Market conditions are said to favor mainstay telecom names, with a number of trades reported last week and levels inching close to par. Nextel Communications' "D" paper traded up to 99 3/4 in a $5 million trade, while same-sized piece of VoiceStream Wireless' "B" tranche traded around 99. A dealer said that the "B" tranche was 99.50, while the "D" was bid at 99.625 and was bid stronger. "The institutional market is still flush with cash and the primary is not filling the appetite at the moment," he noted. "I would expect to see the on-the-run credits continue to perform well from a trading perspective."
Late last year dealers were skeptical of the proposed buyout of VoiceStream by Deutsche Telekom, sending levels into the 98 to 99 range (LMW, 12/24). Yet optimism has been the dominant sentiment in the market lately, and dealers say recent announcements of a delay in the deal aren't quashing their confidence that it will go through. Last week Deutsche Telekom announced a delay in the deal because of a dividends issue. "That's old news, neither here nor there. The chances of the deal not going through are very small," said a trader, adding that the bonds for both companies tend to trade in line. "People look at it as the same credit quality," he said. Another dealer said a delay can be looked at as a good sign. "The fact that they're thinking through various option -- the most efficient and least costly way to finance this -- is a good indication that the deal is going to go through," he said.
VoiceStream's $3.25 billion credit facility breaks down into a $1.35 billion revolver, a $1 billion term loan "B," and a $900 million term loan "A." Goldman Sachs leads the deal of the eight-member syndicate. Nextel has a $5 billion facility that matures in 2008.
Calls to spokesmen at Voice Sream and Nextel were not returned.