About $2.5 million of Allied Waste's bank debt traded up to 99 1/4 last week on anticipation that the term loan will soon be paid off through a bond deal. Two weeks ago, the bank debt notched up to 98 1/2 from the 96 7/8 range following the announcement that the company is increasing the size of its bond deal to $750 million from $500 million. The increase will pay down the tranche "A" and the "B/C" paper. At that time dealers said there was heavy trading in the name topping off at around $25 million. Calls to Thomas Ryan, cfo, and Mike Burnett, director of investor relations, were not returned.
Market sources noted it has been a rocky ride for Allied Waste in the last few months, as the company faced pressures in an economic downturn. "They were coming out with weaker earnings, then they rebounded with bond deal," said a dealer. "Price is up on a relative value [play]." Holders of the "A" and "B/C" will get paid out at par.