Short Takes on High Yields


Merrill Lynch is holding a contest whereby entrants will pick the issuers they think are the most likely to default. From a pre-determined list of the most distressed issuers, participants will choose the ones they feel are the most likely to miss a coupon payment within the next 12 months. Names of the winners will only be disclosed with permission, said Merrill's high yield strategist Martin Fridson. The contest gives the winners bragging rights and maybe even some leverage in their own organization, he said. To enter, e-mail Fridson at martin_fridson@ml.com your name by Oct. 15 and if there is a team involved, include a team leader. Entrants will receive a spreadsheet and instructions via e-mail at a later date to complete...

Four high yield pros were laid off in the merger of Fleet and BankBoston, according to market sources familiar with the banks. Of the four that were let go, three came from the sales force and one was a researcher. That left three that made the move, one trader and two sales people...

Leo Hindery resigned as AT&T's top cable executive last week after what was reportedly a short-lived, tumultuous stint at the telecom behemoth. Hindery had been president of Tele-Communications Inc. when AT&T made its highly-publicized acquisition of the cable company last year. AT&T's total cable investments has been more than $100 billion as it positions itself as a major broadband player. Its acquisition of TCI had a ripple effect throughout the high yield market (HYR 06/29/98) since TCI owned portions of cable companies worldwide, many of which are high yield issuers...

Tenet Healthcare Corp. said that first quarter earnings decreased by 11% because of cuts in government payment and higher costs stemming from recently acquired hospitals. Earnings from operations fell to $122 million...

Moody's Investors Service lowered the ratings of Derby Cycle Corp.'s $100 million of 10% senior notes of '08 to Caa1 from B3. The downgrade is in response to Derby's weaker-than-expected operating performance in fiscal 1998 and the first half of 1999 (HYR 09/20/99). Standard & Poor's had downgraded the issuer's senior unsecured notes last month to CCC+ from B-. Weak market conditions and poor product positioning in the UK contributed to a significant decline in the company's cash flow and interest coverage, Moody's said. It also violated various financial covenants contained in its bank credit agreement.