Allied Waste reached a high this week of 981Ž 2 as a rumored bond deal and the company's strong performance continue to propel the paper. Dealers reported that $5 million of the "B/C" tranche changed hands. But traders are beginning to question the levels and the premise on which they're based. "The level is steep. It's extremely expensive to pay for it now," one trader said. "Regardless of whether there's a bond deal, it doesn't make sense to pay that much for it." One dealer noted that an unconfirmed rumor is a flimsy basis for higher trading levels. "What's to say the company isn't going to turn around and announce it won't do a bond deal? Anyone can start a rumor," he said. The Scottsdale, Ariz.-based company hauls garbage for over nine million residential and commercial customers.
Two weeks ago the market was buzzing with word that the company is considering a $1 billion bond deal that would pay down as much as 30% of its outstanding tranches at par (LMW, 1/15). A $5 million piece traded at 975Ž 8 on the heels of the news, with some dealers talking up the levels into the 98 range. A company spokesman did not return calls for comment. J.P. Morgan Chase, Credit Suisse First Boston and Salomon Smith Barney are the mandated arrangers, according to Capital DATA Loanware.