The market is being flooded with repricings, with some names back after a year-and-a-half and others back just months after initial syndication. "If it can talk and walk, it can reprice," observed one portfolio manager. Some investors are complaining, but as one said, no one is putting their money or their trader where their mouth is and selling their position.
Since the VNU and Travelport repricings earlier in January, more repricings have rolled out each week. At least nine credits last week, including HCA, Neiman Marcus, Sungard, Readers' Digest, Hertz, Insight Midwest, Jarden and Centennial Communications, tapped into the pockets of investors, cutting 25 basis points here and 50 there.
Credits like Sungard and Neiman Marcus have been paying off since 2005, so investors were less concerned about those price cuts. JPMorgan is dropping Sungard's $5 billion of loans to LIBOR plus 2% and Credit Suisse is slicing off 25 basis points on the Neiman Marcus credit, dropping the price to LIBOR plus 2% with a step down to LIBOR plus 1 3/4% when leverage is below 4.5 times. Bank of America is cutting 50 basis points off HCA's $11.55 billion deal (see story, page 6). Because the credit only debuted in late October, at least one portfolio manager said he got some phone call from other investors peeved about it.
The 25 basis point cut on Hertz is another deal giving buysiders grief. "They're repricing because they can," said a portfolio manager. "Performance hasn't changed the market allows them to." After being shot down by investors in June, Deutsche Bank is back again to cut pricing by 25 basis points to LIBOR plus 1 3/4% which includes a step-down to LIBOR plus 1 1/2% when leverage drops below three times or corporate ratings are upgraded to BB/Ba2.
Push back from the buyside has been cause for change in the past, but despite the complaints there has been no truly unified charge this time around. "When it still trades at 101 after a reprice, you've lost your ammo," one portfolio manager said.
