Ford Term Loan Dips After Break
Ford Motor's $7 billion term loan dipped to 100 1/8-100 1/4 after breaking at 100 1/4-100 1/2 on Tuesday. The loan was bid as high as 100 5/8 when it broke, said a trader. Another dealer said there was a lot of chunky selling on the break caused by prop desks and hedge funds selling their positions. "There were a lot of flippers on the break. More people were flipping than holding onto their allocations," he said. Trading was very brisk. One dealer said certain traders had exchanged about $700 million of paper since its break. Citigroup, Goldman Sachs and JPMorgan lead the deal, which is priced at LIBOR plus 3%. The term loan steps down to LIBOR plus 2 3/4% if it is upgraded. It is non-callable for two years and has call protection of101 in the third year. A call to a Ford spokesman was not returned.
Ford LCDS Spreads Widen
Ford Motor's loan-only credit default swap spreads widened 10 basis points to 227-232 after its $7 billion term loan broke. A trader said he was surprised to see spreads widen because the market was expecting spreads to tighten. He said the widening mirrored Ford's unsecured CDS, which widened 13 basis points to 557, according to Markit. A trader said a lot of commercial banks bought into LCDS to hedge their large exposures.
BWIC Trades Successfully
Almost all of a $550 million BWIC [bids wanted in competition] successfully traded this week after a seller came to market last Friday offering to sell loan credit default swap protection on a portfolio of about 50 names, according to traders. There were 61 tranches in the portfolio of mostly large cap names. "Most people put bids in," said a trader. He said buyers of protection came from across the investor spectrum and were not concentrated in a particular class. "It shows improved liquidity in the LCDS market," said another dealer.
Sabre CDS Blows Out On LBO News
The spread on Sabre Holdings' five-year credit default swaps widened 90 basis points to 324 after the company agreed to be acquired by private equity firms Silver Lake Partners and Texas Pacific Group for $5 billion. The deal includes the assumption of $550 million in net debt. The online travel booking firm looks certain to lose its investment-grade rating as a result of the deal, according to Markit. In a report, Moody's Investors Service said the LBO is likely to result in a big increase to financial leverage and could result in a multiple notch downgrade of Sabre's $800 million of existing notes. Deutsche Bank and Merrill Lynch are providing finance for the transaction, according to a company release. A Sabre spokesman did not return a call.