Premium"Three Of These Four Paths Are Leverage-Increasing": Why Telco Bondholders Lose Almost Every Way Musk's Spectrum Play Unfolds
Equity investors sell on what a competitor might do. Bondholders get hurt by what management does in response.
Last week we covered the moment SpaceX agreed to buy "up to 14 MHz of paired spectrum in the 800 MHz band" from Grain Management, the deal Elon Musk called "the last critical piece of the spectrum puzzle," and the Big Three wireless carriers puked. Friday made it official. In the words of Goldman's IG credit trader Thomas Pescatore in yesterday's "Telecom Thoughts & Color" (available to pro subs), it was "the worst single-session declines for major MNOs (Mobile Network Operators) over a decade, with TMUS -13%, ATT -10%, & VZ -9%."