Primary week ends with zero pricings; Dynegy plans deal while bonds drop; Momentive mauled

By Paul Deckelman and Paul A. Harris

New York, Aug. 22 – The high-yield primary closed out the week on Friday having gone 0 for 5, as no deals priced with the market mired in its traditional late-August summer doldrums.

Although there were no pricings, there was one deal announcement, from the Houston-based power generating company Dynegy Inc., which plans to issue about $5 billion of unsecured bonds as part of the funding for its more than $6 billion purchase of generation assets from Duke Energy and from Energy Capital Partners in a pair of separate transactions.

The news of the coming massive bond deal from Dynegy hammered the company’s existing bonds down by as much as 3 points during the session, in heavy trading. Later in the day, however, that paper was heard by traders to have come off its lows, while still ending well down from its pre-news levels.

That was one of the few things that stood out in a largely becalmed secondary market, which saw numerous participants cut out early – if they had been in at all – a typical summer Friday story.

There was also brisk trading seen in the bonds of Momentive Performance Materials Inc., the bankrupt maker of silicon and other specialty industrial materials. Those bonds dropped amid investor worry that the judge overseeing the company’s contentious reorganization may side with Momentive in its dispute with those bondholders over whether they are owed any special interest payments.

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