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Loan Market Commentary 06/08/2010

In the early morning futures pointed to a higher open on Bernanke’s comments that our recovery is still intact. But, his words failed to inspire; equities opened up better but were unable to hold the momentum and reversed course falling into negative territory. The LCDX 14 followed suit and was seen as low as 93 5/8 – 94, (-3/8). Cash loans were quiet and heavy with most names down between an eighth to a quarter point. There were sellers out there; a lot of people are getting out of flow names and some recent new issue in order to make room for newer issue loans that are offering richer spreads and wider OID’s. Today there were three new deals that broke for trading; Citadel, Calpine (NYSE:CPN) and IMG which all broke above their OID’s.
 
Elsewhere Neiman Marcus (NMG) reported 3Q10 earnings; EBITDA came in at $138.3mn up from $105.3mn last year. Dollar General (NYSE:DG) also reported positive results; 1Q10 EBITDA was up 24% to $360mn. Both there term loans firmed a quarter.
 
Right before the bell equities picked up after Nouriel Roubini, a.k.a. Dr. Doom, said that the US is not likely to experience a double dip recession. The LCDX 14 came back a bit to finish the day unchanged at 94 – 94 ¼. Cash trading picked up some but it was really tough gauge a direction. Some buyers did emerge and tried to pick off names on the cheap. In all it was a light and choppy day in the loan market. We should continue to see people better sellers of recent new issues and flow names as they lighten their load to get involved in the new paper that is coming down the pipeline. But, a lot of cash remains on the sideline so we will see opportunistic buying. In sum, the market will be choppy but we should be flat overall.
 
News
  • Moody's Investors Service today revised U.S. automotive parts suppliers’ outlook to positive from stable. Auto suppliers have gained from firming consumer demand, Moody's said.
  • Standard & Poor's said today that it placed its 'BB' senior unsecured debt ratings on Talecris Biotherapeutics Inc's $600 million senior unsecured notes due 2016 on CreditWatch with negative implications, following Spanish health care company Grifols (unrated) plans to acquire the company in a cash and stock deal.
  • Dollar General reported 1Q10 revenues of $3.11 billion, up 11.9% from the year earlier period. 1Q10 adjusted EBITDA was up 24% to $360 million. Street expectations were $330 million. JP Morgan raised DG to $30 from $26.
  • Neiman Marcus Inc today said fiscal 3Q10 revenues were $895.2 million compared to $810.1 million in the prior year. Comparable revenues increased 9.1%. Operating earnings were $85.3 million compared to $50.3 million for fiscal 3Q09, an increase of 70 percent. EBITDA in the period was $138.3 million, up from $105.3 million last year.
  • Domtar has raised the maximum aggregate consideration, to $450 million from $350 million, for its waterfall tender offer for its 5.375% Notes due 2013, 7.125% Notes due 2015, 7.875% Notes due 2011 and 10.75% Notes due 2017.
  • Terex Corp yesterday announced the successful completion of the consent solicitation relating to its 8% senior subordinated notes Due 2017. The purpose of which was to obtain the necessary consents for a waiver of the limitation on sales of assets and subsidiary stock covenant in the indenture governing the notes.
On the Break
  • Citadel Broadcasting's new TLB is quoted today at 104-105. The $762.5 million loan began trading last Friday, following the company's emergence from bankruptcy on June 3. Under the company's reorganization plan senior lenders received a share of the remaining pre-petition debt, converted into the new term loan, plus a 90% equity stake in the restructured company, in exchange for cutting $1.4 billion in debt. The five-year senior secured term loan is priced at LIB+800 with a 3% Libor floor.
  • Calpine New Development Holdings' new $1.3 billion term loan broke for trading this afternoon in the 99-99.5 range and has since ticked up to 99.125-99.625. Pricing on the seven-year term loan was bumped up to LIB+550 with a 1.5% Libor floor and an OID of 98. 101 call protection was also added to the facility at that time. Citi and Deutsche Bank are to the right of Credit Suisse. Proceeds will be used to buy Pepco Holdings' Collective Energy assets for $1.65 billion.
  • IMG Worldwide's new $250 million TLB broke for trading this afternoon in the 97-97.75 range. The issuer downsized the five-year facility by $50 million and firmed pricing at LIB+525, the wider end of the most recent LIB+500-525 talk, along with a 97 OID and a 2% Libor floor. JP Morgan leads the deal. Proceeds are to refinance debt. The corporate family rating is B2, while the facility rating is Ba2. Proceeds also will be used for general corporate purposes. IMG Worldwide provides sports, athletes and event marketing and management services.
New Issues: Bank Loans
Upsized
  • Pricing on AutoTrader.com's $325 million, six-year term loan B has been bumped up to LIB+450 with a 1.5% Libor floor and a 98 OID. The deal now also has 101 call protection. Earlier, the deal was talked at LIB+350 with a 1.5% Libor floor and a 99 OID. The corporate family and facility ratings are both Ba3.
  • Price talk on TransUnion's $940 million term loan has been revised to LIB+475-500 with a 98.5 OID. Earlier, price talk was LIB+375-400 with a 99 OID. A 1.75% Libor floor remains unchanged.
 
New Issues: High Yield
  • Altria Group Inc Baa1/BBB/BBB+ (s/s/s) USD benchmark 5.25y due 9/11/15. Barc/DB (active)/CS (passive) joint books. CoC put at 101. Gtd by Philip Morris USA Inc. Expect to launch/price today. Settle T+3.
  • TitleMax USD225m 144A sr sec 1st lien notes due 2015 (5yr). NC3. B2/B+. Jefferies sole books, Stephens as co-manager. W/reg rights. R/S 6/7-6/17. UOP: To repay existing indebtedness. Biz: Automobile title lending company with over 550 company-owned stores serving individuals who generally have limited access to traditional sources of consumer credit. Their loans are secured by a first lien on the customer s automobile.
  • Triumph Group Inc (NYSE:TGI) USD350m 144A sr notes due 07/15/2018 (8y). NC4 (MWC T+50bp). Equity claw: 3y 35%. Ba3/B+ (stable/negative). Via RBC/UBS joint books, PNC as sr co- manager, BB&T, US Bank as co-managers. W/reg rights. 8.625% at 99.270, yield 8.75%. +592bp vs 3.875% 5/15/2018. Del 06/16. (T+6). 144A CUSIP: 896818 AE1.
  • BWAY Holding Co (BWY) USD205m 144A sr unsec notes due 06/15/18 (8y). NC4(MWC T+50bp). B3/B- (negative/negative). Via BAML/DB/Barc joint books. W/reg rights. 10% at at 98.658, yield 10.25%. +743bp vs 3.875% 05/15/18. Del 06/16 (T+6). 144.
 
What to Watch Tomorrow June 9
  • Wholesale inventories, April (Census Bureau) 10 a.m. ET
  • Beige book (Federal Reserve)
  • Treasury to auction $21 billion 9-year 11-month notes
  • Treasury to auction $25 billion 56-day cash management bills
  • Bill Barrett Corp. at Bank of America Merrill Lynch small & mid cap conference 8 a.m. ET
  • J. Crew Group, Inc. at Piper Jaffray consumer conference 8:30 a.m. ET
  • Navistar International Corp. Q2 earnings, conference call 9 a.m. ET
  • Tanger Factory Outlet Centers, Inc. at Nareit investor forum 9 a.m. ET
  • AGCO Corp. at JPMorgan diversified industries conference 9:15 a.m. ET
  • EnergySolutions, Inc. at JPMorgan diversified industries conference 9:15 a.m. ET
  • Hologic Inc. at Needham health care conference 9:20 a.m. ET
  • URS Corp. at Morgan Joseph best ideas conference 9:30 a.m. ET
  • Lender Processing Services, Inc. at RBC technology, media & communications conference 9:30 a.m. ET
  • TeamHealth Holdings, Inc. at Bank of America Merrill Lynch small & mid cap conference 9:40 a.m. ET
  • Ferrellgas Partners, LP Q3 earnings, conference call 10 a.m. ET
  • Fidelity National Information Services Inc. at RBC technology, media & communications conference 10 a.m. ET
  • Oshkosh Corp. at JPMorgan diversified industries conference 10 a.m. ET
  • Penn National Gaming, Inc. at Morgan Joseph best ideas conference 10 a.m. ET
  • Alaska Communications Systems Group, Inc. at RBC technology, media & communications conference 10:30 a.m. ET
  • G-III Apparel Group, Ltd. at Piper Jaffray consumer conference 10:30 a.m. ET
  • Knology, Inc. at RBC technology conference 10:30 a.m. ET
  • Commercial Vehicle Group, Inc. at JPMorgan diversified industries conference 10:45 a.m. ET
  • Consolidated Communications Holdings, Inc. at RBC technology, media and communications conference 11 a.m. ET
  • EMCOR Group, Inc. at Morgan Joseph best ideas conference 11 a.m. ET
  • CommScope, Inc. at UBS technology and services conference 11 a.m. ET
  • PNM Resources Inc. analyst meeting, conference call 11 a.m. ET
  • Stewart Enterprises, Inc. Q2 earnings, conference call 11 a.m. ET
  • Tenneco Inc. investor day 11:30 a.m. ET
  • Dress Barn, Inc. at Piper Jaffray consumer conference 11:50 a.m. ET
  • Warnaco Group, Inc. at Piper Jaffray consumer conference 11:50 a.m. ET
  • Corporate Office Properties Trust at Nareit investor forum 12:15 p.m. ET
  • Quanta Services, Inc. at JPMorgan diversified industries conference 12:40 p.m. ET
  • Viterra Inc. Q2 earnings, conference call 1:15 p.m. ET
  • Rock-Tenn Co. at JPMorgan diversified industries conference 1:45 p.m. ET
  • MDC Partners Inc. at RBC technology, media & communications conference 2:30 p.m. ET
  • Pike Electric Corp. at JPMorgan diversified industries conference 2:30 p.m. ET
  • Alliance Data Systems Corp. at RBC technology, media and communications conference 3 p.m. ET
  • Quanta Services, Inc. at Lazard alternative energy investor summit 3:30 p.m. ET
  • Quantum Corp. at UBS technology and services conference 3:30 p.m. ET
  • Teleflex Inc. at Jefferies life sciences conference 3:30 p.m. ET
  • Terremark Worldwide, Inc. at RBC technology, media & internet conference 3:30 p.m. ET
  • DuPont Fabros Technology, Inc. at Nareit investor forum 4 p.m. ET
  • Verint Systems Inc. Q1 earnings after market close, conference call 4:30 p.m. ET
  • Luby’s Inc. Q3 earnings after market close, conference call 5 p.m. ET
  • Shuffle Master, Inc. Q2 earnings, conference call 5 p.m. ET
  • Amerco/U-Haul Q4 earnings after market close
  • Spartech Corp. Q2 earnings after market close