Allied Waste's levels are getting a boost on a 20% paydown after the company's bond deal was completed in mid-November. Last Monday the bank debt traded at 99 1/8 from 98 1/2. Allied Waste officials have declared their industry "recession-resistant" but have also responded to a widespread economic downturn by reducing debt and generating cash flow. The company has a target of generating $400 million in free cash flow by 2001 and paying down debt, which currently stands around $9.3 billion. The trash-hauling company is based in Scottsdale, Ariz. Mike Burnett, head of investor relations, declined to comment on trading levels. Of Allied Waste's paydown, Burnett said, "The point is this industry is not recession-proof. Recession-resistant means you feel some impact. We're predicting at the end of year our EBITDA will be off 7%, but at the same time, we're not losing 20 or 30 percent of revenue."
A dealer said a paydown of $750 million from a $7 billion deal "just took some of the technical pressure off. [Prior to that] everyone looked at it as too much paper out there." One trader explained that as collateralized loan obligations are ramping up and fund managers are coming in, more money is being thrown into the market. At the same time, more paper is being taken out of the market as Allied retires bank debt, so it pushes up bids.