Enron's bank debt climbed into the high teens last week after news leaked out that the company's creditors might have access to assets that were transferred off Enron's balance sheet. Paper that has been trading in the mid-teens jumped to a market of 17-20. Trading was said to be slim, but Deutsche Bank is believed to have traded a $10 million piece out of an original seller at the 18 level. Officials at the bank declined to comment.
The tone of the bankruptcy court examiner's report is expected to be similar to the preliminary report issued late last year, which chastised the off-balance sheet transactions, a buysider explained. The reason the bank debt ticked up this week, he continued, was because creditors anticipate that the off-balance sheet assets and liabilities will be brought back on the books. These vehicles are richer in assets relative to liabilities than the scurrent on-balance sheet holdings, thus the pool of assets available for Enron creditors would be greater, he added.
Market players said the bank debt is currently trading at a premium to the bonds, which were quoted in the 14 7/8 15 1/8 context, due to certain litigation against Citibank and J.P. Morgan. Calls to Raymond Bowen, Enron cfo, were referred to a spokesman who declined to comment on the report. "We will not discuss the report until it is made public on Feb. 28," he said.