Almost $5 billion was infused into the secondary market last week after Metro-Goldwyn-Meyer and Masonite International Corp. allocated. MGM's $2.7 billion "B" and $1.05 billion "A" loans broke around 100 3/8-100 5/8 and 100 1/8-100 1/2. Masonite's $1.175 billion "B" loan traded at 101 1/8-101 1/2. "It's a good reflection of the market, that the market can absorb more than $4 billion of paper between MGM and Masonite and both names still trade above par," said one trader.
However, MGM's "B" levels surprised some market participants, a trader said. "Gone are the days of new issues just going straight to 101," the dealer noted. He stressed, though, that it was a $4 billion deal that allocated the same day as Masonite. "It is still a good credit," he noted.
Credit Suisse First Boston and J.P. Morgan lead the MGM deal, which financed the $3 billion buyout of the entertainment giant by a consortium of firms. The credit also comprises a $250 million revolver. "It is fair to say that this market today is not where it was six months ago and it has a lot to do with the high-yield market," he noted.
MGM, along with Sony Corporation of America, Providence Equity Partners, Texas Pacific Group, Comcast Corporation and DLJ Merchant Banking Partners bought the company last December (LMW, 2/28). The company's "A" and "B" loans are priced at LIBOR plus 2 1/4%, while the revolver has a spread of LIBOR plus 2 1/2%.
Masonite's "B" loan is part of a deal that backed Kohlberg Kravis Roberts & Co.'s $3.26 billion acquisition of Masonite. Scotia Capital led the financing. KKR initially offered $3.1 billion to buy the firm last February, but shareholder opposition forced them to increase the bid (3/14). Masonite's "B" loan is priced at LIBOR plus 2 1/4%. The credit also includes a $350 million revolver priced at LIBOR plus 2 1/2%.