Gimme Credit Recommends 10 High-Yield Companies
July 07 2011 - 7:59AM
Dow Jones News
Visteon Corp. (VC), Advanced Micro Devices Inc. (AMD) and Rite
Aid Corp. (RAD) are among 10 junk-bond issuers whose debt is likely
to outperform the market over the next six months, according to
corporate bond research firm Gimme Credit.
The list includes companies ranging from clothing discounters to
casino operators to construction-equipment manufacturers.
"Every investor will have their own view of how to balance their
portfolio, so we provide names with different characteristics,"
said Kim Noland, director of high-yield research at Gimme Credit.
"We try to get a diverse representation."
In addition to car-parts manufacturer Visteon, microchip maker
Advanced Micro Devices and drugstore chain Rite Aid, the list
includes the clothing retailer Burlington Coat Factory Warehouse
Corp., casino operator Caesar's Entertainment Corp., hospital
manager Community Health Systems Inc. (CYH), specialty chemicals
maker Momentive Performance Materials Inc., aluminum products maker
Novelis Inc., and two construction-equiment rental companies, RSC
Holdings Inc. (RRR) and United Rentals Inc. (URI).
"A welcoming high-yield market has permitted some less
creditworthy companies to extend maturities, improving their credit
profile," Noland said. "Other strong issuers have taken advantage
of the relatively low cost of credit to oppportunistically
refinance."
So-called "junk" bonds have returned 4.98% to investors so far
this year, according to a research report from Citigroup. Interest
in new new deals is such that issuance touched a record in May. The
low interest rate environment has made high yield bonds attractive,
even though they are riskier.
Three names on the latest list appeared in Gimme Credit's last
report in April 2010: Momentive, Rite Aid and RSC Holdings.
Gimme Credit, which is based in New York, said it plans to issue
its next list in January 2012.
-By Anusha Shrivastava, Dow Jones Newswires; 212-416-2227;
anusha.shrivastava@dowjones.com