Nextel Communications' bank debt was being quoted down by 1/4 of a point last week as sellers hit the market on a heels of a slow-moving bond deal, traders said. The term loan "D" was quoted at 99 1/2 and the "B/C" at 100 1/4. "There was dumping of a whole bunch of paper," said a trader active in the name. He declined to say who was involved. He noted the "D" paper had since been quoted back up to 99 3/8. "The bond deal didn't go as well as was expected," another dealer said. Another market watcher said the bond deal was perceived to be going slowly, which resulted in some selling off of paper. "It put some pressure on the 'D' paper," he said. Nextel, based in Reston, Va., is a provider of wireless phones, two-way radio dispatch, and paging services. A company spokesman did not return calls for comment.
One dealer questioned why the levels have slipped slightly. "There's no reason why anyone would think that the paper should be weak. Every time they do a bond deal it's subordinated to the bank debt, so if the company goes bankrupt the bank debt is paid out before the bonds. If they keep doing new bond deals, it only increases the value of the collateral package for the bank debt, so it's a good thing."
Nextel has a $5 billion facility which breaks down into four tranches. It matures in 2008 and is priced at 3 5/8 % over LIBOR.