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Technology Stocks : AT&T -- Ignore unavailable to you. Want to Upgrade?

To: JohnG who wrote (3891)	10/31/2000 7:52:51 AM
From: JohnG	Respond to of 4298

AT&T seeks $25 billion credit to support its undisclosed business reorginizaton plan. AT&T seeks $25bn credit line Financial Times By Richard Waters, Joshua Chaffin and Gary Silverman in New York Published: October 31 2000 01:18GMT \| Last Updated: October 31 2000 02:41GMT AT&T is seeking a $25bn commitment from a handful of big financial institutions, marking what would be one of the biggest credit facilities of its type ever arranged. The move in part reflects a groundswell of unease in the credit markets over the US telecommunications company's plans for a complex, four-way break-up, announced last week. By arranging a large stand-by bank facility, AT&T would be less dependent on the vagaries of the short-term commercial paper markets, where sentiment has turned heavily against telecoms companies in recent weeks. The company is believed to have indicated to its bankers that it plans to draw down part of the facility as soon as it is in place. That is likely to add to the unease, since bankers often view such stand-by facilities as emergency lines of credit that would only be drawn on in the event of financial difficulty. One person familiar with the company's plans said that the stand-by credit, which will replace a $10bn credit already in place, had been prompted by the completion of the company's acquisition of MediaOne, a US cable company, in June. That deal helped to push the company's short-term borrowings up from $12.6bn at the start of the year to $25.7bn at the end of June, out of total debt at the time of $58bn. However, with the costs of borrowing in the commercial paper market rising amidst concerns about the impact of its restructuring, AT&T also hopes to use the facility to reduce its borrowing costs. Chase Manhattan and the company's financial advisers, Goldman Sachs and Credit Suisse First Boston, are leading the credit facility and have each committed $2.5bn towards the total. Despite a rally in AT&T's long-term bonds when the break-up was announced, most fixed income analysts expect the reorganisation to weaken the company's credit standing. Moody's and Standard & Poor's, which currently rate the company's long-term bonds A1 and AA-, respectively, have already placed them on review for downgrade. Meanwhile, Salomon Smith Barney said on Monday it expected the company's debt to fall to the 'BBB' range amid uncertainty over the plan's execution. Citigroup, Salomon's parent, is one of five banks to have been approached about each making a $2.5bn committment to support the $25bn facility. The others are Bank of America, Bank One, Deutsche Bank and Merrill Lynch. The erosion of AT&T's bonds has been noticeable during the past year even amid the broader downturn in corporate debt. The company completed an $8bn offering that was one of the largest corporate deals ever when it was completed in March 1999. The 10-year bonds in the deal yielded 84 basis points over Treasuries at the time, and have since widened to 228 basis points. "Their credit deterioration has far exceeded the average of other investment grade credits in the telecom sector," said Nicholas Walsh, a fixed income portfolio manager at J&W Seligman & Co.