Secondary market players amused even themselves last week as they bantered and chased a mammoth $150 million trade of Crown Cork & Seal bank debt that never actually happened. "It's all total bull," a dealer said of the trade. "I have the paper offered to me right now, but it hasn't traded. There's a huge piece that everybody wants to trade and supposedly everyone's trading it. It's kind of funny to watch."
Early last week dealers were buzzing that one holder of the paper was looking to unload $150 million of CCK in one shot. Dealers began speculating that J.P. Morgan was the big seller, but later pointed to ABN Amro. One trader said ABN officials had approached J.P. Morgan about doing the sale for them, but no deal was ever struck. ABN does not have its own trading desk. A J.P. Morgan spokeswoman declined to comment. An ABN spokeswoman did not return repeated calls. Timothy Donahue, v.p. finance at CCK, also did not return repeated calls.
"There's a handful of guys holding large pieces of CCK, and Chase is one of them, so people just assumed it was them," one dealer said. "I was telling the buyside it was them." He later learned his own information was wrong. By late Thursday, dealers conceded a much smaller amount no more than $20 million had actually traded. The coveted $150 million piece was still with the seller.
"Turns out everybody was wrong [about the $150 million trade] and nobody wants to admit it," a dealer noted last Thursday. "A dealer was running around saying $150 million was coming out, and everyone jumped the gun. The competition is so fierce, they tell their desk and a sourcer goes blabbing it out." A dealer noted that the view on the credit is no different than it was three weeks ago, but because many desks have such large exposure to it, any mention of an offer swirls rumors.
CCK, a Philadelphia, Penn.-based company, is one of the leading worldwide manufacturers of packaging products. A trader reasoned that there's market anxiety that the company may file for Chapter 11. Crown Cork is one of the last two asbestos-related names that hasn't filed for bankruptcy. The company has a $2.5 billion revolver that expires in 2002. J.P. Morgan, Société Générale, and Bank of America are the lead arrangers. In May, Moody's Investors Service assigned a B3 rating to the new deal over uncertainty stemming from future asbestos claims payments.