Bankrupt Bonds Rise In 1999

Despite a rally in the telecom sector that sent bankrupt bonds up 12.6% in November, they fell 6.6% in December to end the year at an overall gain of 3.9%, according to a report by Moody's Investors Service.

Spurred by rumors that investor Craig McCaw was ready to take a stake in the company, ICO Global Communications' outstanding bonds surged in November. Its competitor's, Iridium LLC, also gained. In December, however, there was neither good news nor positive market rumors to continue to fuel the rally, said David Hamilton, author of the Moody's report.

ICO Global's 15% senior notes due 2005 fell 6.1%, and each of Iridium's four outstanding issues fell 38.5%.

Still, the telecom and cable sector led recoveries among bankrupt debt.

USN Communications' senior discount notes due 2004 jumped 49.4%, while International Wireless Communications' senior discount notes due 2001 rose 1.3%. Also posting significant gains last month were Royal Oak Mines and Discovery Zone.

Growth in the number of bankruptcies slowed, and only three issuers joined the index in December: Leasing Solutions Inc., Central Terminica Guemes SA and Axiohm Transaction Solutions.

That brought the total number of bankrupt issuers included in the index to 88, representing a face value of $19.4 billion in bankrupt debt.