Lyondell Chemical's bank debt popped up above par on the buzz that the company would issue senior secured notes to take down part of the company's "E" term loan. The "E" loan was being bid in the 100 1/2 range, but it could not be determined if any paper had changed hands. The loan was being bid in the 98-99 range prior to the news. A non-call provision on the term loan "E" expired last May, but the "E" still has call protection at 102. "I expect Lyondell to pay down about three-quarters of the loan, at 102," said a buysider.
The $337 million of senior notes bear a coupon of 91/ 2%, mature in 2008 and are priced to yield 10%. A substantial portion will be used to pay down the company's approximately $418 million term loan. Doug Pike, director of investor relations at Lyondell, said that the company could not comment given the private nature of the transaction.
Lyondell is the latest name to tap the high-yield bond market. Two weeks ago Allied Waste Industries secured a $75 million tack-on to its recent $300 million senior note issue. In addition, Owens-Illinois also completed an offering of 10-year notes that was upsized to $450 million from an intended $300 million. In both cases, proceeds from the offerings were used to pay down a portion of the companies' bank debt.