Traders said deals across the board were trading 1/8 to a 1/4 of a point lower compared to the week before, with several low coupon deals priced in the LIBOR plus 150-175 basis points range continuing to drop below par. Traders said sellers are outnumbering buyers and saw no near end to the selloff. Deals are trading down half a point across the board compared to three to four weeks ago, said a trader.
One buyside trader said the proposed repricing of DaVita's $2.68 billion term loan has crystallized investors' discontent over the large number of repricings in the market. A conference call on the proposed price drew out carping investors. JPMorgan is seeking to lower pricing to LIBOR plus 1 1/2% on the new term loan, which rolls a $279 million term loan "A" priced at LIBOR plus 1 3/4% and a $2.4 billion term loan "B" that is currently priced at LIBOR plus 2% into one $2.68 billion term loan (CIN, 5/22). "Investors are fed up," said the trader. "The market has come to a head. Now people are realizing the repricings just can't work."
One investor said JPMorgan contacted him last week to say it would be out with new pricing this week, not elaborating on what that level would be. Commitments are due May 30. He thought it might not even clear at 175. "You see what is happening in the market, anything with a one handle is getting pounded. I can't believe 175 will do it." Another investor, however, said his firm thought it would go at 175. A JPMorgan spokesman declined comment.
Deals that traded down last week included Fresenius Medical's term loan, which lost a point to trade at 99 1/2. "There are a lot of sellers on Fresenius," said the trader. "It is LIBOR plus 137 1/2 basis points - nobody wants it at that yield." General Growth Properties' term loan was another deal that had more sellers than buyers. The term loan, which has a LIBOR plus 1 1/4% coupon, fell to 99 1/8 from 99 3/4 the prior week. Burlington Coat Factory's term loan dipped to 98 3/4 from 99 1/2 a week earlier. "The market is shifting to a new level. Things will trade closer to par," he said.
