A series of names with tight spreads softened during the week before rebounding as the market adjusted to historically low prices and a roiled bond market. Hedge fund money moving out of the market, strong new supply and relative value disparity with the bond market were all factors, said traders.
Masonite International Corp. and Metro-Goldwyn-Meyer saw softer levels. Masonite traded at 99 7/8-100 1/8, down from the 101 1/8-101 1/2 levels quoted after allocation two weeks ago (LMW, 4/11). MGM's "A" and "B" loans saw markets at 99 3/8-99 7/8 and 99 5/8-100 after breaking around 100 1/8-100 1/2 and 100 3/8-100 5/8, respectively. By the end of the week MGM's "B" ticked back up to par. Masonite's "B" loan is priced at LIBOR plus 2 1/4%, while MGM's "A" and "B" loans are priced at LIBOR plus 2 1/4%. Masonite's deal is led by Scotia Capital. J.P. Morgan and Credit Suisse First Boston lead the MGM deal.
According to Standard & Poor's Leveraged Commentary and Data, institutional spreads for double-B credits are at LIBOR plus 1 3/4%. For single-B names it is LIBOR plus 2 1/4%.