El Paso Corp. continued to be a focus of secondary market players last week as investors and spectators speculated on how the company would deal with the upcoming maturities on its $3 billion, 364-day revolver coming due in May and its $1 billion credit expiring in August. El Paso spooked investors last week when it drew down fully on the August line (LMW, 2/17). The May line is only half drawn and can be termed out for one year. Some market players think that the company will choose to give the bank holders under the May facility extra security in exchange for the extension of that line. Under this scenario, El Paso is expected to draw down on the May credit to repay the August line.
Other bankers said a larger restructuring could be possible. "As long as you are going to be stiff arming the banks, why not stiff arm all of them," one dealer questioned, suggesting that El Paso should give both bank groups extra security and pay down $1 billion across the two. "They need to put a restructuring in place and we think that they have just enough assets," he added. The company's May credit is currently quoted in the 80-81 context and the market for the August line clocked in as high as 86 1/2 87 1/2. Calls to the company were not returned by press time.