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Loan Market Commentary 01/25/2010

The tone in the loan market is very different than what it has been for the past few weeks. The loan market, along with all other asset classes, has been on fire for almost a year now and has realized 50%+ gains. In the first couple weeks of January we saw some moderate gains, but last week things began to show signs of easing. We have now come to a point where people are wondering if the party is over; are going to see the market pullback? Have the past couple months, in fact, been a “Bear Market Rally?” Time will tell, but sentiment has changed and people are being more cautious. Today the trading was more technical; new issues and stronger credits performed and weaker off-the-run paper traded off. So, we are seeing bifurcation in the market again. In sum, volumes were moderate and loans moved a quarter in either direction. The LCDX 13 was down a quarter to 102 3/8 – 102 5/8.
  • Reader's Digest Association has announced it is raising $525 million in senior secured first-lien floating-rate notes to refinance debt as part of its plans to exit from bankruptcy. The seven-year notes are non-callable for two years after which they can be called at 102, 101 and par. Ratings of B1/B+ are expected. The notes will be led by JPMorgan, Bank of America Merrill Lynch, Credit Suisse and Goldman Sachs as joint books, with Moelis as co-manager.
  • Carmike Cinemas Inc has reduced the margin on its $275 million, six-year term loan B to LIB+350 from LIB+400, sources said. The Libor floor remains at 2% and the OID is 98.5. As reported earlier (story, 7Jan), proceeds are to refinance its existing term loan. JP Morgan is lead and is joined by Citi and Macquarie Capital as joint bookrunners.
  • Hexion Specialty Chemicals' extended loan is quoted 96-96.5 after the issuer completed an amendment and extension of the credit, sources said.
  • US Telepacific will be holding a bank meeting this Wednesday for a $360 million, 5.5-year first lien term loan and a $25 million revolving credit facility, sources said. The leads are Credit Suisse, Deutsche Bank and Bank of America Merrill Lynch. Proceeds are to take out existing credit facilities, according to sources. Pricing has yet to be revealed.
  • Chemtura Corp has flexed down pricing by 25 bps to LIB+400 and has tightened the OID from 99 to 99.5 on its Citi-led exit financing, sources said. The Libor floor remains unchanged at 2%. The exit financing consists of a $300 million term loan and a $150 million revolving credit facility.