Up-front fees on pro rata tranches ticked down slightly but are still within arm's reach of last year's annual high of 4.2 basis points. According to Portfolio Management Data, for the rolling three months ended Dec. 31, 2000 pro rata fees tip-toed down to 4.0 basis points for every one million dollars committed. Fees on institutional pieces remained steady at 2.3 basis points, which was the same for last November (LMW, 11/13/00). Marc Auerbach, associate at PMD in New York, said not much has changed in the dreary, credit-sensitive loan market. "The story is much the same. There's not a large deal volume," explained Auerbach. He added that leveraged deal volume for December wilted down to $19 million from November's $36 million. He attributed the small dip in fees to a handful of richly priced telecom deals missing the three-month radar. "It's a rolling three-month average, so some of the small, highly leveraged telecom deals have dropped off our average, which probably accounts for the slight down-tick. Small, leveraged pro rata deals are what's keeping the spreads up," explained Auerbach. One such deal is Goldman Sachs' $250 million credit for Network Plus. The Quincy, Mass.-based telecom company paid 61/2% over LIBOR to expand its network back in October last year.
Institutional investors are still seeking quality deals, as up-front fees remained at 2.3 basis points. Demand is there, but only for the "right" deal. "They want the right deal. They're looking at credit quality, industry," said Auerbach, adding that pricing does not fix a lagging deal anymore.
