Strong Liquidity Buoys HCA On Break
Strong liquidity helped buoy HCA's $8.8 billion term loan on its break in the secondary market. The term loan broke at 100 1/2-5/8 and continued to trade in that context. A trader estimated around $1.5 billion of debt traded since the break of the loan on Monday. HCA's term loan "A" traded more actively than the term loan "B." Traders said banks were selling their exposures to the term loan "A" and funds were buying into it because it is trading at a discount to the term loan "B." The term loan "A" is trading in the 99 5/8-7/8 context. A HCA spokesman did not return a call.
Delta Air Lines Bonds Jump On US Airways Merger Proposal
Delta Air Lines' unsecured bonds jumped 17 points to 58 on US Airways Group's proposal to merge with the airline. Northwest Airlines' bonds also jumped 10 points on speculation it too could become the subject of a takeover. The airline's 9 7/8% '07 bonds were trading at 75. "Northwest is seen as the most likely takeover target," said a trader. Under the proposal, Delta would merge with US Airways upon Delta's emergence from bankruptcy. Delta unsecured creditors would receive $8 billion in cash and stock. A spokeswoman said US Airways proposal represents a 25% premium over the current trading price of Delta's pre-petition unsecured claims as of Nov. 14 and a 40% premium over the past 30 days. She said the proposal would give more value to Delta's unsecured creditors than if the airline emerged from bankruptcy as a standalone entity.
GM Bonds Boosted By Secured Term Loan
General Motors Corp. '33 bonds were up two points to 91 3/4 after the auto maker tapped the loan market for a $1.5 billion term loan. Its five-year credit default swaps tightened 25-30 basis points to 390-400. A trader said the new secured debt is positive for the bonds because it adds to the company's liquidity. "It shores up their balance sheet," said the trader. JPMorgan and Credit Suisse launched the term loan last Monday with a close date set for Friday. A spokeswoman did not return a call.