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Loan Market Commentary 03/05/2010

Well, this morning non-farm payrolls came out showing, on a seasonally adjusted basis, a more modest decline than expected; -36k verses an estimated -50k. The number shocked a lot of people and equities rallied fueled mostly by short coverings. Headlines and commentators came out talking about the growing confidence of a ‘recovery’. But, if want to know the truth, on an unadjusted basis the US actually lost another 473k jobs this month. So things are not as great as people think. Consumer credit expanded by 4.96 billion led by auto loans, verses an estimated decrease of 4.5 billion. Equities remained flat after the morning rally and got a brief pop just before the bell.
In loan land sentiment continues to be positive but volumes were light. Its not that investors aren’t hungry, everyone has plenty of cash to deploy since HY issuance continues to take out loans; its just that everyone is just sitting on the sideline waiting for prices to come down. We got some positive earnings today from CDW and Lyondell, which helped the already positive sentiment. So, with fundamentals improving and supply decreasing I would expected to see more buyers in the secondary market, but they never came. Hopefully next week people will decide to get more involved. Anyways, bids were firmer by an eighth to a quarter across the board today and the LCDX 13 was up ¾ of a point, on the back of equities, to 102 ¾ - 103. In all it was a solid day and I will expect to see continued strength next week. Have a great weekend.
  • Avis Budget Car Rental LLC's $400 million senior notes due 2018 are talked in the 9.875%-10.125%, according to IFR, a Thomson Reuters service. Proceeds are being used to repay its floating-rate term loan. Bank of America/Merrill Lynch, Barclays, Citi, Deutsche Bank, JP Morgan and Wells Fargo Securities lead the sale.
  • Alion Science and Technology is selling $300 million of 4.75-year senior secured notes. Proceeds will be used to repay the company's first-lien credit facility and extinguish subordinated notes and warrants. The notes come in conjunction with a new $25 million revolver. Road shows begin Monday. Pricing is expected next week. Credit Suisse leads the sale.
  • Deutsche Bank and Credit Suisse are holding a bank meeting Tuesday to launch a $1.3 billion term loan B due 2015 to refinance debt at Weather Channel. The TLB will have a 101 soft-call protection. Price talk is to be determined. The company has an existing $150 million revolving credit facility and a $1.076 billion term loan B (LIB+400).
  • Six Flags Inc may require DIP financing should the company's emergence from bankruptcy be delayed beyond mid-April, the company said in a statement today announcing 2009 fourth quarter and full-year results.
  • Early price guidance on RedPrairie Corp's $240 million term loan is said to be LIB+400, with a 2% Libor floor and a 99 OID, sources said. Official price talk is to be finalized next week. Credit Suisse is launching Tuesday a $270 million bank loan to back New Mountain Capital's buyout of RedPrairie from Francisco Partners. The deal includes a $30 million revolving credit facility and the $240 million term loan B. Leverage through the bank loan is 3.6 times. The deal is attractive because the company has a well diversified business model and customer base. RedPrairie has also had a strong financial performance with a focus on deleveraging.
  • Bank of America Merrill Lynch, Barclays and Deutsche Bank are launching Tuesday a $1.1 billion loan for NEW Customer Service. The deal includes a $700 million first-lien term loan, which is covenant-lite, and a $400 million unsecured loan. Proceeds are to refinance existing debt and to pay a dividend. Price talk on the first-lien loan is LIB+425, with a 1.75% Libor floor. An OID is to be determined. Price talk on the unsecured loan is LIB+725, with a 2% Libor floor. The unsecured loan is non-callable for the first two years, callable at 103 in year three and at 101 in year four. NEW Customer Service has an existing $665 million TLB from 2007.
  • CDW Corp's term loan rose almost a point today after the company reported better-than-expected financial results. The loan is currently trading 86.125-86.625.
  • ABInBev launched a limited general syndication for its $13 billion syndicated loan, inviting banks to join with tickets of $500 million and $250 million. A bank meeting will be held on Tuesday next week. The borrower announced on Monday that a group of twelve banks had been appointed to arrange the loan, which partly refinances the remainder of the $54.8 billion of loans that paid for ABInBev's $52 billion merger with U.S. brewer Anheuser-Busch in 2008. Banc of America, Banco Santander, Barclays Capital, BNP Paribas Fortis, Deutsche Bank, ING Bank, Intesa Sanpaolo, JP Morgan, Mizuho Corporate Bank, Royal Bank of Scotland, Societe Generale and Bank of Tokyo-Mitsubishi UFJ were appointed mandated lead arrangers and bookrunners on the transaction. The new loan is split between a five-year, $8 billion revolver and a three-year, $5 billion term loan.
  • Price talk on Holly Energy Partners' $150 million, eight-year senior unsecured notes are at 8.25-8.5%. Books closed today at 12:30 p.m. and an investor call was held this morning. Proceeds are to repay outstanding borrowings under the company's senior secured revolver, and for acquisition of petroleum storage tanks. UBS, Bank of America Merrill Lynch and Goldman Sachs are joint bookrunners. BBVA, Capital One, Comerica, Mitsubishi UFJ, PNC and US Bancorp are co-managers.
  • Bids for LyondellBasell's CAM moved up slightly today after the company posted its January results. The loan is currently straddling 72, up 25-50bp from yesterday. The company posted total January EBITDAR of $110 million, noting that weak refining margins continue.
  • Accuride Corp is out with a $308.2 million restructured credit facility due June 2013. Pricing is LIB+675 with a 3% Libor floor. Deutsche Bank is leading the facility, which would be the fifth amendment to the company's existing credit facility.
  • Penton Business Media Holdings Inc, a publisher of 113 trade magazines such as Ward's AutoWorld, Restaurant Hospitality and National Hog Farmer, won court approval of its reorganization plan, and expects to emerge from bankruptcy within a few days.
  • SITEL LLC is selling $300 million in eight-year senior notes to pay down its revolver and term loans, according to IFR, a Thomson Reuters service. The new notes will be non-call for four years and due 2018. Goldman Sachs, Bank of America/Merrill Lynch and Credit Suisse are joint leads. Roadshows begin Monday.
  • Emergency Medical Services Corp's $550 million, five-year senior secured bank loan is offering three ticket levels, sources said. Banks committing $40 million get an upfront fee of 100bp, those with $30 million tickets get 75bp and those with $20 million get 50bp. one-third of the commitments will go the revolving credit facility and remaining two-thirds to the term loan. The deal has a $125 million revolver and a $425 million term loan. Both tranches are priced at LIB+300. The base rate margin is 200bp. Commitments are due March 23 and closing is slated for April 1.