McLeodUSA Inc.'s bank debt, defying gravity, made a surprise showing in the 97 1/2 range last week, with dealers marveling at the high point for a credit in a beleaguered telecom industry. Traders said $7.5 million had traded, and levels have since notched down to the 95 1/4 range. Calls to company officials were not returned by press time.
A dealer said McLeod's levels are out of line with where many telecom credits are trading right now. "It's emerging telecom, and all are trading in the 80s," he said. "It doesn't make sense: It's not cash-flow positive and just got put on watch for a negative rating." McLeod has a $1.3 billion deal that breaks down into three tranches and expires in 2008. J.P. Morgan Chase, Bank of America, Citibank, and Goldman Sachs are the lead arrangers, according to Capital DATA Loanware.