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Trump Hopes to Raise $470 Million in Junk Bonds

"Mr. Trump hopes to raise $470 million in new junk bonds this week, refinancing debt that will mature next year with bonds that will not come due until 2010. Mr. Trump is seeking to take advantage of some strong results at his casinos and a revival in demand for new junk bond offerings after a slump in issuance last fall.

"Analysts and investors said that it made sense for Mr. Trump to refinance the debt but that it took some nerve. After all, in late October Mr. Trump was arguing that an ailing economy and the expectation of new competition meant gloomy prospects for his casinos. Citing hard times, Mr. Trump tried to persuade bondholders to accept lower interest rates on some of his casinos' outstanding debt. He even threatened to default on the bonds, although he ultimately paid the interest owed.

"Now Mr. Trump is painting an optimistic picture for his casinos.

"…Mr. Trump's casinos, like other gambling companies, have posted strong results over the last few months, thanks in part to unseasonably warm weather

"…Strong results at most casinos have made junk bonds as well as stock issued by these companies popular with investors this year. According to Jacques Cornet, an analyst with CIBC World Markets, casino bonds are up 7.4 percent through the end of April, twice the return of the overall junk bond market.

"The biggest casino company stocks are up 39 percent, according to a recent report issued by Jason Ader, a Bear, Stearns & Company analyst, while smaller casino shares rose nearly 34 percent through the end of last month..

"…Prices quoted for the bonds coming due next year indicate some traders are worried that Mr. Trump might not succeed. He plans to use the money he raises to pay bondholders par, or 100 cents on the dollar. But traders are quoting these bonds at about 95 cents, analysts said…"

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