General Growth Properties (GGP) and NRG Energy have climbed in secondary trading as investors search for larger, cheaper and better-rated credits. Already tight liquidity has been further squeezed after Nextel Communications and Boise Cascade announced they are taking out their loans. Nextel refinanced its $2.2 billion "E" loan, while Boise's $1.225 billion "C" was taken out Feb. 4.
GGP's "A" and "B" tranches traded at 100 1/2-100 3/4 and 101 1/8-101 3/8. Two weeks ago, GGP's "A" was quoted 100 1/8, while the "B" was seen around 100 5/8. "It's moved up quite a bit," one trader said. "Assets that [investors] have are disappearing so people are using GGP to replace it because it's a great credit. The only reason why it hadn't traded up is because there's a lot of it," another dealer noted. Also, banks have almost finished selling the "A" tranche, which brings additional upwards pressure.
Meanwhile, NRG's $950 million "B" loan traded at 100 7/8-101 1/8. "The credit was below 101 a few days ago so people are flocking to it," another dealer noted. NRG's revolver is priced at LIBOR plus 1 7/8%. The $1.45 billion NRG financing also has a $150 million revolver and a $350 million letter of credit facility. Credit Suisse First Boston leads the deal, which is rated BB/Ba3.
GGP's "A" and "B" tranches are priced at LIBOR plus 2 1/4%. The real estate investment trust's credit is rated BB+/Ba2 and is jointly led by Banc of America Securities, Lehman Brothers, CSFB and Wachovia Securities. GGP also has a $500 million revolver and a $1.145 billion bridge loan.