Deutsche Telekom was scheduled to pay off $2.65 billion of VoiceStream Wireless' senior credit facility debt last week at par. "It hasn't happened as of yet," Casey Otley, assistant treasurer of VoiceStream, said last week as LMW went to press. "From VoiceStream's perspective, it's replacing our debt with an inter-company rate. From DT's perspective, it's retiring more expensive debt." Deutsche Telekom finalized the acquisition on May 31.
That means an extra $2 billion in investor money was expected to be freed up by Friday. A trader noted that desks such as Merrill Lynch, Bear Stearns, and Credit Lyonnais hold the credit which has reportedly been trading close to par over the last few weeks. "Many investors got in to the credit as a yield to call play," he said, explaining that a pay down was expected. Dealers played a guessing game of where that additional spending cash will go, or if investors will try to hold off until September or October to put the money into new issue. But many acknowledged there were no solid predictions. "I don't know; my crystal ball is foggy," said one.