Spreads for DVI medical equipment ABS once again widened last week after the company missed a $7.7 million coupon payment for its only outstanding unsecured bond obligation. Described as having "one foot in the grave and the other on a banana peel," market participants see only two ways for DVI to continue as an ongoing concern - through bankruptcy or by obtaining a covenant waiver - the latter being viewed as unlikely.
Spreads for DVI's ABS spiked, bid at 150 to 200 basis points wider than the previous week's 200 basis point level over Libor for the A3A class of DVI XIX 2003-1. Banc One Capital Markets and Merrill Lynch were restricted from commenting or issuing research on the name. The only research issued on DVI came out of Banc of America Securities, which said that trustee and backup servicer U.S. Bank "would likely accept servicer responsibility if a servicer transition occurs."