News last week that the Federal Communications Communication gave approval to Deutsche Telekom to buy VoiceStream Wireless sent bids for the latter company's "B" tranche up to 99 1/2. Dealers last week said the announcement, which was touted as a major step in a long-running drama, would spark trading. Earlier in the week, just prior to the announcement, Voicestream "B" traded at 99 1/4.
Dealers said this was the first good news in a while for the telecom sector."Interest in telecom continues to be light, somewhat non-existent," one trader noted after the announcement. He added that VoiceStream would have a support bid level due to the pending takeover around 99 1/4 to 99 1/2, but said it was unclear whether there would be any trading soon. Meanwhile, other traders projected a rosier future for VoiceStream's paper, saying they expected it to hit par on Deutsche Telekom's investment grade status.
VoiceStream has a $3.25 billion deal that breaks down into three tranches. Pricing starts at LIBOR plus 2 3/4 % to 3%, according to Capital DATA Loanware. Goldman Sachs, Credit Suisse First Boston, Bank of America, Barclays Capital, J.P. Morgan Chase, Salomon Smith Barney, TD Securities, and SG Cowen Securities are the mandated arrangers.