Rumors that WorldCom is planning on drawing down on its $3.75 billion revolver, which is set to expire at the end of this month, caused both bank debt and bond debt players to fret over their exposure to the company last week. As LMW went to press on Friday, there were no reports of the facility being tapped. "For all we know, some bond guys could have started the rumor, hoping to drive down the prices and buy the bonds cheaply," one trader said. The spread on the company's bank debt was wide at 92-97, and no trades could be confirmed.
WorldCom reportedly has secured a $450 million bank line from J.P. Morgan, Bank of America and Citigroup, and negotiations for its $5 billion line are looking to extend past the end of June. One trader noted that the company is in no rush to complete the line. "The company is in the driver's seat," he said. "They have the liquidity they need." The company recently termed out its $2.65 billion credit facility, but investors fear the $3.75 billion line could be drawn if the company decides to file for bankruptcy before maturity. A WorldCom spokeswoman declined to comment on the possible draw down.