Winstar Communications' bank debt hit the single digits last week in a $5 million trade, notching down from the mid-teens a week before. The debt settled in at six, a level so rare that even distressed players were marveling. Dealers fault problems with the debt's structure and say the company needs money to carry out operations. This is a sharp drop from levels last spring when Winstar was trading in the 32 range on news it would default on its bank covenants (LMW, 4/22). Winstar is a competitive local exchange carrier based in New York City. Calls to Richard Uhl, cfo, were referred to spokeswoman Laura Kline, who did not return them by press time.
The credit was once a par name but began to collapse under the weight of an oversaturated telecom industry. Winstar has a $1.5 billion deal that breaks down into three tranches. Bank of New York, CIBC World Markets, Citibank andCredit Suisse First Boston are the lead arrangers.