Three leveraged credit facilities recently syndicated by Credit Suisse First Boston were oversubscribed last week, despite some investor grumbling over the opportunistic nature of the refinancings. Over the past couple of weeks, CSFB has been shopping a $255 million facility for Buffet's and a $530 million "E" term loan for Mueller. The firm also came to the market recently with a $600 million "C" term loan, jointly led by National City Bank, for OM Group. A CSFB banker declined to comment.
"Look at Buffet's, a company that because of a recapitalization has gone to B1 [from Ba3]. Yet the spreads [on the $205 million "B" loan] are at LIBOR plus 3 1/2 % right now," one buysider complained. He noted that pricing has come in from LIBOR plus 3 3/4 % on the original credit even though the recapitalization will increase total debt. "There still will be the usual riot act over allocation and not getting paper," a banker said, pointing out the high demand for the credit.
Mueller originally was paying LIBOR plus 3 3/4 %, but it also has come in and is now LIBOR plus 2 3/4 %. And a buysider pointed out that the end-user markets for the company's fire hydrant products are looking softer. Finally, the spread for OM Group is now LIBOR plus 2 1/2 %, down from its original LIBOR plus 3%.