Nextel Communications "D" paper traded at 90 3/4, before softening to 90 1/2 early last week. Dealers noted selling pressure on this tranche. "The liquidity compared with the term loan 'B' is quite poor," a trader said. "The Street and accounts don't want to be holding this paper in the event that the company disappoints." Nextel is a communications company based in Reston, Va. A company spokesman declined to comment.
Another dealer disagreed. "There's no pressure on it. It trades lower not because of pressure but for structural reasons," he said. The "D" tranche has longer maturity and a lower coupon than the "B" tranche. Another dealer explained that the "B/C" paper was over par when it was syndicated, so the "D" tranche could be priced at lower coupon. "The 'B/C' had call protection, which made it more attractive relative to the 'D' paper," he said. Tenor on the "B/C" paper is November 2008, and the "D" paper is March 2009.
The company has a $5 billion deal which breaks down into four tranches and expires in 2008. Bank of Nova Scotia, J.P. Morgan, Barclays Capital and TD Securities lead the deal, according to Capital DATA Loanware. It is priced at 33/ 8% over LIBOR.