Alltel underwriters to build book for significant amount of firm's $5.2 billion senior notes during April 7 week

By Paul A. Harris

St. Louis, April 4 - Underwriters will seek to build an order book for a significant amount of the Alltel Communications Inc./ Alltel Communications Finance, Inc. $5.2 billion of senior unsecured cash-pay notes during the April 7 week, according to sources on both the buyside and the sellside.

The investment banks, attempting to capitalize on a week-long rally that the credit markets staged as March gave way to April, aim to deal more purposefully with the $50 billion to $60 billion high-yield bond portion of the leveraged buyout backlog, sources say.

"They are using the rally to get the buyside to a better place on price," an investment banker said Friday.

Sources close to the Alltel deal said that while it has yet to be determined which of the underwriters, Citigroup, Goldman Sachs, Barclays and RBS Greenwich Capital, will bring their portions of the Alltel notes to market, a significant amount, greater than $1 billion, is expected to go on the block.

Other sources are expecting at least $2.5 billion.

Sources said that there is a "price discovery" process taking place.

One source added that the notes, which are expected to come with a coupon in the 10% range, have been quietly shopped in the context of an 84.00 reoffer price.

This source said that the price, in part, will depend upon how much of the $5.2 billion appears likely to be placed.

"People will be a lot more constructive on price the less overhang there is," the source said, adding that the market will be willing to shoulder a higher price if there is confidence that all or most of the senior unsecured debt is placed.

This source also said that lead underwriter Citigroup has "drawn a line in the sand," meaning that it will not be driven to sell the notes cheaper than a certain price, but was unable to say what that price is.

The March-April crossover week produced other news with respect to the risk overhang.

An informed source said that all of the $400 million of high-yield risk related to the Solutia Inc. Chapter 11 exit financing has been distributed.

The source declined to specify an interest rate.

Goldman Sachs, Citigroup and Deutsche Bank Securities were the banks in the Solutia financing.

A market source said that at least a portion of the Solutia bridge sold at 93.00.

In February a company source told Prospect News that Solutia marked down a $430 million face amount of 12½% eight-year senior notes (B2/B-) to 93.00.

In addition sources said that underwriters have been purposefully marketing the First Data Corp. hung high-yield bridge.

One source said that the price discovery with respect to the First Data risk has been moving more slowly than has been the case for other situations.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.