McLeodUSA's $615 million "B" loan climbed to 40-41 after falling to 35-38 two weeks ago with between $40-50 million traded. Most market participants said the credit had moved higher for technical reasons. "It's just oversold. The news comes out, sells down to a level and then people jump in and buy it," a trader said.
There was speculation a strategic investor is trying to buy the company through the bank debt. Rumors pointed to Carl Icahn, who acquired XO Communications through the bank debt in 2002, but officials at Icahn Associates declined comment. The head of one distressed desk said there is room to speculate that Icahn is making a play for the company. "There've been some signs that has been happening because there have been some decent sized buyers that might be fronting for him." But he said it is unlikely.
Two weeks ago, the company's "B" loan was quoted at 35-38, the lowest point in its history, after market players perceived a negative call between the company and its lenders (LMW, 2/28). In May McLeod's debt was quoted in the 70s but plummeted after the company reported losses and declining loosen revenues (10/15).