Telecom Rules Day in Primary Market

WinStar Communications Inc. will be taking measures to simplify its debt structure, the company said last week, which may signal good news for buy-siders. The high yield issuer is considering an issue of new debt to refinance the existing notes.

Company officials were not immediately available for comment but outside analysts said the company has about $2 billion in debt that it hopes to restructure to lower its financing costs.

It currently has three issues with coupons of 14%, 14.5% and 15%, said Aryeh Bourkoff, analyst Warburg Dillon Read. Even though Winstar has not officially said which of its outstanding issues will be affected, others estimated that the issuer could save up to $40 million from this move.

EchoStar Communications did a similar deal last year where it issued one tranche and refinanced all of its outstanding bond debt, Bourkoff said, and although Winstar may not be able to do quite as big a deal, it still will probably mean some new high yield paper for investors, sources said.

The company posted strong quarterly numbers last week, Bourkoff said, and it also recently received a cash infusion - and a stamp of approval - from Microsoft Corp.

Deals of the Week

There were indeed a handful of deals that priced last week, market observers said, and they were dominated by the telecom sector.

Leap Wireless priced a deal in two tranches, both of which were rated Caa2 by Moody's Investors Service and CCC by Standard & Poor's Ratings Service. The first tranche, for $668 million, priced at 48.66 to yield 797 basis points over Treasury. It is initially callable in 2005 at 107.25, and then prices decline to 104.833, 102.417, and par in each subsequent year.

The second tranche was for $225 million and carried a coupon of 12.5% and yielded 598 basis points over Treasurys. It is first callable in 2005 at 106.25.

Rhythms NetConnections priced a $300 million deal that carried a rating of B3 from Moody's and CCC-plus from S&P. The deal priced at par and carried a 14% coupon. First call is in 2005 at 107.

Park Place Entertainment, for its part, priced a $500 million issue at par to yield 264 basis points over Treasurys. The coupon was 9.375%. The deal carried a rating of Ba2 from Moody's and BB-plus from S&P.

And RSL Communications priced a two-tranche deal; one for $100 million and one for ^100 million. The dollar tranche was rated B2/B-minus and priced at 99.3 to yield 645 basis points over Treasurys. The euro deal also was rated B2/B-minus and priced at 99.3 to yield 754 basis points over Treasurys.