Midday Commentary: Market quiet ahead of Labor Day break; Radian, Continental Resources higher

By Paul Deckelman

New York, Aug. 30 - The high-yield market began the final trading session of August on Friday "a little weaker and very quiet," a trader said, with not much expected to happen in an abbreviated pre-holiday session.

Although the Securities Industry and Financial Markets Association did not officially recommend an early close to the junk market and other debt markets in the United States ahead of the three-day Labor Day holiday break - which will see the markets completely shuttered on Monday - the reality is that anything that has to get done will get done early in the day, and many people will be making an early exit, market participants said.

Among specific names, Radian Corp. Inc.'s 3% convertible notes due 2017 firmed after the Philadelphia-based mortgage insurance company's Radian Guaranty subsidiary announced an agreement with Freddie Mac regarding a group of delinquent mortgage loans held by Freddie Mac that were insured by the Radian unit.

The notes moved up to around the 139½ bid mark, up more than 3 points on the session and more than 5 points above its most recent round-lot trading levels.

The agreement covers 25,760 first-lien mortgage loans held by Freddie Mac that were insured by Radian Guaranty and were delinquent as of Dec. 31, 2011. It provides for the future treatment of these loans, including claim payments, loss mitigation activity and insurance coverage, and eliminates Radian Guaranty's claim exposure on 9,756 loans that were delinquent and 4,586 loans that were re-performing as of July 31.

Radian's New York Stock Exchange-traded shares were up by 61 cents, or 4.62%, at 10:45 a.m. ET, at $13.82. Volume of 3.1 million shares was a little more than half of the usual full-day turnover.

Continental Resources Inc.'s 8¼% notes due 2019 were busily traded - although strictly in mostly smallish odd-lot transactions - after Standard & Poor's upgraded the Oklahoma City-based oil and natural gas exploration and production company's long-term corporate credit rating and senior unsecured debt to BBB- from BB+. The notes were quoted at 1½ bid, up 2 points on the session.

The company's 4½% notes due 2023 jumped to 98½ bid, a 21/2-point gain, on busy round-lot volume of more than $7 million.

While S&P upgraded Continental to investment-grade status, Moody's Investors Service maintains its rating in the junk category at Ba2.

Continental's NYSE-traded shares were down 86 cents, or 0.92%, at $92.85.

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