Market players are eyeingHuntsman Corp.'s recently amended and restated bank loan, waiting to see if an assigned rating will unleash trading in the new credit or if heavy leverage will hold it back. The $1.6 billion credit comes in conjunction with a larger restructuring plan, and some traders said they expect the debt's value, previously in the low 80s, to jump once the new deal is rated. "Par loan guys would look at the deal if it had a rating," said one dealer. But the credit has traded in the 85 range since the restructuring, and it may be hampered by its highly leveraged position and a current tough market for chemical names, one trader said.
Kimo Esplin, Huntsman cfo, explained that the ratings were delayed because the agencies needed to wait to issue ratings based on the completed documents. "We had a private rating that the agencies gave us, and we've provided that rating to the banks [during the restructuring]," he said, noting that a public rating would be issued in a couple of weeks.
The new deal carries leverage of more than five times at the senior level and may not be of interest to many of the players who have been driving the market, one trader said. "It's really more of a crossover credit," another trader said. "It's not really an asset that CDOs would be looking at." But a rating, which would allow more players to go after the paper, should increase liquidity. "The deal is heavily held by distressed guys, and I think that once it's disseminated it will do better," one buysider said.
The restated deal rolls the company's existing bank debt into a $930 million "A" term loan priced at LIBOR plus 41/ 2% and a $450 million "B" tranche set at LIBOR plus 6%. Both loans mature in 2007. The new credit facilities also provide for a $275 million revolving facility, which was created in part to replace an existing $150 million supplemental accounts receivable facility.