Pricing was cut on the loans for Hertz before the term loan and asset-backed loan broke in the secondary market last week. The $2 billion term loan and $250 million synthetic letters of credit had been talked in the LIBOR plus 2 1/2%-2 3/4% range, but pricing was cut to LIBOR plus 2 1/4%. Pricing on the $1.6 billion ABL was cut to LIBOR plus 2% earlier in the month due to oversubscription (CIN, 12/12).
The term loan broke last Monday at 101 1/2 and continued to trade at that level during the week. A trader said it was popular with investors and speculated it was because it is highly rated. The ABL revolver traded at par. Standard & Poor's rated the ABL BB+ and the term loan BB.
Deutsche Bank is leading the bank group that comprises Lehman Brothers, Merrill Lynch, JPMorgan and Goldman Sachs. The deal backs the buyout of Hertz by The Carlyle Group, Clayton Dubilier & Rice and Merrill Lynch Global Private Equity.