OM Group's bank debt dropped 18 points to the high 70s this week after the Cleveland-based specialty chemicals maker posted terrible results. "It's gone from being a par name to distressed territory in a couple of days," said one trader. After the disappointing results, the tough market conditions for cobalt is expected to hit operating results going forward, and so OM is planning to implement aggressive cost reductions and sell off non-core assets, according to a company release. Calls to a spokeswoman for OM were not returned. Credit Suisse First Boston, National City Bank and Credit Lyonnais are the lead, administration and documentation agents, respectively, on the credit. The loan consists of a $600 million "B" piece and a $325 million revolver.
Earlier in the week, there was talk of Lyondell Chemical's term loan "E" trading up, but buysiders dismissed this as traders bouncing the name to create trades. "There is no fundamental reason for Lyondell to trade higher," one buysider said. She did not discount there was a trade though. "Regardless of how soft the industry is, people buy Lyondell," she noted. "It's a good name, but prospects for the industry are soft. Consumer confidence is at the lowest in nine years."
Traders reported some action with Charter Communications paper after Moody's Investors Service lowered multiple debt ratings on the cable operator. One trader said there have been trades in the 77-81 range, but the paper is now sticking in the high 70s. He declined to name any of the players involved or the size of the trades. The downgrades were caused by growing concerns over Charter's operating performance, as supported by disclosures of disappointing third quarter results and the removal of the company's chief operating officer, David Barford. Charter spokesman David Anderson, responded, "Charter is disappointed with the lower ratings. The company is fully funded until 2004 and we will hit free cash flow as soon as 2004, possibly the last quarter of 2003." He declined to comment on why Moody's may have taken the decision or the continued slide in the price of the debt.
In people news, Paco Torrado a par trader at CIBC World Markets, has been let go by the firm as part of a round of layoffs. CIBC has announced intentions to reduce staff levels by approximately 240, primarily in the U.S., as a result of the continued low level of business activity, particularly in investment banking, according to a company release. One banker said Torrado's exit is part of the layoffs, rather than any substantive change in the way CIBC does the loan business. "The aim is to staff up once the market returns," said one official. Torrado, who spent six years at CIBC, declined to comment on the situation. He reported to Bill Swenson, head of par trading, who is still at the firm. Swenson referred questions to officials within the CIBC press office. A spokesman declined comment.