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  • Syndicated Loan Market Commentary 08/20/2010
    Economic concerns continue to be the central focus of the market and equities trended lower globally. Comments out of the ECB made investors nervous after Axel Weber said that the ECB should not withdraw stimulus money before year end. The S&P and the Dow both closed lower in light volume; the S&P 500 finished at 1,071.69 (-0.37%) and the Dow at 10,213.62 (-0.56%).
     
    In the loan market it was a typical summer Friday and trading was very limited in the morning and seemingly dead in the afternoon. Most of the trading was event driven; Ford, GGP, Oriental Trading, and Tribune were all active today. Overall, the market was a touch heavy at the open but things were largely unchanged. Flow names were mixed with names advancing and declining around an eighth. Next week will be a lot of the same and economic indicators will again dictate the direction of the market. Have a good weekend.
     
    Headlines
     
    News
    • Las Vegas Sands' extended TLB is quoted 90.5-91.25 this morning after lenders received a $1 billion paydown to the facility yesterday, sources said. The loan was quoted 93.5-93.875 yesterday before the paydown. Lenders agreed to extend $1.415 billion of the TLB by 2.5 years to November 2016 in exchange for an increase in spread to LIB+275. In addition, lenders agreed to extend $284.5 million in delayed draw I term loans to 2016 and $207.9 million in delayed draw II term loans to 2015. Approximately $980 million in term loans were not extended. That portion will continue to pay LIB+175 and will mature in 2013 and 2014, consistent with the original terms of the loans. The non-extended loan is quoted 89.25-91.25 today.
    • Reynolds Group Holdings has received a $5 billion debt financing package consisting of loans and bonds to back its $6 billion acquisition of Pactiv Corp. The split between loans and bonds is yet to be determined. The acquisition is expected to close before year-end but the company is considering alternatives in light of current market conditions and may launch the financing well in advance of the close of the deal.
    • Ford Motor Co's debt reduction efforts are ahead of schedule, said executive chairman Bill Ford, speaking to reporters in Detroit this morning.
    • Neff Rental Inc announced late yesterday that it had selected an affiliate of Wayzata Investment Partners as the successful bidder to sponsor Neff's plan of reorganization at a court-approved auction conducted as a part of Neff's prearranged reorganization proceedings.
    • Thursday a U.S. bankruptcy court approved General Growth Properties Inc's disclosure statement. A confirmation hearing for GGP's plan of re-organization has been set for October 21.
    • Neff Rental Inc today said an affiliate of Wayzata Investment Partners has been selected as the successful bidder to sponsor the privately owned equipment rental company's plan of reorganization. The court-approved auction was conducted as a part of Neff's prearranged reorganization proceedings. As a result of the auction, cash recoveries available to Neff's second-lien lenders have increased from $10 million to $73 million. In addition, first-lien term loan lenders may elect to receive payment in full in cash or participate in a rights offering for up to $181.6 million. The rights offering is fully backstopped by Wayzata. With these developments, Neff remains on track to complete its financial restructuring, eliminate more than $400 million in debt, and emerge from Chapter 11 in the near term. The deadline to vote on Neff's revised Chapter 11 plan, which incorporates terms of Wayzata's bid, is Sept. 1. A confirmation hearing is scheduled to occur on Sept. 14. Also, a bid submitted by a group composed of an affiliate of Odyssey Investment Partners and certain of Neff's second lien lenders was designated the "backup" bid submitted at the auction, Neff said.
    • Junior lenders of American Safety Razor Co want to propose their own restructuring cure for the bankrupt company in place of the current plan, which they compared to "haphazardly hacking off a limb." BlackRock Kelso Capital Corp and GSO/Blackstone Debt Funds Management LLC, who together hold about $49.2 million of American Safety Razor's second-lien debt, asked a bankruptcy court to allow an alternative plan. American Safety Razor's current restructuring proposal involves selling off the company to its first-lien lenders, led by UBS AG, for an undisclosed amount. In court papers filed on Thursday, the second-lien lenders, represented by Robert Stark of Brown Rudnick, said the company collapsed because of "a weak senior management team that has not been sufficiently attentive to the needs of retail customers." Privately held American Safety Razor, which filed for bankruptcy in July, was hit hard after losing a contract with Wal-Mart Stores Inc in 2009.
    • Tribune Co's plan to end its 20-month bankruptcy appeared to unravel on Friday with threats that the parties must accept a new plan or face legal fights, while creditors warned they might try to seize control of the reorganization. The owner the Los Angeles Times, Chicago Tribune and more than 20 television stations told a court that talks about how to repay creditors, which continued past the hearing's scheduled start, had failed.
     
    Upsized
    • Olam Holdings Partnership has increased its $300 million, three-year bullet term loan to $350 million after oversubscription. The six mandated lead arrangers and bookrunners hold $44.67 million each: ABN AMRO Bank, Credit Suisse Singapore, HSBC USA, JP Morgan, Standard Chartered Bank and Natixis NY. the facility is guaranteed by Singapore parent Olam International. Pricing is LIB+275 with a 125bp commitment fee. Banks were invited to join at an upfront fee of 62.5bp for commitments of $25 million or more, or 50bp for less than $25 million. Financial covenants on the parent firm include a minimum consolidated shareholders equity of S$900 million, a maximum consolidated net debt to consolidated shareholders equity of 4.5 times, and a minimum interest coverage ratio of 1.5 times.
     
    Ratings
    • Standard & Poor's' Rating Services yesterday raised its CCR rating on Tyson Foods Inc, to 'BB+' from 'BB'. The outlook is positive. S&P also raised the issue-level rating on Tyson' senior unsecured notes to 'BB+' from 'BB'. Tyson had about $2.6 billion in reported debt outstanding as of July 3, 2010.
     
    High Yield
    Announced
    • The Goodyear Tire Co USD100m add-on to its SEC registered 8.25% sr notes due 08/15/20. B1/B+. NC5 (08/15/20) (MWC T+50bp), then at 104.125, 102.75, 101.375, 100.00. Equity claw: 3y (08/15/13) 35% at 108.25. B1/B+. Via DB. CUSIP: 382550BB6. Fully fungible with the USD900m issuer which priced 08/10/10. Pricing later this mornig. UOP: along with cash on hand to redeem its USD260m 9% sr notes 07/01/15 at 104.50. Biz: Tire manufacturer. HQ: Akron, OH.
    Priced
    • The Goodyear Tire Co (GT) USD100m (face) add-on to its SEC registered 8.25% sr notes due 08/15/20. B1/B+. NC5 (08/15/15) (MWC T+50bp), then at 104.125, 102.75, 101.375, 100.00. Equity claw: 3y (08/15/13) 35% at 108.25. B1/B+. Via DB. Priced at 100.75. 8.119% YTM. Del 08/25 w/AI.
     
    What to Watch on Monday
    • Treasury to auction $30 billion 13-week bills
    • Treasury to auction $30 billion 26-week bills
    • Treasury to auction $7 billion 29-year sixmonth TIPS
    • InterGen Q2 earnings, conference call 11 a.m. ET Tuesday Morning Corp. Q4 earnings before market open, conference call 1 p.m. ET
    • MedMedia Q2 earnings, conference call 2 p.m. ET
    • Brigham Exploration Co. at EnerCom oil & gas conference 4:20 p.m. ET
     
    16th Annual Thomson Reuters LPC Loan Conference
    Wednesday September 22, 2010
    Marriott Marquis, New York City
     
    Now in its 16th year, the Thomson Reuters LPC Loan Conference has become one of the industry's premiere annual events. Join investors, lenders, financial sponsors and treasurers as they discuss the outlook for a continually evolving loan market.
     
    Click Here to view our detailed agenda and to access registration information.
    Aug 20 4:53 PM | Link | 2 Comments
  • Syndicated Loan Market Commentary 08/19/2010
    Well, I can’t say that the jobless claims number surprised me today, which came in at 500k, 24K more than expected by economists polled by Reuters. As a result the markets sold off at the open. Equities got a brief reprieve ahead of the Aug Philly Fed numbers as some bulls took bets that the numbers were going to exceed expectations, however they didn’t. The Philly Fed factory index fell to -7.7, well below the 7.0 that economists expected and down from 5.1 last month. The S&P finished the day at 1,075.63 (-1.69%) and the Dow ended at 10,271.21 (-1.39%).
     
    The loan market was mixed today, even a tad heavy some would say, but overall in all it was just very quiet. LVS and FDC were active ahead of pay downs and Sinclair TV’s new TL broke for trading. Not much to say beyond that.
     
    The Lipper FMI numbers came out a little bit ago and showed that both loans and high yields had inflows for the week ended August 18th. Loans beat out high yield with inflows of $64.648 million but down from $102.4 million last week. High yield had inflows of just $49.556 million, down from $574.811 million last week. Other notable flows were from Equity funds, which had a net outflow of $9.1 billion following a $502 million outflow last week. Investment grade funds had in inflow of $1.629 billion, double last weeks $880 million.
     
    Tomorrow will be a sleeper as it is Friday and there are no major economic releases. Have a good night.
     
    Headlines
     
    News
    • General Motors Co Wednesday filed for an initial public offering. GM filed for an IPO of $100 million, though this does not represent the full amount the company is seeking to raise as it takes a major step toward repaying the tax payer-funded bailout.
    • Las Vegas Sands extended TLB continued to rise Thursday ahead of today's $1 billion paydown. The loan is quoted 93.5-93.875 pre-paydown. The extended loan was quoted 92.625-93 Friday after the company sealed lender approval of the amend-to-extend. In aggregate, about 75% of the company's outstanding $3.9 billion in term loans were extended. Las Vegas Sands will also a $1 billion cash paydown on the extended portion. Lenders agreed to extend $1.415 billion of the TLB by 2.5 years to November 2016 in exchange for an increase in spread to LIB+275. In addition, lenders agreed to extend $284.5 million in delayed draw I term loans to 2016 and $207.9 million in delayed draw II term loans to 2015. Approximately $980 million in term loans were not extended. That portion will continue pay LIB+175 and will mature in 2013 and 2014, consistent with the original terms of the loans.
    • First Data Corp bank loan lenders are expected to receive the $500 million paydown on Friday. The paydown will be pro rata across all six of the First Data tranches. The company's TLB-1 is quoted 86-86.5, while the TLB-2 and TLB-3 are both 85.875-86.375. The Euro loan is currently 86 bid and the delayed-draw term loan is quoted 85-87. The revolver is quoted in an 80-85 range. Earlier this month, the company sold $510 million of senior secured first-lien notes due 2020 at 98.387 to yield 9.125%. The note sale came after the company amended its credit to allow the company to issue additional secured debt to pay down its term loans.
     
    On the Break
    • Sinclair Television Group's new $270 million term loan B allocated and broke for trading this morning. The loan is quoted 100-100.5 out of the box. The issuer previously cut pricing on the loan to LIB+400 from LIB+425. The 1.5% Libor floor and 99.5 OID remained unchanged. The loan benefits from 101 soft call protection. The facility is rated Ba1/BB, while the corporate family ratings are B1/B+. The JP Morgan-led loan will mature in October 2015 and will refinance existing debt. The new term loan, along with cash and/or a revolving credit, will be used to repay the company's existing $305 million TLB which also matures in October 2015. Sinclair Broadcast Group, currently owns and operates programs or provides sales services to 58 television stations in 35 markets.
     
    Earnings
    • Bon-Ton Stores Inc today said fiscal 2Q10 comparable store sales increased 0.2%, and its quarterly operating loss fell to $6.4 million from $10.6 million in fiscal 2Q09. EBITDA increased to $21.3 million, compared to $19.3 million in the year earlier period.
     
    Ratings
    • Fitch Ratings affirmed DaVita Inc's IDR at 'BB-'.
    • EBG Holdings LLC, its principal operating unit Boston Generating LLC, and five other wholly owned units, collectively known as BostonGen, voluntarily filed for Chapter 11 in a bankruptcy court. The filing is part of a planned sale of five power plants to Constellation Energy. A Majority of the creditors of BostonGen's first-lien lenders have signed a sales support agreement.
    • Standard & Poor's Ratings Services said today it lowered its ratings on Boston Generating LLC's billion first-lien term bank loan, first-lien letter of credit, and first-lien revolver (all due in 2013) to 'D' from 'CC' following its bankruptcy filing. The recovery rating is '1', indicating that lenders can expect a very high recovery (90% to 100%) in the event of payment default.
    • Moody's Investors Service affirmed its ratings for Windstream Corp including its Ba2 Corporate Family and Probability of Default Ratings on plans to acquire Q-Comm Corporation. The proposed transaction is not expected to materially alter Windstream's operating and credit profile, though its adjusted Debt/EBITDA leverage is expected to remain elevated for the rating category at about 3.8x over the next two years, Moody's said.
     
    High Yield
    • PRICED: Mueller Water Products Inc (MWA) USD225m 144A sr notes due 9/1/20 (10y). NC5. B1/B+ (stable/stable). Via BAML/GS joint books, JPM, STI, WFS as co- managers. Wreg rights. 8.75% at 98.37, yld 9.00%. T+643bp vs 2.625% 8/15/20. Del 8/26 (T+5). CUSIP: 624758AC2.
     
    What to Watch Tomorrow
    • Hub International Ltd. Q2 earnings, conference call 12 p.m. ET
    • NO SCHEDULED ECONOMIC RELEASES
     
    16th Annual Thomson Reuters LPC Loan Conference
    Wednesday September 22, 2010
    Marriott Marquis, New York City
     
    Now in its 16th year, the Thomson Reuters LPC Loan Conference has become one of the industry's premiere annual events. Join investors, lenders, financial sponsors and treasurers as they discuss the outlook for a continually evolving loan market.
     
    Click Here to view our detailed agenda and to access registration information.
     
    Aug 19 5:55 PM | Link | Comment!
  • Syndicated Loan Market Commentary 08/18/2010
    With M&A speculation increasing, so is investor confidence. With the feeling that equities got over sold last week, the view is now that the market is set up for a bit of a rally, albeit in light volume; but positive gains are positive gain, if the does end up coming to fruition. Equities erased early losses on the renewed faith to close slightly above unchanged. The S&P ended at 1,094.16 (+0.15%) and the Dow finished at 10,415.54 (+0.09%).
     
    The loan market was quiet again today but firm. Most names were bid up an eighth as buyers were active today selectively adding to portfolios. With the primary market in both loans and high yield being quiet the focus has returned to the secondary. High yield and loans are very attractive at the moment with fund manager on a desperate search for yield, so the money flows into the credit markets should remain positive for the near to medium term. Warner Chilcott’s new term loan traded well on its break and quickly moved up into the par context after being issued at 99. Tomorrow should be a relatively quiet day, but we do get earnings out of AFC Entertainment, Sbarro, Drummond Co., Gamestop, Knowledge Learning, and Marvell Technology. Have a good night.
     
    Headlines
     
    News
    • DynCorp International's $565 million TLB slipped to 99-100 in trade today after yesterday's ban of private security companies from Afghanistan.
    • DirecTV Holdings LLC is scheduled to pay off its $500 million term loan A due 2011 and possibly, its $1.5 billion term loan B due 2013 as well. According to existing lenders, the company is planning to pay off TLA on August 20th. The company is issuing $3 billion of notes for general corporate purposes which may include the repayment of all outstanding borrowings under the TLA and TLB. Citi, JP Morgan, Credit Suisse and Goldman Sachs are leads on the three-part senior note offering
     
    On the Break
    • Warner Chilcott's new B3/B4 loans broke for trading this afternoon in the 99.75-100.25 range and has since moved up to 100. The OID on the $1.02 billion, 5.5-year loan was previously tightened to 99 from 98.5 amid solid demand. The loan is priced at LIB+425 with a 2.25% Libor floor. There is 101 soft call protection. Senior and total leverage are 2.9 times and 3.4 times, respectively. The company priced its $750 million in unsecured notes on Aug. 13 at 7.75%. The financing also includes a $500 million term loan A. The bank loan is rated (P)Ba3. The corporate family rating is B1. JP Morgan leads the financing, which backs a $2.15 billion dividend to Warner Chilcott's shareholders.
    New Issue
    • Anadarko Petroleum Corp is seeking top-tier lenders on its $5 billion, five-year senior secured revolving credit facility, sources said. Several banks are being invited to join with $250 million tickets. Banks in Anadarko's existing $1.3 billion debt facility due 2012 are said to be invited. Among them are: Bank of New York Mellon, Bank of Nova Scotia, Bank of Tokyo-Mitsubishi UFJ, BBVA, BMO Capital Markets, BNP Paribas, Credit Agricole and Standard Chartered Bank. Besides lead arranger JP Morgan, the revolver is said to have in place a dozen other banks from the oil and gas firm's $2 billion bond deal. Among them are: Bank of America Merrill Lynch, Barclays Capital, Citi, Credit Suisse, Deutsche Bank, DnB NOR Bank, Goldman Sachs, Morgan Stanley, RBS, SG, UBS and Wells Fargo. Pricing on the revolver opens at LIB+275 based on a ratings grid and goes up to LIB+375. The commitment fee is 50bp. The company has to maintain a leverage ratio of 4.5 times.
    Price Flex
    • Pricing on Clopay Ames True Temper's $500 million term loan has been lifted to LIB+600 from LIB+450-500. The $150 million asset-based facility has been reduced to $100 million. Also, the commitment deadline has been extended to Friday. There is also a 1.75% Libor floor and a 98 OID on the term loan. Goldman Sachs leads the loan. It backs Griffon Corp's $542 million acquisition of Ames True Temper (ATT) from Castle Harlan Partners. Clopay Ames True Temper is a newly formed wholly-owned subsidiary of Griffon Corp. Griffon will provide $75 million in cash. The corporate family and term loan rating is B2. The ABL facility is rated Ba2. The combined assets of ATT and Griffon's Clopay Building Products and Performance Plastics subsidiaries will secure the borrowings under the financing commitments. Griffon expects to have cash in excess of $200 million available for general corporate purposes after the completion of the deal. Griffon currently conducts its operations through Telephonics Corporation, Clopay Building Products Company and Clopay Plastic Products Company and Clopay Plastic Products Company.
     
    Extended
    • Las Vegas Sands Corp today said it will extend $1.415 billion of its term loan B, in addition to reducing the size of its revolving credit facility to $750 million under the terms of the amendment secured last week, according to a regulatory filing. Term loan B lenders holding $1.415 billion agreed to extend by 2.5 years to November 2016 in exchange for an increase in spread to LIB+275. In addition, lenders agreed to extend $284.5 million in delayed draw I term loans to 2016 and $207.9 million in delayed draw II term loans to 2015. In aggregate, about 75% of the company's outstanding $3.9 billion in term loans were extended. Las Vegas Sands will also make a more than $1 billion paydown on the extended portion. The payment in cash is expected to occur this week, it said in the filing.
    • HealthSouth will seek to extend the maturity of its $400 million revolving credit facility and refinance its term loans in an effort to increase its financial flexibility, the company said in an SEC filing. The company's priorities for its capital structure include the extension of its revolver to 2014 or beyond, the refinancing of its $450 million term loan due 2013 and the retirement of its term loan due 2015 and 10.75% notes due 2016. The company provided no specific timing for the expected transactions.
     
    Upsized
    • Futures exchange group IntercontinentalExchange Inc has increased its new $220 million, three-year senior unsecured term loan to $400 million after heavy oversubscription. Lead arrangers Wells Fargo, Bank of America Merrill Lynch and Bank of Montreal hold $32 million each. ), pricing opens at LIB+200. Banks were invited to join at an upfront fee of 30bp for commitments of $25 million or more, and 25bp for less than $25. The loan amortizes in quarterly equal installments of 7.5% through year 2, followed by 10% installments through the last year. The facility can be increased by up to $180 million. Financial covenants include a maximum total leverage ratio of 2.5 times and a minimum interest coverage ratio of five times. Closing is slated for August.
     
    Downsized
    • SoftLayer Technologies has downsized its $190 million term loan to $150 million and has also eliminated its $20 million revolving credit facility and $20 million delayed-draw term loan. Pricing on the term loan is now LIB+550 with a 99 OID and a 1.75% Libor floor. Earlier, price talk was LIB+525-550. In addition, GI Partners, which is buying the company, has boosted its equity check to $250 million from $195 million. Deutsche Bank and SunTrust lead the deal. SoftLayer provides global, on-demand data center and hosting services from facilities across the U.S.
     
    Ratings
    • Standard & Poor's Ratings Services today raised its corporate credit rating on the Las Vegas Sands Corp. (LVSC) family of companies to 'B' from 'B-'. The rating outlook is positive. Aside from Las Vegas Sands Corp., the LVSC family of companies includes Las Vegas Sands LLC, its Venetian Casino Resort LLC subsidiary, and affiliate VML U.S. Finance LLC. All issue-level ratings were also raised by one notch in conjunction with the corporate credit rating upgrade. The ratings were removed from CreditWatch, where they were placed with positive implications July 28, 2010. At the same time, we assigned new issue-level ratings to Las Vegas Sands LLC's extended $532.5 million revolving credit facility and approximately $1.9 billion of term loans (three tranches). We rated the new facilities 'B' (at the same level as the corporate credit rating) with a recovery rating of '3', indicating our expectation of meaningful (50% to 70%) recovery for lenders in the event of a payment default. (For the recovery analysis, see Standard & Poor's recovery report on Las Vegas Sands, to be published on RatingsDirect as soon as possible following the release of this report.) "The rating upgrade reflects the substantial improvement to the company's debt maturity profile that results from the completion of the amend-and-extend transaction," explained Standard & Poor's credit analyst Ben Bubeck. "Furthermore, given the easing of the leverage covenant into 2012, the company's financial flexibility and liquidity profile also improved." We expect only gradual improvement in the performance of the Las Vegas properties over the next few years, which would likely continue the need for equity cures and/or cash balances remaining at the U.S. entity to maintain covenant compliance.
     
    High Yield
    Announced
    • Choice Hotels International Baa3/BBB (pos/s) USD250m SEC registered 10y sr notes. GS/JPM/WFS (active)/BofAML/STRH (passive) joint books. CoC put at 101. UOP: Repay outstanding borrowings under revolving credit facility. Pricing today
     
    Price Talk
    • Price talk of 9% area is out Mueller Water Products Inc (MWA) USD225m 144A sr notes due 2020 (10y). NC5. B1/B+ (stable/stable). Via BAML/GS joint books, JPM, STI, WFS as co-managers. Wreg rights. Books close at 5pm today for most investors. Pricing tomorrow afternoon.
    • PRICE GUIDANCE: T+312.5bp area. Choice Hotels International Baa3/BBB (pos/s) USD250m SEC registered 10y sr notes. GS/JPM/WFS (active)/BofAML/STRH (passive) joint books. CoC put at 101. Pricing today
     
    16th Annual Thomson Reuters LPC Loan Conference
    Wednesday September 22, 2010
    Marriott Marquis, New York City
     
    Now in its 16th year, the Thomson Reuters LPC Loan Conference has become one of the industry's premiere annual events. Join investors, lenders, financial sponsors and treasurers as they discuss the outlook for a continually evolving loan market.
     
    Click Here to view our detailed agenda and to access registration information.
     
     
     
    Aug 18 7:11 PM | Link | Comment!
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