Allied Waste is rumored to be considering a $1 billion bond deal that would pay down as much as 30% of its outstanding tranches, and bank debt players late last week started pushing up the price on the debt. The paydown is expected at par, and trade levels have been creeping up to that level on the bond rumor. A $5 million piece traded at 97 5/8 early last week, and some traders were talking the debt up to 98, but nothing could be confirmed as moving at that level by press time. A company spokesman for the Scottdale, Ariz.-based company did not return calls for comment by press time. Word of the bond deal was spreading late Thursday. "It hasn't been announced, but we're hearing it could happen very quickly," one trader said, noting that he heard there will be a 22-25% pay down on the "A," "B," and "C" tranches. He added, however, that a bond deal is hardly a no-brainer. "We're still trying to figure out why they're doing it. They don't need it; they're playing with liquidity. Why would you replace lower priced bank debt with higher priced bonds?" Whether the deal comes off as rumored made little difference last week for the bank debt, which moved up.
Allied's "B/C" tranche last traded two weeks ago at 97 1/8 and the revolver traded at 93 3/4. J.P. Morgan Chase, Credit Suisse First Boston and Salomon Smith Barney are the mandated arrangers, according to Capital DATA Loanware. Spokesmen at all three banks did not return calls for comment.