Repricings Continue

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Repricings Continue

Investors continued to complain about the spate of repricings that are dominating the market, causing average spreads to drop to levels that threaten the arbitrage of some collateralized loan obligations.

Investors continued to complain about the spate of repricings that are dominating the market, causing average spreads to drop to levels that threaten the arbitrage of some collateralized loan obligations. "They are killing the goose," said one CLO manager, noting that if the banks continue to do this, CLOs will not exist for banks to sell into. Nextel Communications has said it will slash pricing on its mammoth term loans 1 1 / 4 % to LIBOR plus 2 1 / 4 %. This will affect $2.2 billion in institutional money. Laidlaw is in the market with a 1 1 / 4 % price reduction on its $625 million "B" loan, that will take pricing to LIBOR plus 3 3 / 4 %, said a source. Advance Auto Parts is also said to be looking to cut pricing on its $523 million "B" piece 1/4% to LIBOR plus 2 1 / 4 %. Laidlaw and Advance Auto officials did not return calls by press time. A Nextel spokeswoman confirmed the move.

 

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