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Leveraged Loan Market Commentary 07/12/2010

Not much to say today, it was a summer Monday and the loan market was pretty quiet. Most people were focus on the primary with IDC and Fidelity's new loans hitting the market today and trading up over their OID's, showing there is still strong demand for new issue paper. But, the demand is more selective these days; IDC's new deal closed at the wider end of talk where Fidelity's cut pricing a quarter, upsized the deal $100 million and tighened the OID to 99.
With the equity markets closing higher [Dow 10,216.27 (+0.18%), S&P 1078.75 (+0.07%)] flow names, index names and newly issued term loans firmed an eighth as investors remain optimistic on earnings. The LCDX 14 was last seen at 95 7/8 - 96 1/8, (+3/8). I don't expect to see volume to pick up that much this week but I would count on seeing the market firm, that is if earning continue to impress. Keep your eyes on the numbers; this week the big names to watch are GE, Google, Knoll, Mattel, PPG Industries, WW Grainger and Yum! Brands.
  • ECB bond buying slows to near halt
  • UK challenged by austerity, falling exports 
  • Greek first-half budget deficit down 46 pct y/y-----Way to go Greece!
  • ECB gives backing to Greek bank fund plans
  • US to issue new drilling ban,BP enters asset talks
  • Bernanke says spurring credit key to rebound     
  • Aon to buy Hewitt for $4.9 bln, creates HR giant 
  • Senate vote on Wall St bill possible this week   
  • US to issue new drilling ban,BP enters asset talks -->
Lender Call
  • American Safety Razor is scheduled to have a lender meeting tomorrow morning at 10:00 a.m. at the Westin in New York. Goldman Sachs sent out the invitation to the market but no other details were given. the company has an existing $435 million credit facility consisting of a revolving credit facility due July 2012, a term loan B due July 2013, and a term loan due January 2014, that was led by UBS.
  • Credit Suisse and Morgan Stanley have provided a $1 billion term loan and a $1.5 billion bridge loan to back Aon Corp's acquisition of Hewitt Associates Inc, according to a press release. Aon expects to issue unsecured notes prior to drawing on the bridge loan facility. The aggregate fully diluted equity value of the transaction is approximately $4.9 billion, consisting of 50% cash and 50% Aon stock (based on the closing price of Aon common stock on July 9, 2010). Aon plans to integrate Hewitt with its existing consulting and outsourcing operations and sees annual revenue of $4.3 billion for the combined entity, which will be named Aon Hewitt.
  • General Growth Properties Inc said it is to receive a $500 million equity investment from the Teacher Retirement System of Texas. The TRS investment will be in the equity of the reorganized GGP only.
  • Blockbuster Inc has hired turnaround expert Jeffery Stegenga as its chief restructuring officer to help the company with its financial restructuring, and with long-term strategy. Stegenga was hired at the request of the company's bondholders.
  • Chemtura Corp and 26 of its U.S. affiliates have filed a revised Plan of Reorganization and related Disclosure Statement with the United States Bankruptcy Court for the Southern District of New York, the company announced Friday.
  • Kellogg Co is seeking new lenders on a potential refinancing to surface in September. According to sources, the cereal maker has met with both existing and new lenders individually since June. Barclays Capital is said to be coordinating. The BBB+ company has an existing $2 billion, five-year revolving credit facility due in November 2011 that was led by JP Morgan and Barclays.
On the Break
  • Interactive Data Corp's new $1.3 billion term loan B has traded up to 98.75-99 since breaking for trading earlier this afternoon in a 98-98.5 market. the loan was previously flexed up to LIB+500 from LIB+475 and the OID widened to 97 from 98. The 1.75% Libor floor remained unchanged. The TLB has 101 soft call protection for one year. Proceeds are to back the company's $3.4 billion buyout by Silver Lake Partners and Warburg Pincus. The debt financing commitment has been provided by Bank of America Merrill Lynch, Barclays Bank, Credit Suisse and UBS Investment Bank. The company is a provider of mission-critical evaluated pricing and reference data, real-time market data and other services for the financial services industry.
  • Fidelity National Information Services' new $1.5 billion TLB broke for trading this afternoon in the 100.625-200.875 range. The issuer upsized the loan by $100 million and cut the spread to LIB+375 from LIB+400. The OID firmed at 99, the tighter end of 98.5-99 talk. The 1.5% Libor floor remained unchanged. The corporate family rating is Ba1/BB, while the facility rating is Ba1/BBB-. The TLB is led by JP Morgan. It backs the company's share buyback plan.
New Issue-Loans
  • GE Capital and Bank of America Merrill Lynch are launching at 10:00 a.m. on Wednesday a $220 million bank loan for Bryant & Stratton College. The credit includes a $40 million, five-year revolving credit facility and a $180 million, five-year term loan B. Price talk on both tranches is LIB+500-525, with a 1.5% Libor floor. Earlier this month, the issuer netted corporate ratings of B1/B+. Proceeds will be used to refinance existing senior and mezzanine debt associated with the company's buyout in February 2008 by Parthenon Capital Partners and will provide a dividend to the sponsor/co-investors. Pro-forma leverage for the transaction is 2.92 times senior and total. Bryant & Stratton College is a for-profit provider of post-secondary education with a network of 16 campuses in New York, Ohio, Virginia and Wisconsin, as well as online. The College provides Bachelor and Associate degrees through 25 programs in a wide variety of areas including healthcare, business, information technology and legal.
  • Early price guidance on inVentiv Health's $525 million, six-year term loan is LIB+475-500 with a 1.75% Libor floor and a 98 OID. Citi is launching the loan tomorrow. It backs the company's $1.1 billion LBO by THL Partners. The financing also includes a $75 million, five-year revolving credit. In addition, the company will also raise $275 million in senior unsecured notes. The corporate family rating is B2, while the credit facility rating is Ba3. As per an SEC filing from, THL Partners will contribute $384 million in equity. THL Partners will pay $26 per share, a premium of 7 percent to inVentiv's closing price on May 5. inVentiv expects to complete the deal in the third quarter of 2010.
  • Ocwen Financial Corp's $350 million term loan has cleared market at talk of LIB+700 and allocations are slated for this week. The OID firmed at 98, the wider end of 98-99 talk. There is also a 2% Libor floor. The loan amortizes at 10% per year and has 101 soft call protection in the first year. There is a 50% excess cash flow sweep. Proceeds back Ocwen's $1.3 billion acquisition of HomeEq Servicing. HomEq is the U.S. mortgage servicing business of Barclays Capital and services mortgages with an unpaid principal balance of approximately $28 billion as of March 31, 2010.
Price Flex
  • SonicWALL has lifted pricing on its first- and second-lien term loans and is asking for commitments by 2:00 p.m. on Friday. Pricing on the first-lien is now LIB+625 with a 2% Libor floor and a 97 OID. Earlier, price talk on the first-lien piece was LIB+500 with a 1.75% Libor floor and a 98.5 OID. The first-lien loan now has 101 call protection. Pricing on the second-lien loan is now LIB+1000 with a 2% Libor floor and a 97 OID. Earlier, price talk on this tranche was LIB+900 with a 1.75% Libor floor and a 98 OID. The second-lien loan is now non-callable for one year and thereafter callable at 103, 102 and 101. In addition, the tenor on both term loans has been shortened to 5.5 years and 6.5 years, respectively, from six years and seven years. The deal includes a $155 million first-lien term loan and a $105 million second-lien term loan. The corporate credit rating is B2/B.
  • Avis Budget Car Rental LLC is amending its JP Morgan-led credit facility to prep for its potential acquisition of Dollar Thrifty. The company is asking to increase its accordion in order to increase the maximum amount of first-lien senior secured debt to $2 billion from $1.5 billion. the amendment proposes to enable the company to issue second- lien high yield notes. The definition used in calculating the debt-to-EBITDA covenant is also proposed to be changed. Consenting lenders will get a 12.5bp amendment fee upon closing of the amendment, and another 12.5bp if the acquisition succeeds. Consents are due July 14.
New Issue-Bonds
  • Interactive Data Corp (IDC) USD700m 144A sr unsec notes due 2018 (8y). NC4. Caa1/B-. Via Barc//BAML/CS/UBS joint books. W/reg rights. Roadshow 07/13- 20. UOP: along with US1.45bn 1st lien sr sec credit facility (USD1.3bn term loan and USD150m revolver, undrawn), and USD1.31bn equity from the sponsors, to fund the acquistion of IDC by Silver Lake and Warburg Pincus for USD33.86 per share in cash or USD3.4bn total. Biz: provides financial information (data, software). HQ: Bedford, MA.
  • Price talk of 8.375% are all-in-yield , including approximately 1 point OID is out on Windstream Corp (NASDAQ:WIN) USD400m 144A/Reg S sr notes due 2018 (8y). NC4. Exp ratings Ba3/B+. MS/DB/GS joint books. Barclays/Citi joint leads. Co- mgrs: BNP, MUS, STI. W/reg rights. Books close at 2pm today. Pricing this afternoon.
  • Calumet Specialty Products Partners LP/Calumet Finance Corp (NASDAQ:CLMT) USD450m 144A sr unsec notes due 2020 (10y). NC5. Mid single-B expected. Via JPM/BAML joint books, Barc, DB, GS, WFS as co-managers. W/reg rights. Roadshow 07/12-16. UOP: repay sr sec term loan and a portion of its revolver. Biz: leading refiner and processor of specialty hydrocarbon products. HQ: Indianapolis, IN.
  • Windstream Corp (WIN) USD400m 144A/Reg S sr notes due 09/01/18 (8y). NC4. Ba3/B+ (stable/stable). MS/DB/GS joint books. Barclays/Citi joint leads. Co- mgrs: BNP, MUS, STI. W/reg rights. 8.125% at 99.248, yield 8.25%. +556bp vs 4% 08/15/18. Del 07/19 (T+5). Proceeds are to repay the outstanding indebtedness under its revolving credit facility and to finance the acquisition of Iowa Telecom.
  • Calumet Specialty Products Partners LP is planning a $450 million senior unsecured offering due 2020 via JP Morgan and Bank of America Merrill Lynch as joint book runners. Proceeds are to repay its senior secured term loan and a portion of its revolver.
16th Annual Thomson Reuters LPC Loan Conference
Wednesday September 22, 2010
Marriott Marquis, New York City
Now in its 16th year, the Thomson Reuters LPC Loan Conference has become one of the industry's premiere annual events. Join investors, lenders, financial sponsors and treasurers as they discuss the outlook for a continually evolving loan market.
Click Here to view our detailed agenda and to access registration information.