Search results for

Goldman Sachs, Merrill Lynch, Morgan Stanley and Lehman Brothers, have all signed up as retail participants in a $425 million two-year term loan for AES. Power sector financiers say it highly unusual to see so many bulge bracket firms sign up to a single loan facility.

The average size of trades has been shrinking, pushing the thorny issue of assignment fees to the fore. These standard $3,500 payments to the administrative agent on a loan when it is traded are cutting into the upside for desks. "When you were doing $20 million trades, it didn't matter," said Jon Weiss, head par trader at Bear Stearns. "But on a $2 million trade, it does."

Bear Stearns is seeking to pick up key bankers with transaction and customer relationship experience for its London-based origination desk, according to Noel Dunn, senior managing director for debt corporate finance. Dunn says there are roughly 10 bankers on the desk, while noting that, "We have more hiring to do and the current market makes for a terrific opportunity to hire good people."

Merrill Lynch and Morgan Stanley are leading a $1.9 billion financing package for Burlington Resources' acquisition of Canadian Hunter Exploration, parlaying advisory roles they won quietly when Burlington went straight to them in hopes of minimizing potential leaks of the deal. Dan Hawk, v.p., treasurer, said the company turned to Morgan Stanley for a mixture of relationship and understanding of the business and to Merrill because of its understanding and expertise in the Canadian sector.

Two collateralized loan obligations are in the market as managers see an attractive arbitrage between spreads on assets in the secondary market and on the liabilities they issue to support the deals. Both ING Capital Advisors and PPM America are in the market seeking to take advantage of spreads widening in their favor. Lang Gibson, CDO analyst at Banc of America Securities, said CDO arbitrage is at an exceptionally high level. "The CLO arbitrage spreads are better by 17%, rising from 330 basis points to 385 basis points," said Gibson.

Concert Industries closed a C$145 million deal in late September to consolidate five loans into one deal. Carey Edwards, cfo, said consolidating debt offers greater flexibility and a better interest rate. The company stuck with original lender National Bank of Canada because of its longstanding relationship with the bank. "They offer the best flexibility as well as business-like approach to banking," Edwards said. Concert Industries, based in Toronto, makes pulp-based products that are used in a wide range of items including baby wipes and home cleaning materials.

Countrywide Securities has moved Jim Griffin from mortgage analyst to the position of secondary trader in its asset-backed securities and mortgages desk. Jeff Staab, senior v.p. of home loan trading, says Griffin will report to both Staab and Kevin Doyle, senior v.p. ABS trading. Prior to his promotion, Griffin reported to Anand Bhattacharya, head of fixed-income research, says Staab.

Bonds of high-yield wireless companies traded up last week after AT&T Wireless (Baa1/BBB) announced that it would acquire affiliate TeleCorp PCS. Bids on TeleCorp 10.625% notes of '10 (formerly B3) rose from 93.5 to 114. Bids on other wireless affiliates of AT&T and Sprint, such as AirGate PCS (Caa1/CCC), Triton PCS (B2/B-) and Alamosa PCS (Caa1/CCC) rose two to four points each, in what analysts attribute to investor expectation of further acquisitions. But, Robin Lochner, wireless analyst at Deutsche Banc Alex. Brown, says that is a mistake. "Other than Dobson Communications, I don't think you can count on any near-term M&A activity in the sector." Bids on Dobson's 9.5% notes of '09 (B2/B) moved up five points, to 97.5.

The credits for FPL Group Capital and its subsidiary Florida Power & Light were oversubscribed with $4.2 billion of commitments coming across the two deals, according to bankers. Allocations were expected Oct. 10, but could not be ascertained. Salomon Smith Barney andBank of America led the syndication of the FPL Group's $2 billion credit; J.P. Morgan and First Union are the leads on the $1 billion deal for the subsidiary. Banks that signed onto one deal signed onto the other, said a banker. The allocations are likely to be scaled back rather than the deal being enlarged.

Gaming analysts and investors say there is room for further tightening on bonds of gaming companies that depend on air travel for a large percentage of their clientele, chiefly those operating in Las Vegas. Many had thought that the casinos would suffer as a result of decreased air traffic into Las Vegas (BW, 9/24). Though the whole gaming sector sold off immediately after Sept. 11, Vegas credits were particularly hard hit, trading down by as much as 15 to 20 points. They have since come back, but as of last week were still well short of their August highs. MGM Mirage's 9.75% senior subordinated notes of '07 (Ba1/BB+), which traders see as a benchmark Vegas name, were up to a 101 bid--well off its August level of 109, but much improved from a post-attack low of 90.

Genesis Health Ventures has closed a $515 million deal that was increased $100 million due to strong appetite for the health care sector. Lisa Salamon, director of investor relations at Genesis, said two weeks ago the company emerged from a "fun fifteen months of bankruptcy." Mellon Bank led the $290 million debtor-in-possession facility, but First Union, Goldman Sachs andGE Capital are leading the new facility. Salamon declined to comment on why the other banks stepped up to lead the exit financing. Upon oversubscription of the deal, Genesis decided to upsize the facility with a part of the proceeds paying off its outstanding DIP facility and the extra amount used to pay some leases and help finance the acquisition of American Pharmaceutical Services, said Salamon.

The slide in Global Crossing debt continued last week in the wake of the company's Oct. 4 earnings warning and management shuffle. The benchmark long haul communications provider saw bids on its 9.5% senior notes of '09 (Ba2/BB-) sink to 15 last Thursday, down from 21 the previous week. "There have been several downdrafts in the [high-yield wireline telecommunications] sector over the past year, but this latest downdraft since Sept. 11 has been more severe than others, and we think it represents real capitulation," says Trent Spiridellis, analyst at Banc of America Securities. He says "slowing demand for data services, shrinking budgets for capital expenditures, customer churn, soft wholesale demand and the company's general unwillingness to do business with competitive carriers" were among the factors contributing to Global Crossing's earnings miss, and the decline of the sector as a whole.