Secondary Market Firm, But No Big Pricing Moves

The secondary high yield market last week seemed to be on firm footing, although the most enthusiastic market participants seemed only to point out that at least bids were there, and that there was little in the way of movements because supply was meeting demand.

That in itself is a bit unusual for this time of year, one high yield strategist noted. Typically, the mutual funds would be selling paper before year end and not taking any risky bets.

However, it still is somewhat less bullish than the scenario in November, when the upticks made some investors wonder aloud whether the January effect had come early this year. The advocates of the disjointed-calendar theory pointed to the fact that Y2K fears were subsiding and cash outflows seemed to have stemmed from the drastic losses earlier in the fall.

The big move in the secondary last week came from Plains Resources (see story on page 3), but other than that it was fairly quiet with small moves coming in a range of different industries.

Revlon's zero-coupon issue, which has seen so much turmoil this year, was up two points to trade at 28, while the company's 8.625% issue was up one point on the week and five points for the month, traders said.

Pillowtex's 9% and 10% issues were both up about two points to 30 and 36.5, respectively. The textile maker posted a loss last month for the most recent quarter.

Bethlehem Steel's 10.375% issue of '03 was up about a point and a half on the week to 102.

There also were some declines on the week, but even most of those were fairly small, again reflecting a content market where the bids and offers were matched, one analyst said.

Canadian issuer Call-Net Enterprises watched its $450 million, 9.375% issue with a maturity of 2009 fall about three points last week. Call-Net, through its wholly owned subsidiary Sprint Canada Inc., offers long distance voice, data and network management services.

Reliance Group Holdings, for its part, saw its $250 million, 9.97% issue of '03 fell about two points in secondary trading.