Loans generally traded up in the first week of the New Year and loan-only credit default swaps tightened, mainly due to technical trading, traders said.
Among the LCDS that tightened were those for Smurfit-Stone Container Corp., Mosaic Corp. and Celanese Corp. Smurfit's LCDS was about five basis points tighter, trading between 95-100; Mosaic's was trading about three basis points tighter in the 68-73 range; and Celanese's LCDS was about two basis points tighter to 78-83.
On the cash side, traders said prices generally seemed to be stronger and trading was more active as the week went on. "We've seen the secondary pretty well bid," said one portfolio manager.
The corresponding cash loans saw some instruments trade up and some down. Smurfit's term loan was up slightly to par 7/8-101 from around 100 3/4-101. Bucking the trend, Mosaic's term loan was a little softer, trading at par 1/4 from par 3/4 and Celanese was also down slightly to par 1/4-1/2 from par 3/4-3/8.
The most recent financing for Smurfit came to market in June, with the first phase of debt backing the $1.04 billion leveraged buyout of the company's consumer packaging division by Bluegrass Container Co., an affiliate of Texas Pacific Group (CIN, 6/19). The second part backed a follow-on acquisition. Field Container Co. and Altivity Packaging, what the consumer packaging division of Smurfit was called, combined their businesses in August. The new company has been renamed Altivity Packaging, LLC. JPMorgan and Lehman Brothers lead the deal.
Mosaic tapped JPMorgan in the fall for the new bank credit to finance, along with new senior notes, a tender offer as well as refinance existing debt (11/13). Doug Hoadley, v.p. of investor relations, said Standard & Poor's downgraded the company slightly at the end of September, but that its outlook is very strong. He said Mosaic received a lot of interest for the new credit, which was completed Dec. 1.
Deutsche Bank led a repricing for Celanese back in November 2005. The approximately $1.4 billion term loan was priced at LIBOR plus 2% with a step down to LIBOR plus 1 3/4% based on ratings or leverage improvement (11/28/2005). Mark Oberle, v.p. of investor relations and public affairs, said that during the company's 'Investor Day,' Dec. 13, it presented some of its long-term outlook. He said the company identified three main objectives: doing bolt-on acquisitions, maintaining assets and investing in internal growth, and finally, looking at the capital structure, everything from debt paydown to stock buybacks. He said there is definitely a possibility it would come back to the bank market, though, "everything is on the table." "We are looking at all alternatives that create value for our shareholders and are a positive from a financial perspective," he said.
A Smurfit spokesman could not be reached. A spokesman for TPG declined comment.