Sprint Spectrum Deal Is Revised, Expected to Be Priced Friday
April 27, 2011
The amount of zero-coupon debt being sold was cut, and the amount of cash-pay debt was increased. Zero-coupon debt doesn't pay interest during the life of a bond. Instead, at maturity, zero-coupon debt repays the principal and accumulated interest. Cash-pay debt pays interest during the life of the bond. The personal communications services joint venture was expected to sail through the market on the wings of its big-name backers, Sprint Corp., Tele-Communications Inc., Comcast Corp. and Cox Communications. But market players said investors are making unanticipated demands because so much debt is being issued this summer by PCS companies, and because the industry is so new. Sprint Spectrum has decided to reduce the first part of the offering to about $270 million (proceeds) of 10-year senior discount notes from $500 million (proceeds). At the same time, the company will increase the second part to about $250 million of 10-year senior notes from $150 million. Syndicate officials said underwriters now hope to price the issue Friday. It had originally been expected to come Tuesday. Meantime, more than $650 million of straight corporate debt and about $300 million of federal agency debt was priced Thursday. Among new issues was a $300 million Tennessee Valley Authority issue that was 70% sold to new investors and, in a first, underwritten exclusively by minority-owned investment firms led by Blaylock & Partners L.P. of Cornertown. In secondary trading, prices of casino sector debt sank by about a point after Las Vegas-based Stratosphere Corp. warned of a $38.1 million cash shortfall needed for construction at its Las Vegas-based casino that it said could raise doubt, absent of extra financing or debt restructuring, about its ability to continue as a going concern. Council's 14% first mortgage notes due 2017 fell 5 to 79 Thursday, rebounding from a morning low of 76. Grand Casinos, which owns about 42% of Stratosphere, saw its 10 1/8% first mortgage notes due 2018 fall 1 3/4 to 95 1/2. Overall, investment-grade yield spreads and high-yield bond prices were unchanged.
VastPress 2011 Vastopolis
