Levels for Qwest Communications International's bank debt fell to a wide 75-80 after the company admitted that the U.S. Attorney's office in Denver was conducting a criminal investigation into the company. The name had been offered at 83 before the announcement, one dealer noted. No trades were reported, and market players suggested that investors are waiting to see what happens next.
The Securities and Exchange Commission has been investigating Qwest for a number of issues, including the sales of optical capacity assets, the sale of equipment by Qwest to customers from which Qwest bought Internet services and revenues related to its directory business. Market players hope that the U.S. Attorney's investigation, which they believe was spurred on by WorldCom's fraudulent disclosure, is along the same lines as that of the SEC. A Qwest spokesman confirmed the investigation but said the U.S. Attorney's office has not disclosed the scope or the specifics of the probe. He could not comment on the bank debt levels.
Qwest currently is trying to sell its directory business, also known as Qwest DEX. The company reportedly has had at least three bids topping $8 billion for the business. The transaction would provide Qwest with much needed liquidity, according to one analyst who follows the company.