Off-the-run distressed names see more action; Fannie, Freddie preferreds in decline

By Stephanie N. Rotondo

Seattle, Dec. 2 – A distressed debt trader noted Wednesday that several off-the-run names were trading actively during the session.

For instance, Associated Materials Inc.’s 9 1/8% notes due 2017 were trading, falling down to just north of 73.

That compared to levels around 81 a month ago, the trader said.

“You don’t see that one every day,” he said.

Rex Energy Corp. was another rarely traded name that was busier than usual, the trader said.

He saw the 8 7/8% notes due 2020 ending at 24¾. He noted that the bonds’ price had been “cut in half” since the last trades in early November.

Allegheny Technologies Inc.’s 5.95% notes due 2021 were also included on the list.

“There always seems to be sellers of that,” the trader said. However, he added that “you can never find a bid.”

That paper drifted down 1½ points to 77¼.

One trader noted that the sell-off in Fannie Mae and Freddie Mac paper “seems to continue,” adding that the decline has “been pretty steady for the past two weeks.”

The losses have “been substantial,” the trader said. For some issues, the drop has amounted to as much as 30%, though on average he speculated that the paper has drifted down around 20% in the last couple of weeks.

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