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Loan Market Commentary 02/18/2010

This morning the initial jobless claims and producer prices came out and were much worse than expected. But, the market shrugged off data that pointed to increasing unemployment and inflation and churned higher. At 10 am the Philly Fed numbers came out and were pretty good; General Business Activity rose to 17.6 from 15.2, New Orders were up at 22.7 verses 3.2 in January, Shipments came in at 19.7 verses 11.0 and Number of Employees increased to 7.4 from 6.1 in January. Manufacturing numbers continue to improve and that is helping the positive sentiment which helped push equities higher and lifted loan bids a bit today. We saw names firming anywhere from an eighth to a quarter in most cases, despite a mixed bag of earnings results today. Community Health, HCA, Las Vegas Sands, MGM Mirage, NewPage, and Goodyear all reported today. The gaming sector continues to struggle but healthcare and auto names are still performing well. The LCDX 13 was on fire today moving up a point to 101 ¾ 102. In all it was a pretty solid day for the loan market and with sentiment getting better things should finish up the week strong. Volumes continue to be light so watch out.
  • MGM Mirage's term loan declined almost 1.75 points to 93 ¾ - 94 ¾ this morning after the company reported a 6% decline in 4Q09 revenue, sources said. Yesterday, the facility was bid around 95 3/8. This morning, the company said revenue decreased to $1.5 billion as casino revenue declined 7%. Las Vegas Strip REVPAR decreased 16% from the year-earlier period. Adjusted EBITDA was $307 million in the quarter, down 8% from last year. However by the end of the dat the term loan rallied back to 95-96, down 50 bps on the day.
  • Goodyear’s term loan rose today after reporting solid earnings today. Sales were up 7% from last year on higher tire unit volumes globally. Segment operating income was $249 million, up $408 million from last year. Stronger cash flows are helping drive debt lower.
  • Community Health Systems' strip ticked up slightly to 93. 5/8 -94 3/8 after the company announced a rise in 4Q09 revenue. The company reported total revenue of $3.1 billion, an 11% rise from the year-earlier period.
  • HCA's TLB is relatively unchanged at 94 1/2-95 this morning after the company reported 4Q09 results that were in line with the issuer's preliminary announcement. Yesterday morning the loan was 94 5/8 – 95 1/8. Revenues in 4Q09 increased 4.7% from the year-earlier period to $7.605 billion. Adjusted EBITDA was $1.343 billion, up from $1.237 billion in 4Q08. The company said cash flows from operating activities increased $757 million to $2.747 billion for the year ended December 31, 2009, from $1.990 billion for the year ended December 31, 2008.
  • Intergraph Corp is launching tomorrow via JP Morgan a $300 million incremental term loan, sources said. Proceeds are to refinance debt and pay a dividend. The company obtained a $420 million first-lien loan and a $200 million second-lien loan in November 2006 to back its LBO by a Hellman & Friedman and Texas Pacific Group-led consortium of investors.
  • Tribune Co was granted until the end of March to file a plan of reorganization and avoided the immediate threat of starting a "litigation nightmare" over its 2007 leveraged buyout. At the start of Thursday's hearing, the owner of the Los Angeles Times and Chicago Tribune said it would reduce the requested extension of exclusivity to the end of March from its original request to extend it into June. The company now has until the end of next month to resolve the main issue of its bankruptcy, the role of its 2007 $8.2 billion leveraged buyout that was led by Sam Zell, a real estate developer. The official committee of unsecured creditors have blamed banks that financed the deal for the company's bankruptcy, saying they knew the buyout debt would leave it insolvent.