Weakness in the high-yield and investment-grade markets is seeping into the loan market with auto-suppliers taking the biggest hit. "People are looking at the credits now and seeing what type of exposure these companies have to [General Motors Corp.] or to some of the other auto-related weak names," a trader said
Visteon's $250 million delayed draw term loan dropped to the 98 range from par. The $219 million "B-C" loan for Progressive Moulded also lost two points to 98. Grand Vehicle Works' $135 million "B" loan is quoted 96-98 from 99 and Collins & Aikman's term loan is trading at par from 101.
GM's financial difficulties are not solely to blame and auto names aren't the only ones being affected. Some investment-grade names are contributing to an overall market weakness, the trader said. "With the back up forced by GM you'll see more conscious investors. People are not going to necessarily throw their money into all these second-lien deals and smaller middle-market deals."