Nextel Communications' bank debt did not budge despite being upgraded to investment grade by Standard & Poor's. Traders said market technicals held the price steady with the paper trading in the 1007/8-101 range. One dealer quipped, "How much higher can you pay for [the name]?" There was speculation on whether the paper will ultimately be refinanced, but Nextel's $2.2 billion term loan "E" carries call protection of 101 for the first year.
Late last year, Nextel restructured its credit, putting in place the new "E" term loan in an effort to reduce interest costs, extend maturities and pay down approximately $575 million on the principal amount under the credit facility. The company's bank loan is held at the Nextel Finance Co. subsidiary level. The company used cash on hand and proceeds from the "E" loan to take out the existing $2.775 billion in loans. The new loan also dropped pricing to LIBOR plus 21/4%.
Nextel's bank debt has traveled a long way upward over the last two years, a time in the credit's history when market players were divided on whether or not the company would be able to overcome the hurdle of continuing capital expenditures under operational constraints. Since then, the company has been able to improve operationally while simultaneously reducing leverage. Calls to a spokeswoman were not returned by press time.