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Loan Market Commentary 02/22/2010

Well equities were not a real good gauge for anything today as they were down globally on feelings that they were over bought last week and lower commodity prices weighted on the markets. The opposite was true for loans; I heard that people felt the loan market was over sold recently when investors got skittish over the Euro land contagion. So, things continue to firm in our little corner of the world; most of the new issue names were firmer by an eighth on no real news. The cougars of the market (Claire’s, TXU, FDC, etc.) were up pretty significantly; Claire’s was up almost three points, TXU was up almost a point, and First Data was up over a quarter. Gaming names continue to edge higher as well. Harrah’s was up one and a half points after announcing that it completed the merger with Planet Hollywood; MGM and Gateway were also a bit firmer. Golden Nugget was flat and Fontainebleau was down over a point. LyondellBasell’s CAM was up another couple point after Reliance sweetened its bid for the company. Skype’s new term loan broke for trading today and finished up strong, ending at 100 1/2 - 101 1/8. The LCDX 13 was out the door today up a 3/8’s to 102 ¼ - 102 ½ but trimmed down a bit with equities in the afternoon to 102 – 102 ¼. In all, with everyone back from vacation, activity picked up today and many of the gainers from last week continued to firm. But, without any major catalysts on the horizon I expect the market to continue to be choppy. Also, watch out for any headlines out of Europe or from the FED that might affect the natural balance of things.
  • Express LLC is selling $200 million in senior notes due 2018. Proceeds, along with cash on hand, will be used to repay its $150 million term loan C at Express TopCo LLC and make a distribution to equity holders, according to IFR, a Thomson Reuters service. Roadshows begin tomorrow and run to March 1. Bank of America Merill Lynch, Goldman Sachs, and Morgan Stanley lead the sale.
  • Lennar Corp, a top three U.S. homebuilder, said on Monday it terminated its $1.1 billion senior unsecured revolving credit facility, which it was using to issue letters of credit. The company said it decided it would be more cost-effective to enter into cash-collateralized letter of credit agreements and entered into agreements with two banks with a capacity of $225 million.
  • LyondellBasell's CAM facility rose another 2 points this morning on news reports that Reliance Industries upped its bid for the company to $14.5 billion. LyondellBasell's CAM facility consists of a ratable portion of the company's eight pre-petition credit facilities (story, 2Feb). At the time of the company's bankruptcy filing earlier this year, existing lenders rolled into a $3.25 billion DIP facility that ran alongside a $3.25 billion new money term loan and a $1.515 billion ABL facility.
  • Reddy Ice is selling $300 million senior secured notes to refinance its $240 million term loan, according to IFR, a Thomson Reuters service. Roadshows begin today with pricing expected later this week. J.P. Morgan, Broadpoint and Wells Fargo are joint bookrunners. The company has also commenced an exchange for its 10.5% senior discount notes due 2012.
  • Magazine and website publisher Reader's Digest Association Inc has emerged from Chapter 11 bankruptcy after cutting it debt by 75 percent, the company said on Monday. Reader's Digest, which filed for protection from creditors in August, comes out of bankruptcy with $525 million in exit financing and a new board of directors that includes Fredric Reynolds, former chief financial officer of CBS Corp. Moody's Investors Service assigned a B1 Corporate Family Rating (with Stable outlook) to the company and its exit financing. Standard & Poor's issued a B rating to the exit financing package.
  •  Price talk on Savers Inc's $325 million term loan is LIB+375, with a 99 OID and a 2% Libor floor. Moody's has assigned a facility rating of Ba3 and placed the B2 corporate family rating on review for possible upgrade to B1.
  • Skype Technologies' new $591 million term loan B broke for trading this morning in a 100.25-101 market, sources said. The loan, priced at LIB+500 with a 2% Libor floor, was issued at 99. The loan was initially talked at LIB+400 with a 1.75% Libor floor. The OID was initially set at 99.75. The loan is part of a JP Morgan-led refinancing that takes out its 2009 buyout loan.
  • RBC is expected to launch a deal for Prime Healthcare Services, sources said. Price talk is said to be LIB+400 with a 2% Libor floor. An OID is to be determined. The deal consists of a $40 million revolving credit facility and a $250 million term loan B. Pro forma leverage is around 1.4 times. Proceeds will be used to refinance mortgage debt and for general corporate purposes.
  • Merge Healthcare announced it has a $200 million bridge loan commitment from Morgan Stanley to finance its bid for Amicas Inc. Based on that commitment and available cash, including $40 million of pre-funded equity investments from mezzanine investors, Merge has proposed to commence a $6.05 cash per share tender offer for all Amicas shares.