Distressed commodity names hit again; AMD bonds, equity beaten down; Fannie, Freddie gain

By Stephanie N. Rotondo

Phoenix, July 7 – The distressed debt market was weak yet again Tuesday, even as the equity markets rebounded on hopes Greece and its European Union creditors have come to terms.

Reports were circulating that a verbal agreement had been made and that Greece would formally propose the deal on Wednesday.

The distressed debt space wasn’t the only part of the bond market losing ground, as junk bonds were also retreating.

The KDP High Yield Index fell to 69.91, with a 5.78% yield, from 70.07, with a 5.74% yield, on Monday. The reading is getting perilously close to the index’s 52-week low of 69.01.

As for the day’s dealings, the focus continued to be on commodities.

“Anything commodity-linked got hammered again today,” a trader said.

Those declines came even as oil prices managed to rally. West Texas Intermediate crude improved by 22 cents to $52.75 a barrel.

Advanced Micro Devices Inc.’s debt couldn’t catch a break Tuesday, as the bonds continued to weaken after the company lowered its quarterly guidance on Monday.

A trader said the name was “down a good bit,” calling the bonds off “3 to 5 points, maybe even more.”

Despite the modest strength seen in the preferred stock market, a trader noted that Fannie Mae and Freddie Mac paper was selling off early Tuesday. He wasn’t sure what was sparking the move, speculating that “there must be something going on in the courts.”

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