Education Management Corp.'s $1.185 billion term loan broke at 100 1/4 in an overall weaker secondary market last Tuesday. The deal traded up to 100 3/8 the day after the break. Credit Suisse, Goldman Sachs, Merrill Lynch and Bank of America lead the credit, which backs the leveraged buyout of EDMC by Providence Equity Partners and Goldman Sachs Capital Partners.
Several deals with low coupons in the LIBOR plus 1 3/4% range lost a quarter of a point on average last week, but a buyside trader said the EDMC deal managed to trade steadily above par because of its coupon. "The LIBOR plus 250 pricing is reasonable, which is why it is sitting where it is," he said. The deal also consists of a $760 million bridge facility and a $250 million revolver (CIN 5/5). An EDMC spokeswoman did not return calls.
Moody's Investors Service assigned a B2 rating to the credit facility. The company is a provider of private post-secondary education. Weaker than expected growth in enrollments and increased debt from acquisitions could put the company's ratings at risk of downgrade, said the agency in a report.