Comdisco, Inc. last week said it had drawn down roughly $800 million of its $1.1 billion deal, prompting market players to draw comparisons to Xerox Corporation's announcement last December that it had exhausted most of its $7 billion revolver. Comdisco's bonds quickly plummeted about 25 points, from 85 to 60. Unlike the Xerox experience, however, the bank debt did not follow suit. Traders said Comdisco's bank debt was holding steady in the 60-65 range and no trades were reported. Comdisco, based in Rosemont, Ill., leases electronic equipment. A company spokeswoman did not return calls for comment.
The company, which couldn't issue commercial paper after a ratings downgrade, said it had nowhere to turn but to its bank debt. "Commercial paper lenders are fair-weather friends," said a market player, explaining why the downgrade meant a loss in funding. "Once you lose that the cost of credit goes up dramatically." The company is paying LIBOR plus 72.5 basis points with an additional 15 basis point facility fee. While Xerox's announcement last year sent the market reeling, dealers seemed less reactive to Comdisco's announcement. "There's just so much going on, people don't get surprised anymore. They've become punch-drunk," one trader said.