The "B" term loan for Dex Media East immediately shot up to over par after allocation last Thursday. Traders and buysiders said the deal was bid between par and 100 5/8. The $700 million "B" piece was syndicated at 99 with a LIBOR plus 4% spread by J.P. Morgan, Bank of America, Deutsche Bank, Lehman Brothers and Wachovia Securities. Some investors were looking to be compensated for the anticipated glut of directory paper and anticipated a flex to LIBOR plus 41Ž 2%. There were also demands for an original issue discount feature that would prevent the second phase of the deal next year being sold with a higher yield than Dex Media East. This would prevent the paper from trading down, but this has not been incorporated, said a buysider.
The bank loan was allocated after the banks pulled off an almost $1 billion junk bond sale in a market that has been comatose for new offerings. The $450 million in senior notes due 2009 were sold to yield 97Ž 8%. The 10-year, $525 million senior subordinated notes were sold to yield 121Ž 8%. The senior-note portion was reportedly increased $100 million, while the senior sub note was reduced $175 million. The Carlyle Group and Welsh, Carson, Anderson & Stowe put in $75 million more equity to fund the acquisition.