After a failed auction two weeks ago, Pillowtex's bank debt finally traded on Friday, July 13 at around about the level where it was snubbed. Dealers said $36 million traded in a single shot at 35. Dealers were unsure as to why someone was willing to pay at a level that failed earlier in the week at an auction. The auction failed earlier in the week as bids came in shy of the floor, which was said to be in the mid-30s. Bank of Nova Scotia was rumored to be the seller of the piece and Morgan Stanley was said to be one of the invited players to the trade (LMW, 7/16). Pillowtex, based in Dallas, is a home-textile manufacturer. A company spokesman could not be reached by press time.
Dealers marvel at the steep decline of the credit, even in a market of plummeting deals. In April, the paper was in the low 60s. By the end of May, it was around 45. "Textiles have been beaten up," a trader remarked. Another noted that the credit's outlook is bleak due to a weaker textile sector, but said it's still logical for someone to anticipate a turnaround. "It's a speculative bet," he said of the buyer's reasoning. "If you look in your linen closet, you probably have something that's marked Fieldcrest [a Pillowtex brand]." Bank of America leads the $680 million deal. Pillowtex's bank debt dropped late last year from the low 60s to 55 after the company filed for Chapter 11. It breaks down into a revolver and term loan. Pricing is LIBOR plus 31/2 %.