Salomon Smith Barney last week had to flex pricing upwards for two credits debuting in the institutional market. The buyside demanded flexes on Moore Corp. and Giant Eagle, citing a lack of familiarity with the names. Moore, a commercial printeing company, launched the refinancing of two facilities totaling $400 million last week, but investors refused to bite at LIBOR plus 21/ 4%. As a result, pricing has been flexed upwards 25 basis points on the six-year, $200 million "B" piece. Investors looking at Giant Eagle, which is co-led with Mellon Bank, were pushing for a 1/2% flex on the $550 million term loan, but they had to make do with a 1/4% boost to 21/ 2% over LIBOR.
The reception both credits has received may be indicative of a change in the market as the bond market has backed up, but bankers also suggested the loan market is bifurcated. Seasoned issuers are able to tap the market much more easily than borrowers without a track record, one banker chimed, adding that Dominos should have much less problems refinancing at lower rates.
However, both these credits also have issues. "There is some concern over off-balance sheet accounting," one banker said, regarding the Giant Eagle credit. Officials at Giant Eagle could not be reached. Meanwhile, Moore operates in the service sector, and people are a little wary of the business, another banker noted.