Unfolding Adelphia story mesmerizes market

By Sara Rosenberg

New York, May 29 - There is still a lot of focus on Adelphia Communications Corp. in the secondary bank loan market as the company's saga continues to grow on a daily basis. Only a couple of small trades took place on Adelphia's paper Wednesday and prices fluctuated "sideways" throughout the day, according to a trader.

The Adelphia Century loan was trading in the high 80s and the Olympus loan was trading in the low 90s, the trader said.

Meanwhile the Coudersport, Pa. cable company's stock continued its downward momentum, dropping by 42.01% or $0.8402, at market close.

The performance of the company's stock will not directly affect the bank loan paper's performance, according to the trader.

"There's a huge amount of cushion because of the bonds and the convertibles," the trader explained. "The banks are at the top of the capital structure. They'll get paid back first so (bank loans) will be less volatile than equities."

However, an indirect impact will eventually be felt, he said. The poor equity performance implies uncertainty and "by implication the debt will go down," the trader added.

Adelphia's activity on Wednesday was in reaction to media reports that the company may run out of money in the near future and that the company is in talks to sell certain assets to Charter Communications Corp.

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