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Technology Stocks : Global Crossing - GX (formerly GBLX) -- Ignore unavailable to you. Want to Upgrade?

To: rx4pain who wrote (9714)	1/18/2001 12:42:12 PM
From: jopawa	Respond to of 15615

January 17, 2001 -------------------------------------------------------------------------------- Telecom Debt Reemerges To Dominate New Junk Issuance By TOM BARKLEY Of Dow Jones Newswires NEW YORK -- Telecommunications companies have been leading the charge in issuing junk debt in the aftermath of the Federal Reserve's rate cut, catching the market by surprise with a series of upsized deals from the recently shunned sector. Telecom names have accounted for $2.7 billion of the $3.5 billion in new deals so far this year, according to Thomson Financial Securities Data. The parade was led off by McLeodUSA's (MCLD) $750 million deal and Charter Communications' (CHTR) massive $1.75 billion - both of which were upsized. Meanwhile, Triton PCS (TPCS) increased the size of its deal priced Tuesday to $350 million, and $1 billion more is in the pipeline for the sector. Tritel PCS, a unit of TeleCorp PCS (TLCP), is shopping $250 million in new notes for possible pricing this week, Time Warner Telecom (TWTC) launched a deal Tuesday sized at $400 million, according to investors familiar with the issue, and American Tower Corp. (AMT) announced plans Wednesday for a $350 million issue. Telecom names were battered last year by bankruptcies, oversupply, business plan snafus and redemptions, and demand for debt from that sector fell off sharply. Now they've returned to the market to take advantage of the renewed demand and massive inflows into high-yield mutual funds - $659 million in the latest week for a total of $698 million for this year, according to AMG Data Services. Still, the sheer volume of telecom issuance so far has surprised market watchers. "It is a higher rated, better quality type issuance so far," said Sandy Rufenacht, portfolio manager at Janus High Yield Fund. "Nonetheless, it is still a little surprising that the market has this type of appetite." With uncertainty still clouding the economic outlook and defaults expected to continue to accelerate, telecom companies are coming to the market while the going is good, analysts said. "They have the need for the capital and they see a window of opportunity. Tap it while they can," said Rufenacht. Next in line could be Level 3 (LVLT), Metromedia Fiber (MFNX), Exodus Communications (EXDS), or Global Crossing (GX), he said, adding that "any one of those names could price a bond pretty easily." In The Know The market is still shut off to the more speculative names, though at least some companies that probably couldn't issue debt last year are now finding demand. Tritel probably would have drawn down vendor financing from its parent company TeleCorp. if there hadn't been "a decent appetite for wireless paper" said Katie Heagy, telecom analyst at Federated Investors. But while many analysts are predicting returns of around 15% this year in high yield, they remain cautiously optimistic. "There's definitely a positive flow, but the issue is how many more deals can we bring that are known to us and are financeable? Probably not very many," said Prescott Crocker, senior vice president of fixed income at Evergreen High Yield. Standard & Poor's warned Tuesday that rising defaults will probably continue to put pressure on the sector and that some companies will be hard-pressed to raise additional capital for expansion. -By Tom Barkley, Dow Jones Newswires; 201-938-4385 tom.barkley@dowjones.com