A few banks are holding out on approving the two-year extension sought by Calpine Corp. for its $1 billion revolver that expires this Friday, according to market rumors. The identities of the holdouts could not be determined. The market for the company's "B" loan sunk into the 95 range early Wednesday morning but firmed to the 96-97 context later in the day. The bonds were softer as well.
Traders said the market was reacting to the timing of the company's various financing deals. Market buzz indicates that Calpine will initially seek to extend its revolver by three weeks to a month until a more permanent solution can be worked out. The company needs to receive 100% approval for the amendment. "In a situation like this [investors] feel empowered to ask for everything," said one trader. In addition, the market expected the company to come out with its securitization deal via Morgan Stanley sooner, explained one trader. Rick Barraza, senior v.p. of investor relations for Calpine, did not return calls by press time.
Owens Corning's bank debt has been volatile this week, reacting to pressure from a seller and positive news from Washington. Earlier in the week the bank debt sank as low as 55 1/2 to 57 1/2. There was a major dealer trying to pare exposure to the credit, which put pressure on the name, noted one buysider. Later in the week Owens Corning bank debt regained ground with expectations that a bill providing for a universal asbestos liability trust would soon be introduced into Congress. According to reports the bill would fund the trust through contributions from companies plagued by asbestos liabilities and insurance companies. The bill is expected to be introduced on Thursday. A spokesman from Owens Corning said it was too soon to tell how the bill would affect Owens Corning.
Wyndham International's bank debt was softer this week with the "B" loan quoted in the 79-80 context. A few sellers were said to come to the market early in the week to test the bids, but paper did not trade, noted one market player. Dealers said the name is retreating from its recent run up into the low 80s. Wyndham is not going to be rescued by the bond market like a lot of other stressed credits, one dealer explained. In addition, negotiations for an amendment whereby the company would be able to push out the maturity on its increasing-rate loan continue. Calls to Rick Smith, Wyndham cfo, were not returned by press time.