Nextel Communications' bank debt is said to be inching back up on positive numbers, with dealers citing multiple small trades of the bank debt in the 95 range. Early last week levels were quoted at 93 1/2 to 94 1/2 range. Nextel's stock was said to be up $1.20, but the bonds were unchanged. "Their numbers are what the analysts expected, and they have a reduced capital expenditure plan," a dealers said of the improved outlook. Still, he noted some ongoing issues. "They're concerned they'll have to upgrade their system. If they need more capital to fund, your return may be less." Nextel is based in Reston, Va.
The company has also announced several cost-cutting efforts, including eliminating 850 jobs.
TD Securities was rumored to be buying most of the bank debt. "They're in the name and believe in it tremendously," said a trader at a rival bank. He diminished the recent spate of trades to the company's first quarter announcement issued last week. "The banks had a budget meeting a month ago. The bank market that owns this debt was already privy to the information," he said. TD officials declined to comment.
Dealers reported about half a dozen trades by midweek. "It's a company that got beat up before the earnings announcement, but now people realize the sky's not falling down," a dealer said. Nextel has a $5 billion credit facility that breaks down into four tranches and expires in 2008. Pricing starts LIBOR plus 2 1/2 % to 3 3/8 %.