The "B" paper for American Tower hit 99 1/4 in a $10 million trade last week, improving on the 98 3/4 bid on the name. Dealers have been divided on whether tower credits seem to tumble with the telecom sector. Some have said towers follow--albeit sometimes months behind--downgrades in levels on telecom credits. Still, overall tower credits have remained fairly resilient in a rocky market. Calls to the company were not returned.
One dealer speculated that telecom companies may be starting to move in on what had been tower companies' turf originally. "It's possible wireless companies are eating away at landline service," he remarked. "Wireless had been a growth business for several years, and now it's landlined; there's nowhere to go." Another dealer was skeptical of the most recent trading levels, noting that the company's debt was just put on negative watch and that it may come to market for an incremental term loan that would put more supply into the market.
Early last month the company's paper softened a bit to 99, with dealers stating that tower credits get lumped in with the rest of telecom (LMW, 7/1). American Tower has a $2 billion deal that breaks down into three tranches and expires in 2008. Pricing is LIBOR plus 31/ 2%. TD Securities, Bank of New York, J.P. Morgan and Credit Suisse First Boston are the lead arrangers.