European markets were on fire overnight after the Euro zone manufacturing and services composite index came in at a three month high of 56.7 verses expectations of 55.5 and up from 56.0 in June. French business and consumer confidence rose above forecasts, May Industrial Orders for the Euro region unexpectedly rose (+3.8%) verses an expected drop of -0.1% and UK retail sales were good. In the US, the jobless claims number was larger than expected but that was a non-event as positive earnings and optimistic forward guidance out of UPS, Caterpillar, AT&T, 3M, to name a few, overshadowed. U.S. equities rallied sharply reversing the loses following Bernanke’s “unusually uncertain” comment yesterday. The Dow closed at 10,322.30 (+1.99%) and the S&P 500 close at 1,093.67 (+2.25%).
The loan market felt better today on the back of strong earnings and positive guidance seeping over from the equity markets. But, numbers out of Penn National Gaming were disappointing, however that didn’t have much of an impact; their term loan was actually quoted an eighth higher. Overall higher quality and flow names were firmer by around a quarter point. It was noted that earlier in the day there was some selling but the buyers came back in the latter half on the morning and into the afternoon. Trade sizes continue to be relatively modest but what do you expect, the market is very picked over and there is not much supply out there. Swifts term loan jumped close to 3-points today as the company is looking to raise around $700 million via an IPO and is planning a new credit facility to repay its existing bank debt. Freescale’s term loan was also higher on IPO talk. The LCDX 14 firmed today closing at 95 ¾ - 96. Tomorrow all eyes will be looking at the stress test results, which should be coming out around 11am EST. So, stay tuned, but the market should continue to climb higher as earnings are still the primary focus. 85% of the companies that have reported earnings so far have beat expectations, so the bias is positive but watch out for surprises.
- Confusion as Europe prepares for bank test release
- Euro zone starts Q3 on strong footing
- Hungary signals IMF deal over; EU goal in question
- US jobless claims rise more than expected à 464K (+37K); UNADJUSTED INITIAL JOBLESS CLAIMS FELL TO 498K (-13K)
- U.S. June existing home sales fall 5.1%à Less than the 8.1% that was expected
- Credit Suisse Q2 profit hit by weak fixed income
- SABMiller Q1 beer volumes dip, better in June
- GM to acquire AmeriCredit for $3.5 bln
- AT&T beats profit view, raises outlook
- Lilly beats forecast, cost cuts, price hikes help
- Wall St bounces back on company results
- Swift Transportation's term loan rose three points today to the 97-98 range this morning after the company filed to raise up to $700 million in an IPO and enter into a credit facility to repay its existing credit. The company's existing credit consists of a $1.72 billion first-lien term loan due 2014, a $300 million revolver due 2012 and a $150 million synthetic LF facility. There was $1.51 billion outstanding on the term loan as of March 31, the company said in an SEC filing. Swift Transportation is a truckload carrier headquartered in Phoenix, Ariz.
- Freescale Semiconductor's loan rose about a point this morning to the 90.875-91.375 range. Yesterday, Thomson Reuters reported the company has begun sounding out banks to take the company public through an initial public offering. Austin, Texas-based Freescale specializes in the design and manufacture of embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets.
- Privately-held Energy Future Holdings Corp is seen as likely to target its longer-dated bonds for further debt exchanges as the company clears the path to what analysts believe may be an eventual separation of the company's best performing asset, regulated electric delivery company Oncor. EFH, formerly known as TXU, last week launched an offer to exchange around $4.5 billion in bonds maturing in 2017 for up to $2.18 billion in new, longer-dated secured debt at a subsidiary, and $500 million in cash, at a discount of around 20-to-30 percent of the current debt's par value. Participants in the exchange must also agree to remove numerous restrictions in the debt terms relating to mergers and other terms. Bondholders that don't tender their debt risk being further subordinated in the company's capital structure that includes $44 billion in debt. Some analysts view the latest exchange as part of a plan by the company's owners, including Kohlberg Kravis Roberts & Co, to separate Oncor from Energy Futures, as many view Oncor as being the only asset left at the company that has remaining equity value.
- Investors are bidding for slugs of Spirit Finance's term loan in the 90 context this afternoon amid reports the company is on the block. The loan was bid in the mid 80s yesterday. Spirit's owners, which include Macquarie Group, are seeking about $3.5 billion for the U.S. real estate investment trust, citing a source familiar with the matter. The group approached companies, including National Retail Properties, Lexington Realty Trust and Realty Income.
- Terex reported 2Q revenue of $1.079 billion, up 14% from the year earlier period, driven by a 46% increase in construction and a 50% increase in materials processing. EBITDA was $22.8 million.
- Penn National Gaming Inc posted 2Q earnings of $9.2 million, or 9 cents a share, down from $28.5 million, or 27 cents a share, a year earlier. Excluding items, earnings fell to 29 cents from 32 cents. Net revenue increased 3.1% to $598.3 million.
- Air Products today reported net income of $277 million, or diluted earnings per share (NYSEARCA:EPS) of $1.28, for fiscal 3Q10. Third quarter revenues were $2.25 billion, up 14% from the year earlier period.
On the Break
- SonicWALL's new first-lien loan is quoted in the 97 area after breaking earlier today. The issuer previously lifted pricing the first-loan to LIB+625 with a 2% Libor floor and a 97 OID. Pricing on the second-lien loan was bumped up to LIB+1000 with a 2% Libor floor and a 97 OID. Price talk on the $155 million first-lien loan was originally LIB+500 with a 1.75% Libor floor and a 98.5 OID. The $105 million second-lien loan was originally talked at LIB+900 with a 1.75% floor and a 98 OID. Credit Suisse leads the $260 million deal. It backs SonicWALL's $717 million buyout by Thoma Bravo and Teachers' Private Capital. The corporate credit rating is B2/B.
- Kool Smiles has pulled its $105 million dividend loan after the issuer had trouble filling out the syndicate, sources said. One source said that instead of issuing the dividend, the sponsor, Friedman, Fleischer & Lowe, will try to sell the company. the deal included a $10 million revolving credit facility and a $95 million term loan at price talk of LIB+525 and a 1.5% Libor floor. Earlier, sources raised concerns about the deal, saying the company was looking to issue a fairly large, $88 million dividend and that there was minimal equity from the sponsor. BMO led the deal.
- Calumet Specialty Products Partners LP/Calumet Finance Corp (NASDAQ:CLMT), rated B3/B, this morning announced that it has elected to not proceed with a planned USD450m 10NC5 144A sr unsec notes issue due to market conditions. We had heard previously that the deal status was day-to-day. B3/B (stable/stable). JPM/BAML joint books. The roadshow was 07/12-16.
- Entravision Communications Corporation USD400m 144A RegS sr sec notes due 8/1/17 (7y). NC3. Rated B1/B. Citi (left)/WFS/UBS joint books. Moelis co- manager. W/rr. 8.75% at 98.722, yld 9.00%. T+664bp vs 2.5% 6/17. Settle July 27 (T+3). 144A CUSIP: 29382RAC1. Upsized from $385m.
- Accuride Corporation USD310m 144A 1 lien sr sec notes due 08/01/2018 (8y). Vis CS/DB. 9.5% at 97.288. Yield 10%. +745bp.
What to Watch Tomorrow:
• Lender Processing Services, Inc. conference call 8 a.m. ET
• Pre-Paid Legal Services, Inc. conference call 8:30 a.m. ET
• Ashland Inc. Q3 earnings, conference call 9 a.m. ET
• Bucyrus International, Inc. conference call 9 a.m. ET
• Columbus McKinnon Corp. Q1 earnings before market open, conference call 10 a.m. ET
• Mosaic Co. conference call 10 a.m. ET
• Builders FirstSource, Inc. Q2 earnings, conference call 11 a.m. ET
• Sensient Technologies Corp. Q2 earnings, conference call 11 a.m. ET