they sell. Others may figure at 86 the paper will go higher, so they buy it." The telecommunications company is based in Reston, Va. Calls to Paul Selah, cfo, were not returned.