Investors Start Push Up Pricing

Some recently launched deals are being pinched as investors are starting to push back and call for higher pricing.

  • 13 May 2005
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Some recently launched deals are being pinched as investors are starting to push back and call for higher pricing. The spreads on Kerr-McGee's $5 billion credit have been bumped up twice since the credit hit the market three weeks ago and buysiders are saying more credits will likely -- or at least should -- follow suit.

Bankers are not disagreeing. "Credit spreads are at an all-time low," one banker said. "They really support a no-default environment, which doesn't exist [in the loan market] so just fundamentally it makes sense for credit spreads to rise. We're at levels that, long term, aren't sustainable."

Kerr-McGee was first being shopped at LIBOR plus 1 3/4% on the $1 billion revolver and on the $2 billion term loan "X" and LIBOR plus 2% on the $2 billion "B" (LMW, 4/22). Many buysiders predicted a price hike that was first projected to be LIBOR plus 2% on the revolver and "X" loan and between 2 1/4% to 2 1/2% on the "B" (4/29). With allocation scheduled for last Friday, pricing was set at LIBOR plus 2 1/4% on the revolver and "X" loan and LIBOR plus 2 1/2% on the "B" loan. Several buysiders said the deal, led by JPMorgan and Lehman Brothers, was now oversubscribed.

Other names being thrown around as potential candidates for price flexing include the JPMorgan-led $3.05 billion deal for DaVita and the $500 million Citigroup and Goldman Sachs-led loan for Energy Transfer Co. (see related story, page 5). A spokesman for JPMorgan said he was not aware that pricing would be changed for DaVita and a banker said pricing on Energy Transfer is not being increased at this time. John McReynolds, president of Energy Transfer Co. said he has heard that some investors want the loan priced up to LIBOR plus 2 1/2%. "We won't do the loan if it gets priced up, but we'll have to see," he noted.

A third deal that some investors say could use a repricing is the $775 million deal for Hexion Specialty Chemicals led by JPMorgan, Citigroup and Credit Suisse First Boston. But no moves have been made to adjust pricing. "That deal is not getting repriced -- and that's a problem," one investor said. A spokesman for Hexion said he could not comment because the company was in a registration period. The JPMorgan spokesman said pricing on Hexion is not changing. Calls to banks on the deal were not returned as LMW went to press Friday.

  • 13 May 2005

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
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1 Citi 317,691.74 1201 8.90%
2 JPMorgan 291,227.96 1326 8.16%
3 Bank of America Merrill Lynch 285,088.11 991 7.99%
4 Goldman Sachs 217,749.25 714 6.10%
5 Barclays 209,291.80 811 5.87%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
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1 HSBC 32,400.29 147 6.76%
2 Deutsche Bank 32,042.83 103 6.69%
3 Bank of America Merrill Lynch 28,820.43 84 6.02%
4 BNP Paribas 25,608.74 143 5.35%
5 Credit Agricole CIB 22,617.86 130 4.72%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
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1 JPMorgan 18,067.92 70 9.12%
2 Morgan Stanley 15,215.44 76 7.68%
3 UBS 14,195.29 55 7.17%
4 Citi 14,014.57 86 7.07%
5 Goldman Sachs 12,113.98 67 6.11%