Trinity Industries, a Dallas-based railcar company, tapped the "B" loan market for the first time as part of a $400 million refinancing led by J.P. Morgan. The new loan replaces a $450 million, 364-day revolver, also led by J.P. Morgan, set to mature this month. "The aim is to diversify the bank group and get a longer-term commitment," noted Neil Shoop, treasurer of Trinity.
The new Ba1/BBB- loan is split between a three-year, $250 million revolver and a five-year, $150 million "B" loan. Trinity also completed a railcar lease financing facility via Credit Suisse First Boston. "It enables Trinity to use its assets," Shoop noted. By separating the lease financing requirements from the general corporate requirements, the leasing company does not need to rely on the bank lines, he explained.
Shoop described the bank loan market as "a little tight right now," but noted that the facility was oversubscribed. Pricing on the revolver is similar to the last facility, but he declined to disclose terms. According to bankers, the revolver and "B" are priced at LIBOR plus 13/ 4% and LIBOR plus 23/ 4%, respectively.
"Trinity is a cyclical business that is at the bottom of the cycle right now," Shoop acknowledged. He believes the industry is emerging from a slump, but Moody's Investors Service notes that the current low level of railcar demand could continue for awhile.