Tyco International's $2 billion, five-year revolver with February '06 maturity traded in the 90 context early this week. Its bank debt, which matures in February '03, was quoted in the 97-97 3/4 context and traders said the paper has been creeping closer to par as its expiration date approaches. The February '03 bank debt was a $3.855 billion, 364-day revolver that was termed out in February this year.
One trader explained the level where Tyco's '06 bank debt traded was not favorable on a relative value basis with the company's similarly termed bonds. The trade levels are appropriate, however, if investors think that the February '06 paper will get refinanced along with the company's February '03 paper. "Wouldn't you be willing to pay a three-point premium if you were going to get another 10 points in the end?" he questioned. Calls to Tyco officials were not returned by press time.
WorldCom's bank debt surged alongside of bond prices on reports that Rudy Giuliani has joined on with David Matlin of Matlin Patterson Asset Management to raise $1 billion to purchase WorldCom bonds. Several small trades of WorldCom's bank debt were said to have been completed in the 24-25 context on Tuesday, but those trades could not be confirmed. Calls to WorldCom and David Matlin were not returned by press time.
Charter Communications rallied a couple of points despite the announcement that an additional $2.6 billion in franchise costs and deferred income tax liability should have been recorded. Traders said the bank debt traded up to the 83-84 range because the news removed some of the uncertainty that has surrounded investigations into Charter's accounts. In addition, market players said the news had a net zero effect on the company's cash position. "It doesn't have any impact on cash flow," noted Eric Geil, Standard & Poor's analyst. Questions to Kent Kalkwarf, Charter cfo, were referred to a spokesman, who did not return calls by press time
A $10 million auction of AES Corp. bank debt went off in the low 80s on Monday, said traders. The buyer and seller could not be determined. The auction comes as the deadline for a critical exchange offer of up to $500 million of senior notes due in 2002 and 2003 approaches. Last week, a $30 million piece of the AES Corp. revolver traded in the same context as the ability of the company to complete the offer - and the contingent bank debt refinancing-came into question. The company has $300 million of senior notes that mature on Dec. 15. If AES cannot complete its exchange, meeting that maturity will be difficult, explained market players. Calls to AES were not returned by press time.