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Loan Market Commentary 02/10/2010

Overnight European and Asian equities were firmer as, it was noted, that the fears over Greece seem to be getting a little better. But, has the situation really changed at all? Regardless, back in the USA the Treasury tried to make the record books by issuing $25 billion in 10-year securities; the second of three note and bond offerings this week totaling $81 billion. Needless to say, but the auction did not go all that well and treasuries tumbled. I am hearing a lot of talk that the bond bubble is ending, but who knows, the market is going to push it until it pops anyways.
In the loan world, things were no different. The market was heavy again and volume was light. All the major players were out showing cheaper levels, trying to lure people off the fences. But, there is not much interest in the secondary and that has been, and will be, the case for some time to come. The tone has been pretty negative out there and the only stuff that we see any interest in is recently issued paper that has fallen below its OID price. I have also been hearing some people talking about HY investors flocking to the loan market as they have become more attracted to floating rate products. What are you thoughts on this? I would really like to hear.
The focus of today was on Cedar Fair’s new term loan, which broke for trading at 100 7/8 – 101 1/8 after being issued at 99.5. Smurfit-Stone Container’s exit term loan also came out today, and it was quoted at 99 1/8 – 99 5/8. Claire’s Stores term loan rose to three quarters of a point to 79/80 after posting positive preliminary results. Dean foods term loan was lower after it posted a drop in 4Q09 EBITDA. The company’s term loan was seen at 96 ¼ -97 1/8. The LCDX 13 was relatively quiet and bounced around today. It ended up a quarter at 100 3/8 – 100 5/8.
  • Dean Foods' TLB eased about 75bp to 95.75-96.5 after the company posted a drop in 4Q09 EBITDA and sales, according to sources. Today, the company said 4Q09 adjusted EBITDA was $208 million, down from $265 million a year ago. Sales in the quarter were $3 billion, down 2.6% from the year-earlier period. The company said 4Q09 profit fell to $50.3 million, down from $66.4 million last year. Dean Foods entered into its $1.8 billion TLB in March 2007 (story, 29March07). The facility cleared at LIB+150 with a step up to LIB+175 when leverage rises to 5.75 times and a step down to LIB+137.5 when leverage falls to 4.5 times.
  • Cedar Fair LP's new $1.2 billion term loan B broke for trading today in the 99.75-100 range, source said. Since then, the loan has moved up 12.5bp to 100.875-100.125. The loan was sold at 99.5 and is priced at LIB+375 with a 1.5% Libor floor.
  • Claire's Stores' TLB rose more than a point to 78.5-79.5 today after the company posted preliminary unaudited 4Q09 and full-year financial results, sources said. Late yesterday, the company reported 4Q09 net sales of $411 million, an increase of $18 million from the same period last year. Consolidated same-store sales rose 2.1% in 4Q09. Adjusted EBITDA in the 4Q09 is expected to be between $91 million and $95 million, the company said, compared to $76 million in 4Q08. Cash and cash equivalents were $199 million at the end of the period.
  • Airline ticketing firm Travelport is testing investor appetite by lowering its initial public offering (NYSEARCA:IPO) price range by a quarter, fund managers said, trying to rescue its $1.78 billion London listing. The private equity-owned group on Wednesday slashed the price range for the listing, which would be the biggest in London for almost two years, to between 180 pence and 190p per share from 210p to 290p previously, fund managers said.