Secondary levels softer; Nextel holds steady as equity bounces around

By Sara Rosenberg

New York, Oct. 8 - The secondary bank loan market was characterized as softer on Tuesday, according to market sources. Some said that levels are actually off, while others said that they have not seen a tangible change. But most agreed that the underlying tone was weaker.

Meanwhile, Nextel Communications Inc.'s bank debt stayed firm despite the company's equity roller coaster ride on Tuesday and AT&T Corp. broke for trading after a three-day delay.

"The market is trading off generally," a trader said. "Levels are off. The market is just softer."

"It seems quieter and that means softer," a fund manager said. "It seems like people are doing less trading. I'm not seeing a markdown in my prices but inactivity is usually indicative of a weaker market"

When asked what could be causing the softness, the fund manager responded: "There's not a lot of fund raising going on so there's not a lot of new money. There are not a lot of CLOs [coming in] that I can see. And, people are holding on to capital [in anticipation of the large deals, such as Del Monte Foods Co., Burger king Corp. and Ball Corp.]."

Leveraged players involved in Nextel Communications Inc.'s bank debt essentially chose to ignore the company's rocky equity performance on Tuesday, leaving bank quotes unchanged with a bid of 86½ and an offer of 871/2, according to a trader.

"It was a very wide market today. People aren't really focusing on it," the trader said about Nextel. "The stock traded way off and then bounced mostly back." Although the stock was down by almost $1, "no one came in looking to sell," the trader added.

The Reston, Va. telecommunications company's equity dropped following the release of a JPMorgan research note which claimed that Nextel is not recognizing sufficient levels of bad debt expense, is using wide discretion in customer turnover recognition and artificially enhanced 2002 results through timing benefits and one-time adjustments.

Nextel's stock closed at $7.3113, down $0.4287 or 5.54%. The stock opened at $7.46, experienced a high of $7.62 and a low of $6.85.

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