A small piece of Wyndham International's "B" term loan traded in the 95 range in retail last Tuesday, according to dealers, as the completion of the company's planned bond deal comes into question. Some traders quoted the paper as low as 92-94 down from the 971/ 2-98 range, where it had been trading before Moody's Investors Service gave the company's planned $750 million of senior subordinated notes a Caa1 rating. The new notes are earmarked to pay down the company's increasing-rate loan and roughly 10-15% of the name's "B" term paper. No trades were reported on the IRL's and the market was quoted wide at 95-98.
Investors are unsure if the company will be able to "price their way into" the bond deal. If the market extracts too steep of a cost for the notes, it will not make economical sense for the company to replace the bank debt with the notes, one dealer explained. Market players think if the bond coupon rises as high as 101/ 2 % or 11% the deal will not get done. Rick Smith, cfo of Wyndham, could not be reached by press time.