Several telecom names continue to feel the heat of market saturation and a weak high-yield sector. A total of $15 million of Winstar Communications' bank debt traded around 30 last week. Teligent is bid around 20. In December of 1999, Teligent's paper was bid at 99, and by January of this year, bids had dropped to 60. Teligent provides telephone services for companies. "The whole CLEC, long-haul service provider sector is getting beat up," a dealer said. RCN Corporation's bank debt is in the 66-72 range and 360 Networks is at 60-70. "Telecom has just fallen out of bed," a distressed dealer remarked. Spokesmen at Teligent, RCN and 360 Networks did not return calls. A spokesman at Winstar declined to comment.
Now market players are watching to see which companies survive and which take the fall. "Anybody with money to invest is going to be careful and stay on the sidelines," one market player observed. "A lot of telecom paper came out last year, and people just have too much paper in their books. If 90 percent of portfolio is telecom, it's a huge risk. Right now people want a much smaller portion, like five percent in telecom."
Dealers point out that credit quality and sector are major factors. "People are just picking through the names and deciding who are the survivors," a trader said. "It's individual, not sector-specific but company-specific. People are looking at higher-quality names." Names said to be surviving the hit are Crown Castle, with a $5 million piece trading at 100.50. SpectraSite Communications is trading in the mid-90s, down from par. Its bid-offer spread was quoted last week at 94-97 in the Street. "Those are both tower deals, not companies that provide telephone services. It's basically real estate," a dealer said, giving his take on why the credits weren't affected as much as others.