A $10 million piece of Allied Waste's "B/C" tranche traded at 99 1/4 last week, following a presentation company officials gave at Morgan Stanley Dean Witter's high-yield conference in Florida. "It's no coincidence that the conference ended Wednesday, and there were six trades on Friday," said a dealer who attended the conference. "The buyside funds were there and saw it." He added that company's continued popularity has helped nudge up levels. "It's just a popular name. Everybody wants it. Everybody has a core position. The [waste hauling] industry makes people nervous, but the company itself has a good story."
While calling company presentations a "glorified commercial," the dealer said Allied's selling point is that it will have access to landfills for the next several decades, alleviating concerns as landfills are closing and access to new land is scarce. "The bonds have rallied, and there's relative value play between the bonds and the bank debt, with the bank debt in favor," said a trader. The Scottsdale, Ariz., company hauls trash for 9.9 million commercial and residential customers.
Last month the company issued $600 million in bonds, which paid down 22-25% of the "A," "B," and "C" tranches of the bank debt at par. Earlier that month rumor of the bond deal pushed up the debt.