American Tower Corp.'s bank debt received a lift from the news that the company would use $30 million in proceeds from the sale of its Verestar subsidiary to pay down its credit facility. Market players said a $2-3 million piece traded in the 92 3/4-93 context. The bank debt has rallied from the mid-to-high 80s over the last month. Questions for Bradley Singer, cfo, were referred to a spokeswoman who did not return calls.
Michael Tsao, a Moody's analyst, noted that American Tower has the strongest balance sheet among the tower companies. This opinion is in stark contrast to that of the the bank debt market, which has always considered Crown Castle International to be the "golden egg" of the sector. Tsao, however, warned investors. "Most of [Crown Castle's] bank debt is held at the parent company level and does not have access to the liquidity and free cash flow at the subsidiary level." He noted that leverage at the parent company level was about 18 times. Crown Castle officials did not return calls by press time.
Levels for tower company bank debt are currently pricing higher than they have been for the last six months. Crown Castle's "B" piece had a market of 94 5/7 to 95 15/16 last week, according to LoanX. "People haven't lost money on the bank debt," noted one dealer, adding, "Even with the companies that have been restructured, it was the bonds that got the haircut." A trader concurred, "Even if they have to file, bank lenders think that they will get everything back." Standard & Poor's has released a report on the tower sector, however, that paints a less optimistic picture. The rating agency states that weak tower business profiles are unlikely to improve in the next 18-24 months due to slowing demand services by wireless carriers. S&P said that deleveraging will be unlikely to occur within the sector without debt restructuring or an equity injection.