AmerenEnergy bonds catch a bid; Caesars firms; Fannie, Freddie preferreds remain busy, strong

By Stephanie N. Rotondo

Phoenix, March 20 - Though most of Wednesday's activity remained centered on new issues, those distressed issues that were on the active were seeing sizeable gains.

AmerenEnergy Generating Co., for instance, put on as much as 4 points during the session. There has been no fresh news on the company since it announced last week that it was selling its merchant generating unit to Dynegy Inc.

Caesars Entertainment Corp. was also rising, though there was no new news out to act as a catalyst.

Meanwhile, in the world of preferred stock, Fannie Mae and Freddie Mac securities continued to be actively traded. The two issues that had the most trading jumped over the $3-mark.

Ameren debt boosted

AmerenEnergy bonds "caught a bid," a trader said on Wednesday.

He saw the debt putting on as much as 3 points. The 7% notes due 2018 were up the most, ending at 78. The 7.95% notes due 2032 and the 6.3% notes due 2020 both gained 2¾ points, he said, closing at 73 and 72 5/8, respectively.

"That stuff was up a bunch," another trader said. He pegged the 6.3% notes at 73, up from 69 previously, while the 7% notes rose the high-70s from the mid-70s.

A third trader called the 7% notes "up another 2 to 3 points" at 78.

On March 14, the power producer said it had inked an agreement with Dynegy to sell its merchant generating business. Though Ameren will not receive any cash in the deal, Dynegy is assuming about $850 million of Ameren's debt.

Caesars ends firmer

A trader said Caesars Entertainment's 10% notes due 2018 were up over 2½ points on the day, finishing around 67 1/8.

He also saw the 6½% notes due 2016 gaining 1½ points to close at 751/2.

But another trader said the 10% notes were only "up a smidge" at 67.

There was no fresh news out on the Las Vegas-based casino operator that would have caused the gains.

Fannie, Freddie remain strong

A market source said that there was "still a lot of speculation on Fannie Mae and Freddie Mac stuff."

The agencies' preferreds have been trading actively of late as investors wonder whether or not the government-backed mortgage giants will eventually be privatized.

Freddie was meantime making headlines on Wednesday as the firm filed a lawsuit against a group of banks - including Bank of America Corp., UBS AG and JPMorgan Chase & Co. - alleging Libor rigging.

Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) rose a dime, or 3.33% to $3.10. Freddie's 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) gained 19 cents, or 6.31%, to close at $3.20.

A trader also noted that the companies' common stock had tripled in value over the last few days.

Sears dips, JCP, Ambac rise

Among other distressed names, a trader said Sears Holding Corp.'s 6 5/8% notes due 2018 were down nearly a point at 973/4, though on thin trading.

Another market source called J.C. Penney Co. Inc.'s 5.65% notes due 2020 up 1½ points at 81½ bid.

Yet another source said Ambac Financial Group Inc.'s bonds were continuing to rally, seeing them finish the day around 70.

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