Leap bank debt jumps around on MetroPCS move; Parmalat bonds higher

By Paul Deckelman and Sara Rosenberg

New York, July 29- Leap Wireless International Inc.'s bank debt was all over the place on Thursday on the heels of MetroPCS Communications Inc.'s decision to pull its initial public offering.

In bond trading, insolvent Italian dairy products producer Parmalat Finanzaria SpA's bonds were seen several points firmer as the company moved to recover potentially several billion dollars by suing its former banker, Citigroup.

Leap's bank debt dropped all the way down to 112 bid, 113 offered, went back up to 117 bid, and then finally settled in the 116 to 117 context, a trader said.

By the end of the day one trader had the San Diego-based communications operator's paper quoted at 116 bid, 117 offered, another had it 116.5 bid, 117 offered and yet a third trader had the paper quoted at 116.5 bid, 117.5 offered.

The paper closed Wednesday round 117 bid, 117.5 offered, so it was really only down about a half a point to a point on the day - but it had been down as much as five points in the morning.

The volatility is nothing new; over the last 10 days or so, the paper has fallen by about 10 points.

Around midnight ET on Wednesday, MetroPCS released a statement that said the Dallas-based wireless communications company's management "has determined not to proceed at this time" with the IPO "pending their review of certain accounting issues that came to their attention today, relating to the company's previously disclosed financial statements."

Bad news for Leap, market players said.

"MetroPCS is a comparable company. When a private company goes public, there's a public valuation. People were looking for a high public valuation," a trader said.

But, when MetroPCS decided to pull its IPO, people started to speculate that "multiples are coming in [and there's] not enough demand from equity side. So if Leap ever wanted to do an IPO - maybe they couldn't. Perceived multiple contraction changes the price; also the sell-off in the equity market," the trader added.

Adelphia down again

On the bond side of the ledger, a trader said that he saw another communications name, bankrupt Greenwood Village, Colo.-based cable operator Adelphia Communications Corp., "still lower." The company's senior bonds - some of which had been trading above par just a few short weeks ago on expectations of asset sales and a quick Chapter 11 exit - have now retreated more than 10 points from such highs, with the 10¼% notes due 2006 dipping to 88 bid, 90 offered from 90 bid, 92 offered previously.

At another desk, Adelphia's 9 7/8% notes due 2007 were down more than a point on the session to around 88 bid, while the bonds of its Century Communications Corp. unit - which trade at a considerable premium to the parent's bonds because of their closer proximity to the unit's collateral assets - were seen down about half a point at 107 bid.

Charter slips

Also in the cable constellation, a trader quoted Charter Communications bonds "a little easier," with the St. Louis-based cabler's 8 5/8% notes due 2009 dipping to 77 bid, 78 offered from prior levels around 81. Its 8¼% notes due 2007 were two points lower at 88 bid, 90 offered and its 9 5/8% notes due 2009 were half a point down at 77.

Parmalat gains

The trader saw Parmalat's bonds up about two points on the session at 14 bid, 16 offered.

Parmalat - which filed for protection from its creditors under Italy's revamped fast-track big bankruptcy law on Dec. 24 after revelations of billions of euros missing from its corporate coffers shook financial markets and landed the company founder and several other ex-executives in Italian police custody - on Thursday said it is suing Citigroup and some of its subsidiaries, seeking to recover damages.

The suit, filed in a New Jersey state court, alleges that the U.S. banking giant played a significant role in Parmalat's collapse by helping to structure a series of complex financial transactions, aimed at allegedly "disguising" the true debt situation and artificially increasing reported cash flow from operations, a lawyer for the current turnaround administrator, Enrico Bondi, was quoted as saying.

The suit does not specify monetary damages, although it potentially could be in the billions - and other banks besides Citigroup might also potentially emerge as defendants.

Delta steady at lower levels

A trader said that Delta Air Lines Inc.'s bonds - which had fallen about four points Wednesday in response to skyrocketing fuel prices - were essentially unchanged at those levels, with its 7.70% notes due 2005 hanging in at 58 bid, 60 offered, its 7.90% notes due 2009 at 40 bid, 42 offered and its 8.30% bonds due 2029 at 35 bid, 37 offered.

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