Levels for Motor Coach Industries' bank debt have been sliding, with traders quoting the paper in the low-to-mid 70s. No trades could be confirmed, but multiple market players were watching the name last week. "The company may miss their covenants and will probably have to go back to the bank group later this year," noted one buysider. Allan Swanson, Motor Coach's cfo, declined to comment through a spokeswoman. Motor Coach's "B" loan was quoted in the 791/2-823/4 context at the beginning of this month, according to LoanX.
Moody's Investors Service recently downgraded Motor Coach's bank debt to Caa2 from B2 due to the covenant issue, as well as deterioration in expected operating results. The company currently has covenant waivers through December 2003. But if Motor Coach is unable to obtain further waivers, receive liberal amendments to its credit agreement, or significantly improve its operations, Moody's believes Motor Coach will likely violate the credit agreement. Motor Coach currently has a $119 million revolver and a $299 million "B" loan.