The market for Dobson Communications Corp.'s bank debt slipped from the 101-1011/2 range to the 993/4-100 context after the company's debt was downgraded by Moody's Investors Service. No trades could be confirmed at those levels, but traders said the paper had recovered somewhat to the 100-1001/2 range toward week's end.
One loan source explained that the recent movement was important because Dobson is one of the few par names that has been trading at a premium to slip under par, albeit briefly. The $700 million credit facility under Dobson subsidiary's Dobson Cellular Systems was completed last fall. The deal is led by Lehman Brothers and Bear Stearns.
Moody's downgraded the Dobson Cellular Systems' bank debt to B1 from Ba3 due to poor financial results for its fourth quarter. The rating agency notes that primarily lower than anticipated roaming revenues caused Dobson's EBITDA to fall short of expectations by 8.5%. Continued weak performance is likely to reduce financial flexibility in 2004, Moody's adds. Richard Sewell, v.p. and treasurer, did not return calls.