UBS Warburg and Morgan Stanley's $375 million "B" loan for RailAmerica blew out last Wednesday, the day it hit the market, as the company tapped the market during a sweet spot for issuers. "The market is on fire right now," said one banker. RailAmerica knew this was the case and came to market specifically with the purpose of cutting pricing, he added. The "B" used to be LIBOR plus 31/ 4%, but is now LIBOR plus 23/ 4%, he commented. The six-year $100 million revolver, priced at LIBOR plus 21/ 4% and is still chugging along, he said. The names of the banks interested in the revolver could not be ascertained.
RailAmerica is the latest name to come to market to refinance to get better pricing terms. Iron Mountain, Caremark RX, Isle of Capri and Printpack have all cashed in over the past few weeks (LMW, 4/8). This might make issuers happy, but it is chipping away at the returns of funds already invested in the deal. Sara Wilkins, v.p. of investor relations at RailAmerica, declined comment.