Market players suggest that Xerox Corp. could be preparing for some type of debt refinancing and that speculation has propped the bank debt about two points higher over the last couple of weeks. The market for Xerox's revolver is quoted in the 94 1/2 context, its "A" piece is in the 97 - 97 1/2 range, and the "B" loan is quoted as high as the 99 level. There are a number of reasons leading to the refinancing speculation. Xerox filed an amended shelf registration last week for up to $3 billion in new securities. Traders also said the high-yield market is hot and the company has a short-term debt maturity schedule. The current buzz speculates that a new debt package will likely consist of new bonds and a bank debt refinancing. Calls to Larry Zimmerman, Xerox's cfo, were referred to the company's spokeswoman, who declined to comment, noting that the company's earnings come out next week.
WorldCom bank debt ticked up slightly on news that the company has filed its plan of reorganization. While the plan suggests that senior debt holders, which include lenders, will receive 36 cents on the dollar, the bank debt paper only ticked up about two points to the 26 - 27 1/2 context, which is about a point behind the company's bonds due to the bank debt's relative illiquidity. No bank debt traded. "The real question is if the banks will want to sell," said one trader, explaining that the amount of equity that lenders will ultimately receive under the reorganization plan will affect whether or not there will be any sellers. Calls to company officials were not returned by press time.
The bank debt for Levi Strauss & Co. slipped after two former employees filed suit against the company alleging that the San Francisco-based clothing maker had booked income and tax deductions incorrectly, thus inflating profit. The bank debt is quoted in the 94-97 range, falling from the 98 3/4 context, where a trade was completed the day before the news. No trades occurred at the fallen levels. One trader noted that the market is unsure of what happens next. If any bad news comes out the paper will plummet down from the mid 90s levels, he speculated. Calls to William Chiasson, Levi's cfo, were not returned by press time. The company has denied the allegations in a written statement.