Nextel Communications' term loan "B" notched down a few points last week to the 92 1/2-93 1/2 range, from a previous high of 96. The trades were in the $5 million range, although totals could not be determined. Some dealers attributed the fall to "technicals" and predict the name will trade back up. "In any different market, if this was trading in a vacuum, it would be above par," said one. A company spokesman did not return calls.
However, others said the level is a result of inherent flaws in the credit structuring. "You've got some fundamental credit issues on this one," said a trader. "Nextel's amendment relied on pretty aggressive new subscriber growth. It's levered for higher subscribers."
Nextel has a $5 billion credit facility that expires in 2008 and breaks down into four tranches. Bank of Nova Scotia, J.P. Morgan Chase, Barclays Capital, and TD Securities lead the deal, according to Capital DATA Loanware. Pricing starts at 21/ 2% to 33/ 8% over LIBOR.