Market Picks Up, With One Caviat

The secondary high yield market had a healthier tone to it last week than the previous few weeks - when the best thing that could be said about it was that it was mixed - but had one caveat: Timer money seemed to be back in the market, according to various portfolio managers.

Most managers don't like timer money, which comes from investors who try to outsmart the market, because it will quickly get yanked back out of the mutual funds at the first sign of trouble, which only exacerbates cash outflow problems.

The overall market picked up about a point last week, traders said, with some of the telecom and cable names once again reigning at the top.

NTL and UPC, both of which compete in the European cable markets, saw some nice gains last week of a couple of points. And U.S.-based VoiceStream also saw a marginal bump in the secondary in the wake of its new issue.

And, of course, ICO Global gained last week on the news of Craig McCaw's much-needed $1.2 billion cash infusion (see story on page 1).

Telewest was garnering investor attention last week on more rumor mergers. And there was actually more than one rumor to go around, but in any case, the outstanding bonds saw increases of about three points, traders said.

One rumor said that NTL would buy its competitor Telewest, while others in the market saw Telewest as a takeover candidate by UPC in order to compete better with NTL in the U.K. market.

Also helping the European names in secondary trading was the lack of new issues, one investor noted.

One portfolio manager said that Weight Watchers, for its part, saw an increase last week in trading as its yield fell about 40 basis points.

And even though traders said it felt like more money was coming into that market last week, the latest official numbers from AMG Data Services showed a cash outflow of $96 million for the week ending Oct. 27. That marks at least the eighth straight week of cash outflows.