Search results for

A whopping $300 million in Finova Group bank debt traded last week and levels climbed about 10 points as the market jumped all over news that Berkshire Hathaway and Leucadia National Corp stepped up with a bailout bid for the company. Activity was so heated that even some par desks were chattering about it, but euphoria died down a bit by the end of the week as traders noted there were still some big issues to be ironed out. Bids dropped back from 87 to 80. Bear Stearns, Credit Suisse First Boston, Deutsche Bank, and J.P. Morgan Chase were said to be the shops most actively trading the name. Calls to Bruno Marszowski, cfo of Finova, were not returned.

Merrill Lynch and First Union are scheduled to launch this week general syndication of their $800 million credit for Winn-Dixie Stores. A banker said pricing bumped up roughly 25 basis points from its original level resulting in an opening price of LIBOR plus 2 1/2% on the $400 million pro-rata piece. There will be a 37.5 basis points non-use fee on the $200 million, 364-day revolver and a 50 basis points non-use fee on the $200 million five-year revolver. The $400 million term loan will be priced at LIBOR plus 3%. Pricing will be tied to a grid based on the company's credit ratings.

HSBC is ramping up an effort to grow its investment banking business and build a lending and secondary trading business and has hired Greg Meredith, formerly of NationsBank, to lead the charge. Meredith declined to comment on the bank's plans, but sources at HSBC said the search is on for someone to lead the secondary loan trading desk.

Merrill Lynch has revised its forecast for the 2001 junk default rate to 9.2%, bringing it closer to the 9.5% prediction of Moody's Investors Service, which some had considered a radical outlier. "It is just coincidental that the number has come closer to Moody's figure," says Martin Fridson, Merrill Lynch's chief high- yield strategist. "Conditions have worsened--the reality has come in line with Moody's. It isn't that Moody's has finally come into line with reality."

Citigroup, Deutsche Bank, and Bank of Nova Scotia have joined joint leads Bank of America and J.P. Morgan Chase as agents on a $1.7 billion credit for Southfield, MI-based Lear Corporation. Cameron Hitchcock, treasurer, said he is satisfied with general syndication on the loan and he expects it to close on March 21. Hitchcock said the company went with Chase and B of A as the company has longstanding relationships with each bank. "They are ranked number one and two in jumbo syndication," he noted.

Credit Suisse First Boston, Bank of Montreal, andTD Securities have reportedly landed the leads on a $600 million credit for Nextel Partners after bids went out on the loan early this week. Market sources said the company selected the trio to arrange a $600 million credit that will replace its existing $425 million deal. The old credit comprises a pro rata piece priced at LIBOR plus 4 1/4 % and an institutional tranche priced at LIBOR plus 4 3/4 %. A banker said price talk is LIBOR plus 3 1/4 % on the pro rata and LIBOR plus 3 3/4 % on the term loan. Officials at CSFB would not comment on the structure of the deal.

More than $20 million of Pacific Gas & Electric's paper traded in the mid- to high 80s as the state of California tries to pull the beleaguered utility away from bankruptcy. Dealers said this is one of the first trades of the bank debt in a while. Deutsche Bank was among those actively handling the paper. A market watcher observed, "There's been a lot of swaps, some default swaps, so there's a lot of trading." Meanwhile, the state has committed $10 billion to buy power for the companies' customers. "They seem to be trying to deal with that situation," a dealer said.

Owens Illinois traded in the 90s range in the wake of a favorable bank meeting. The size of the piece could not be determined by press time, but one market player who attended a bank meeting early last week says the company is making progress, despite any asbestos ties. "I'm hearing positive things about them," he said, noting that the company is offering the banks collateral. "Are they completely out of the water? No. But the guys that are in that deal are going to be in a lot better. It's a good company with solid cash flow. It's well-run with a good management team," he said. "And there are no current asbestos issues, just liabilities from the 1950s hanging over the company's head." Two weeks ago the company's bank debt was trading up to the mid-80s.

The speed with which investors have dived into a new type of retail offering has surprised institutional investors, but it's also got them eyeing the possibility it may soak up excess supply and tighten spreads. In the last four weeks, Bank of America Capital Management has sold $600 million of the new InterNotes, part of a $3 billion shelf, and Household International is also planning a $1 billion issue. "I'm really surprised they've been able to place this much paper so quickly," says Robert Hickey, head of fixed income for Van Kampen Investments in Oakbrook Terrace, Ill.

SG Cowen is releasing two high-yield bond analysts as part of a move to end efforts to underwrite high-yield credits in the aerospace, consumer products and energy sectors. A senior official in New York says the action is being taken because the firm has not been able to develop high-yield bond issuance from its existing commercial lending relationships in these sectors. The two set to leave are Paul Shaum, the head of the six-person junk research team, who covers aerospace and consumer products companies, and Gloria Holzman, who covers energy. The senior official says that as part of this effort, the firm will unwind its loan portfolio in these sectors, which was valued at approximately $1 billion.

Only markets, not regulators can determine what capital a bank should hold, the Shadow Financial Regulatory Committee said last week, and it accused bank regulators of going down a path toward creating increasingly complicated capital formulas that are counter-productive. The current specific target of the Shadow Committee's criticism was the Basle Committee's revised capital accord proposal, issued in January, which Shadow member Charles Calomiris termed "a disaster."