The bank debt of Express Scripts traded at 99 in the Street, following reports that Aetna will be terminating its pharmacy contract with the company. The paper had been trading in the 99 3/4 context prior to the news, and it had even rallied a bit immediately following the trade. But by week's end, the market for the name had slipped into the 98 1/2 99 range.
News from Express Scripts, however, was all positive. During the company's earnings conference, CEO Barrett Toan said a new contract with the U.S. Department of Defense would alone exceed the business that Aetna brought to the company. In addition, David Myers, Express Scripts' director of investor relations, told LMW that the company had secured several undisclosed new clients over the past couple of months. He also noted that the company was prepped for a strong season in 2003. "Show me the customers," quipped one trader in response to the information.
Some dealers predicted that Express Scripts' bank debt was likely to come under pressure in the future because its slim spread of 2% over LIBOR does not justify its current price. Myers referred questions about the bank debt to the company's treasurer, who did not return calls by press time.