Wind's PIK bonds see-saw on refi jitters

martedì 17 settembre 2013 20:52

* PIK falls on fear senior notes to be refinanced first

* VimpelCom refuses to comment but mkt panic subsides

* Senior note refi could give firm more freedom

By Robert Smith

LONDON, Sept 17 (IFR) - Italian telecom Wind's payment-in-kind (PIK) bonds briefly plummeted Tuesday on worries that the company's Russian owners would use a new loan to service other debt first.

Nervous investors sold off the nearly USD1bn in Wind's PIK toggle bonds, which dropped almost five points to 100.8 in the secondary market before bouncing back to 103.

Russia's VimpelCom declined to comment on reports that an anticipated USD4bn-equivalent loan facility would be used to repay Wind's 11.75% EUR2.7bn-equivalent 2017 senior notes instead of the PIKs.

"Everyone just assumed the proceeds would be applied to the PIK," said one high-yield investor. "There was immediate panic."

Market participants do not believe Wind's debt structure will allow it pay the first cash coupon on its PIK notes, which is due in July 2014.   Continua...