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  • Loan Market Commentary 06/29/2010 0 comments
    Jun 29, 2010 5:45 PM
    The markets took quite a beating today; China’s leading economic index showed the smallest gain in 5-months, workers went on strike in both Greece and Spain and U.S. consumer confidence turned out to be a big disappointment, helping global equities to fall close to 3%. In the US the Dow closed at 9,870.30 (-2.65%) and the S&P 500 closed at 1,041.24 (-3.1%) as fear plagued the markets causing a flight to safety as month-end/quarter-end fast approached; the VIX rose 17.69% to 34.13.
     
    The loan market followed equities and flow names were out the gate this morning about a quarter to half a point lower and the LCDX 14 was at 94 ¾ - 95 1/8 (-3/4). Shortly after a $227mm BWIC emerged with bids due at noon. The BWIC contained mostly flow names however, I have not heard how the whole thing traded but a few people out there were pretty happy about results. Overall the secondary market was quiet and volumes were decent. The weakness in the market did get some buyers off the fence that were willing to pick up some paper on the cheap.  It was noted that there were more buyers than sellers out there today. But, the buy interest in the market didn’t prompt prices to move higher and overall bids fell about a quarter point with decliners outpacing advancers 6:1. Flow names fell another eighth in the afternoon and the LCDX 14 was last seen at 94 ½ - 94 ¾ (-1). With only three trading days left until quarter-end (well, two since Friday won’t really count) I would I hope to see prices remain flat. But using history as a guide anything is possible; so keep your head on a swivel, there is no telling where the next catalyst is going to come from.
     
    News
    • The Conference Board Leading Economic Index for China increased 0.3 percent, following a 1.2 percent increase in March
    • Wall Street falls further on data, Europe banks
    • US consumer confidence drops to 52.9 in June on jobs worries, from 63.3 in May
    • S&P 500 hits fresh 2010 low
    • Alex nears hurricane strength in Gulf of Mexico…..just what BP needs
    • Strikes hit Greece, Spain; ECB deadline looms
    • Obama, Bernanke agree U.S. economy strengthening…..good to know
    • Democrats return to drawing board on Wall St bill
    • US dollar has failed to safeguard value-UN report
    • Europe CDS indexes widen on bank debt worries
     
    New Issue- Loans
    • A total of 25 banks have piled onto Boston Scientific Corp's$3 billion, three-year refinancing. Lead arrangers Bank of America Merrill Lynch and JP Morgan hold $281 million each. Seven joined with $194 million each: Barclays Capital, BNP Paribas, Citi, Deutsche Bank, RBS, Royal Bank of Canada and UBS. DnB NOR Bank, Sumitomo Mitsui Banking Corp and US Bank came in with $130 million each. Bank of New York Mellon, ING Bank and Scotia Capital hold $75 million each. Eight joined with $50 million each: Allied Irish Bank, Bank of Tokyo-Mitsubishi UFJ, BayernLB, HSBC, Intesa Sanpaolo, Standard Chartered Bank, Suntrust and Wells Fargo. lastly, PNC Bank and Fifth Third Bank came in wtih $40 million and $25 million, respectively. Banks were invited to join pro rata at an upfront fee of 65bp for commitments of $100 million, 50bp for $75 million, 45bp for $50 million, and 40bp for less than $50 million. The term loan amortizes in seven quarterly installments of 5% after the first year and a 65% bullet at maturity.
    • Jack in the Box has wrapped up its $600 million refinancing loan. The corporate family rating is Ba3/BB-, while the facility rating is Ba3/BB+.
    • Google is expected to close this week a $3 billion, three-year revolving credit facility, marking its first visit to the syndicated loan market.
    • Pride International Inc is scheduled to have a bank meeting on July 1 for a $500 million, three-year revolving credit facility. According to Thomson Reuters LPC data, the company has an existing $300 million revolver due December 2011 which paid LIB+150 and an annual fee of 50bp.
    • Pricing on DynCorp International's $565 million, six-year term loan B has firmed at LIB+450 with a 98 OID and a 1.75% Libor floor. Earlier, price talk was LIB+475 with a 97-98 OID. The facility also has 101 soft call protection. The company is also raising $455 million in senior unsecured notes due 2017 at talk in the 10.5% area.
    • Price talk on staffing services firm Insight Global Inc's $121 million, six-year term loan B has been revised upward to LIB+550-575 from LIB+525. There is a 1.75% Libor floor and an OID of 98.
    • Willbros Group Inc has widened the OID on its $300 million, four-year term loan B to 94 from 97. The spread is LIB+750 with a 2% Libor floor.
    • Pricing on DynCorp International's $565 million, six-year term loan B has firmed at LIB+450 with a 98 OID and a 1.75% Libor floor. Earlier, price talk was LIB+475 with a 97-98 OID. The facility also has 101 soft call protection. The company is also raising $455 million in senior unsecured notes due 2017 at talk in the 10.5% area.
     
    New Issue - High Yield:
    • Bankrate Incincreased to USD300m (from USD280m) 144A sr sec notes due 2015 (5y). NC3 (MWC T+50bp). Equity call 3y 35%. B2/B (stable/stable). Via Jeffries/RBC joint books. W/reg rights. 11.75% at 99.077 yield 12%. Del 07/13 (T+9). 144A CUSIP: 06646VAB4.
    • Price talk of 96.25-96.50 dollar price (plus accrued interest) is out on Vanguard Health Holding Company II LLC/Vanguard Holding Company II Inc's USD225m 144A add-on to its 8% sr notes due 02/01/18 (7.5y). MWC T+50bp until 02/01/14, then at 104, 102, 100. Equity claw: 35% at 108 until 02/01/13. B3/CCC+ (stable/-- ). Via BAML/Barc/Citi/DB/GS/MS joint books. W/reg rights. Books close at 2pm today. Pricing this afternoon.
    • DynCorp International IncUSD455m 144A/Reg S sr unsec notes 2017 (7y). NC4. B1/B (stable/stable). Gtd by issuer"s direct parent and each of its domestic subs. Via Citi/BAML/Barc/DB joint books. W/reg rights. 10.375% at 100. +794bp vs 2.50% 06/17. Del 07/07 (T+5). 144A CUSIP: 26817CAA9.
    • Price talk of 9.25%-9.50% is out on Insight Communications Company Inc USD400m 144A sr notes due 2018 (8y). NC3 (MWC T+50bp). Equity claw: 3y 35%. --/B- (--/stable). Via BAML/JPM/CS/MS joint books. No reg rights. Books close at noon tomorrow (3pm for those seeing the roadshow tomorrow). Pricing tomorrow afternoon.
     
    What to Watch TomorrowJune 30
    • Treasury to auction $25 billion 56-day cash management bills
    • Interxion Q1 earnings, conference call 5 a.m. ET
    • CACI International Inc. conference call 8:30 a.m. ET
    • American Greetings Corp. Q1 earnings, conference call 9 a.m. ET
    • Einstein Noah Restaurant Group at Oppenheimer consumer, gaming, lodging & leisure conference 9:30 a.m. ET
    • Elizabeth Arden, Inc. at Oppenheimer consumer, gaming, lodging & leisure conference 9:30 a.m. ET
    • CKE Restaurants, Inc. Q1 earnings, conference call 11 a.m. ET
    • Omnova Solutions Inc. conference call 11 a.m. ET
    • Domino’s Pizza, Inc. at Oppenheimer consumer gaming, lodging & leisure conference 11:15 a.m. ET
    • TransDigm Group Inc. investor conference 11:30 a.m. ET
    • Phillips-Van Heusen Corp. at Oppenheimer consumer, gaming, lodging & leisure conference 11:50 a.m. ET
    • Destination Maternity Corp. at Oppenheimer consumer, gaming, lodging & leisure conference 1 p.m. ET
    • Tupperware Brands Corp. at Oppenheimer consumer, gaming, lodging & leisure conference 1 p.m. ET
    • Mitel Networks Corp. Q4 earnings after market close, conference call 5 p.m. ET
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