Eastman Kodak's term loan continued to slide as buyers remained bearish on the credit. Its term loan "B" fell to 98 3/4 from 99 1/4. Kodak's term loan has been falling since it broke in the secondary market in October at 100 3/8. At the time it broke it dropped to as low as 99 7/8. Over the past month, the term loan has consistently traded below par in the 99 range.
The coupon on Kodak's loan displeases traders. One trader pointed to Kodak and Affinion, another deal that recently launched and has traded below par since it broke in the secondary market in early October, as deals signaling a shift in the market. He said six months ago these kinds of credits would have broken much higher in the 101 1/2 range. "The market has changed. Structures are more aggressive. They are too tight on price because the buyside listens too much to the sellside," he said. Affinion's term loan is trading in the 98-99 range.
Another trader agreed the pricing on deals such as Kodak are not adequate. "The fact Kodak is trading below par states that the coupon needs to be higher," he said. Kodak's $1.7 billion term loan is priced at LIBOR plus 2 1/4%. At the time of its syndication, investors complained that the loan did not have a big enough coupon. Kodak's problems adapting to new digital technology has also discouraged investors. "Their technology is going to be obsolete," commented a trader.