CIBC World Markets' $500 million refinancing for Boyd Gaming, which will be launched into the market this month, is demonstrating the latest pricing trend in the loan market with the pro rata and "B" loan offering the same spread. A banker said the $100 million "B" loan and $400 million revolver are both priced at LIBOR plus 21/ 2%. Having the "B" spread the same as on the pro rata is being seen increasingly, said a banker, with some 15 deals so far this year following that form. Five "B" deals have set pricing below that of the pro rata, she said.
Another banker, citing the flaming "B" market, said, "It is being used as a method of persuading companies to refinance." Despite the price convergence, institutions are unlikely to invest in the pro rata. "Because the revolver is not always funded, it is not economic for the institutions to invest in them," a banker said. Deutsche Bank also has a role to play on the line, said a banker. CIBC bankers did not return calls.
Boyd is in the attractive gaming sector, which has seen strong demand in the high-yield and bank-debt markets for companies not concentrated in Las Vegas (LMW, 4/1). CIBC also led a credit for Isle of Capri Casinos that blew out and Penn National Gaming and Park Place had successful bond offerings. Rob Stillwell, a Boyd spokesman, said the market conditions are obviously a factor in the refinancing, but the company also does not want to leave it to the last minute before the lines mature. The bank debt will also provide liquidity for the refunding of its $200 million senior notes, which are due in October 2003. In April, Boyd completed a $250 million private placement of 83/ 4% senior subordinated notes due 2012, he added.