Distressed market quiet heading into holiday break; energy names firm; Micron bonds, converts fall

By Paul Deckelman

New York, July 1 – Friday was the first day of July and the last day of the week – and saw only relatively tame trading in the distressed debt market, mirroring the situation in the larger junk bond market.

Activity was quiet during the abbreviated session heading into the July 4th holiday weekend in the United States, which will also see all fixed-income markets closed on Monday.

Traders said that energy names continued the pattern they had followed all week, moving higher as crude oil prices rose. They mentioned issuers such as Freeport-McMoRan Copper & Gold, Inc. – which drills for oil and natural gas besides mining for precious and industrial metals – and Chesapeake Energy Corp.

Another gainer was Intelsat SA in the wake of the underperforming communications satellite company’s financing deal that involved the issuance of $490 million of new privately-placed bonds.

The junk bonds and convertible notes of Micron Technology, Inc. retreated and its shares were hammered down after the computer-chip maker reported mediocre third-quarter earnings, offered weak guidance and said it would have to make workforce reductions in response to underperforming sales.

Puerto Rico defaulted on almost half of $2 billion in bond payments due Friday. However, traders did not report any immediate adverse impact on the troubled island commonwealth’s bonds.

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