Search results for

Apparently if a tree falls in a forest it doesn't make a noise if no one is around to hear it. At least that is what one loan market player said with regard to the effect of Tyco International's accounting disclosure on the deserted secondary bank loan desks last week.

This chart, provided by Citibank/Salomon Smith Barney Inc., tracks bid-ask prices for par credit facilities that trade in the secondary market. It also tracks facility amounts, ratings, pricing and maturities.

Lawrence Shaw, portfolio manager at Alliance Capital Management, is pondering protecting or reducing his portfolio's triple-B corporate exposure by 10%, or $100 million, in anticipation of greater corporate sector volatility due to the potential war with Iraq. He has not decided if he will do this via the use of credit default swaps or by rotating into Treasuries. Shaw says he will make the move this week or next based on the amount of new corporate issuance.

Kmart's bank debt continues to lag after the holiday season produced weaker than expected results for the retail sector. Levels on the company's three-year, pre-petition revolver continue to be quoted in the 25-30 context, according to dealers. The $1.1 billion loan is led by J.P. Morgan. "The retail season shaped up to be poorer than expected," said one trader, noting that buyers for the paper have backed off. Kmart reported a loss of $383 million, or 76 cents per share, for its latest quarter.

Lehman Brothers is set to close by the end of this month a $30 million add-on piece for Corrections Corporation of America's (CCA), six-year "B" term loan. Pricing remains at LIBOR plus 31/ 2% on the now $595 million institutional tranche. The piece was sold to participating investors in the existing facility, said a banker familiar with the deal. He added that a 10 basis point up-front fee was offered. A Lehman official declined to comment.

Stanfield Capital Partners has launched a distressed debt hedge fund and has hired two managing directors to work on business development, said Kevin Murphy, managing partner. He declined to provide further details regarding the new fund but added Stanfield is planning to add two or three analysts in the first quarter this year. Stanfield has tapped Richard Johnson, a managing director at hedge fund firm Lucerne Partners, and Marion Patterson, an executive in the hedge fund placement group at Links Capital Group.

Any boost that Tyco International's bank debt holders could expect to reap from the company's disclosure that past aggressive accounting measures would have no material effect on the company's financial statements was muffled due to the slow holiday week. The company's revolver expiring in February is inching closer to par as a refinancing approaches and Tyco's bank debt maturing in February 2006 was quoted in the mid 90s. But, bank debt levels remain largely unchanged.

United Rentals has completed an offering of $210 million, 103/ 4% senior notes and has amended its current credit facility to give the company a softer cushion for its minimum interest coverage ratio requirements. "It was an opportunistic move based on the availability of capital in the high-yield market to get additional flexibility [for the credit facility]," said John Milne, president, cfo and director for the Greenwich, Conn.-based equipment rental company. "We anticipated to be in compliance," said Milne, explaining that the company wanted the extra breathing room as the construction industry is exposed to cyclical changes and the market downturn. "It's not a change in our view of our business," he added.

ABN AMRO has fully underwritten a $200 million credit backing The Carlyle Group's $300 million majority stake acquisition of CSX Corp.'s CSX Lines subsidiary. ABN will be shopping a six-year, $175 million "B" term loan and a five-year, $25 million revolver. Marketing to commercial and institutional investors is set for Jan. 14, said Mark London, managing director and co-head of U.S. leveraged finance at ABN. He added that pricing would most likely be determined by the middle of next week. CSX will receive $240 million in cash and $60 million in securities in the transaction. Equity for the acquisition, set to close in this quarter, will come from Carlyle's flagship U.S. buyout fund.

OM Group's term loan "C" has ticked up roughly seven points over the last month as the company completed an amendment to its credit facility and announced restructuring initiatives. The "C" loan is currently quoted with a bid/ask spread of 90 1/3 to 92 2/3, compared with a spread of 83 to 85 1/2 at the beginning of December, according to LoanX. "Anyone who bought [the paper] in the low 80s is patting themselves on the back right now," one trader commented. The bank debt plummeted roughly about 18 points into the mid-70s at the end of October after the Cleveland-based specialty chemicals maker posted poor results (LMW, 11/4).

Dealers said there has been more interest in Conseco's director and officer loans since the details of the company's reorganization plan have emerged. The interest has been drummed up by revelations that the $480 million of D&O loans will be treated in a similar way to the company's $1.5 billion revolver in the company's emergence from bankruptcy. "There are buyers of the revolver around 70 and buyers of the D&O loans around 68," noted one trader.

Lenders looking for a fresh start in 2003 are chirping about a busy pipeline for the first two months of the year, and investors are setting their sights on the $1.6 billion deal for Dole Food Company coming next month. Deutsche Bank, Scotia Capital and Bank of America are leading the deal, one in a lineup that is set to take the field after clearing the holiday season. The credit will back Dole's $2.5 billion buyout agreement with David Murdock, Dole chairman and ceo, and will also refinance some of Dole's existing debt. Investors that have been looking for paper are waiting for the credit. "It's a big liquid deal and they have been in the high-yield market for some time," one investor stated, adding that it is collateralized by real estate. A B of A official declined to comment, while Deutsche Bank and Scotia Capital bankers did not return calls. Murdock and other officials at Dole did not return calls.