Deutsche Bank has flexed pricing upwards by 50 basis points on a refinancing for Commonwealth Brands, the Bowling Green, Ky., discount cigarette manufacturer. Investors said the credit, which comprises a $600 million "B" loan and a $17 million revolver, is fundamentally well liked, but pricing came in with too low of a spread. Pricing is now LIBOR plus 4%. Officials at Deutsche Bank did not return calls.
One buysider speculated that some investors, such as the European pension funds and insurance companies, would not touch the deal because Commonwealth makes cigarettes. "This won't be many but in this market, where investors are reluctant to purchase in the primary, it could make a difference," he said. "The place to buy is the secondary. As new issue spreads widen, this is forcing down the prices on recently syndicated deals, of which many investors received only small allocations."
The new facility refinances a $400 million "B" tranche syndicated last year. One investor said the reason for the increase in the size of the tranche is to compensate for a pulled bond deal, but this could not be confirmed. John Poling, ceo and cfo, did not return calls.