Qwest upsizes, Charter and Nextel firm in trading

By Paul A. Harris

St. Louis, June 2 - During Monday's session in the leveraged loan market Qwest Corp. found a sufficient number of parties listening closely on the investor line that it was able to dial in an extra $500 billion, bringing the total size of its new credit facility to $1.5 billion.

And Domino's, scheduled to have its bank meeting on Monday, was heard to be delivering a deal that is "a bit aggressive."

Meanwhile in the secondary market the paper of Charter Communications was heard to be getting a better reception and Nextel's bank debt was also heard to have firmed.

And the recently closed Williams loan was quoted above par.

"The market was pretty well bid today," one secondary market source told Prospect News late in the first session of June. "Monday is usually pretty quiet so things kind of died around noon."

Two deals in the market that are expected to close this week, Qwest and Domino's, sparked a good deal of the day's discussion.

Qwest, with its $1 billion four-year senior term loan oversubscribed in excess of three times, according to one source, is set to add a $500 million seven-year fixed rate tranche to its new financing.

The Denver telecommunications company's deal, led by Merrill Lynch, Credit Suisse First Boston and Deutsche Bank, is expected to close at the end of the week. The $1 billion four-year senior term loan (Ba3), which had been talked at Libor plus 450 to 500 basis points.

One source on Monday commented on Qwest's previously announced four-year loan, saying: "I find it extremely interesting that it's unsecured. With those kinds of coupons it's normally senior secured stuff. So this is kind of a hybrid.

"And bank loans are usually prepayable at a moment's notice. So it's really a hybrid: it's got a high-yield coupon but it's unsecured. But they do have call protection."

The new Domino's $685 million senior secured credit facility (B1/B+) also had a bank meeting scheduled for Monday, and one informed source said "the high profile deal of the week" is being viewed as "a bit aggressive."

JP Morgan is leading the deal comprised of a $560 million seven-year term loan B at Libor plus 350 basis points and a $125 million six-year revolver at Libor plus 325 basis points.

Meanwhile in Monday's aftermarket action sources had the paper of Charter Communications decidedly firming.

"There was a big price trade," said one source, adding that the Charter term B traded at 94 and was subsequently quoted at 94 bid, 95 offered.

"I thought that was pretty notable," the official commented. "It has come a long way. It slowly crawled up through the 80s to 90, 91, 92. And you saw activity on the name, and it came up further. That's a lot of momentum on a bank loan."

Another source quoted the Charter paper at the "94 level," adding: "That is up pretty substantially. The bonds were rallying. Equities were up about 10 cents on the basis of $3. It ended the day pretty well bid, although there was no real news." The stock closed 10 cents higher at $3.10.

This source also reported that Nextel's term loan had traded higher at 98.75. "The offer was lifted there," the source said.

Also seen moving up in the aftermarket was the recently closed loan from Williams Cos.

"It was very well received," said one official. "The institutional investors basically have got this thing at 100.25/100.75.

The official noted that the loan was upsized to $500 million from the initial talk of $400 million and the interest rate flexed down to Libor plus 375 basis points from Libor plus 400 basis points. It was offered to the market at par.

In follow-up news, Watson Pharmaceuticals, Inc. said it closed on a $300 million five-year revolving credit facility via Wachovia Securities, Inc. Interest is at Libor plus 125 to 175 basis points, depending on the company's credit rating. There is an unused commitment fee of 37.5 basis points.

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