Nextel debt firmer; Triton PCS emerges with $300 mln; Fed move awaited

By Paul Deckelman and Paul A. Harris

New York, Nov. 5 - Nextel Communications Inc. debt was firmer in otherwise generally quiet high yield secondary market trading Monday, as the wireless operator denied that it plans to sell a $250 million stake in its Brazilian subsidiary to raise money and said it would evaluate plans to fund the expansion of its international unit.

In the primary market, Triton PCS emerged late in the session with a $300 million offering of 10-year notes expected to price later in the week. Bookrunners are J.P. Morgan and Merrill Lynch & Co.

Also, talk of 8¾% to 9% was heard on Woolworth Group plc's upcoming sterling-denominated offering, set to price Wednesday, while Global Auto Logistiques S.A.'s €125 million deal was downsized to €100 million. Among dollar-denominated new prospective deals Majestic Investors LLC planned to hit the road this week with a $140 million offering of seven-year notes (see story below).

With the Dow Jones Industrial Average gaining 117.50 to 9441.00 and the Nasdaq adding 47.92 to 1793.65 Monday, investment bankers and other market sources were split on whether the recent rise in equity markets was good for junk bonds.

One source, speaking from London, said that European equity markets were shadowing those in the New World. And he was not necessarily taking heart in the recent equity run-ups.

"Europe has really been taking the lead from the US recently, just because the downturn has seemed so severe, over here, and people are nervous," the source commented. "And Europe has basically been following the US equity markets back up again.

"I think the high yield market follows the equity markets to a certain extent, with something of a lag. And certainly when the equity markets are extremely hot or extremely cold, the high yield market is affected in a big way.

"But I think the best thing for the high yield market is relatively steady equity markets, which these have not been. That is what has really put a damper on things. People don't invest in high yield funds for volatility."

Meanwhile a syndicate source in New York saw only good news in the recent equity market run-ups.

"It's definitely a good thing, without a doubt" the American-based banker said. "It gives investors confidence that things are going to perform well, after-market.

"Actually I think our market is fairly stable right now," the New York source continued. "If you are a well-known issuer, if you are a higher-rated credit, you should be able to do a deal."

In secondary activity, a trader said Nextel's 9 3/8% notes due 2009 rallied to 72.5 bid from prior levels around 71, citing news reports that Nextel had denied a report in Brazil's Valor Economico that it planned to sell at least part of its Brazilian operation and use the proceeds to fund international expansion. Instead, Nextel said in a statement that the Valor Economico report was wrong. As to funding international expansion, a company spokesperson said Nextel International is considering selling bonds, equity or other financing options, although nothing concrete had been decided yet.

The trader admitted, however, that he didn't know whether the bonds had firmed primarily because the Reston, Va.-based No. 5 U.S. wireless carrier plans to expand its international stake while keeping control of its Brazilian unit, or just because "the overall market was better, tracking equities." He saw no movement, meanwhile, in Nextel International's bonds.

At another desk, Nextel's 9 3/8s were quoted as high as 73.25, up about a point-and-a-half, while its 10.65% notes due 2007 were heard having firmed to 70 bid from 68.

Elsewhere, Lucent Technologies Inc. bonds were heard trading about a point to 1½ points better, helped by improvements in its stock price; the Murray Hill, N.J.-based telecommunications equipment maker's 7¼% notes due 2006 went from Friday's 81 bid to 82.5 on Monday.

Fruit of the Loom's bonds, which had gained about five points across the board in Friday's trading on news that billionaire investment guru Warren Buffett's Berkshire Hathaway would buy Fruit's basic apparel operations for $835 million, continued to firm on Monday.

Its 7% notes due 2011 and its 7 3/8% paper of 2023, which had risen Friday to around the 38 bid level, went home Monday quoted at 42, while market players pegged its 6½% notes due 2003 at around 64 bid, up a point.

Trump Atlantic City Associates's 11¼% first mortgage bonds due 2006 were seen having firmed, quoted left bid with no offers at 61.5, up from around 60 on Friday. The bonds were trading flat, or without accrued interest, after the gaming company announced that it would withhold interest payments in order to force bondholders to grant the company more favorable debt terms, and in fact did not make a $73 million interest payment on the bonds which was due on Nov. 1.

On the downside, Allied Waste, a loser last week, was again heard easing, its 7 3/8% notes due 2004 retreating to 98.5 and its 10% notes due 2009 seen at 99.25, both down about half a point to a point. Emmis Broadcasting's zero-coupon notes ended lower, at 55.5 bid, while not-quite-yet-a-junker Enron Corp.'s 7 3/8% notes due 2019 dipped to bid levels in the 70-72 area from prior quotes around 73.

But overall, a trader said, market activity was generally restrained, as players awaited the release of earnings, after the bell of equity-market tech bellwether Cisco Systems Inc. (the networking giant reported that its fiscal first-quarter earnings slumped amid the broader economic slowdown, but it still beat Wall Street expectations and said on an after-hours conference call that it expects fiscal second-quarter sales to be unchanged to up slightly from the $4.45 billion in the first period).

Besides the key equity benchmark, he noted that investors were awaiting word from the Federal Reserve, expected to announce the latest in a series of interest rate cuts on Tuesday.

"A lot of people are just sitting on their hands right now, waiting to see which way we go."

Another trader noted that there had not been much market reaction to Friday's news that some $37.8 million more had come into high yield mutual funds than had left them in the week ended this past Wednesday, continuing the positive trend in fund inflows seen the previous two weeks, although at a considerably more modest scale - the week before, the funds had gained a net $141 million, and $480 million the week before that.

The latest rise was "a modest inflow, but an inflow nonetheless," he opined, adding that with the recent return of cash to the funds after several weeks of heavy bleeding following Sept. 11, "there's a lot of money on the sidelines waiting for the new deals to come. A lot of these accounts do have tons of cash sitting on the sidelines, waiting for the better deals, waiting for the defensive deals."

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