Suiza Foods' $1 billion "B" term loan, which broke into the market last month, is showing its first signs of decline after holding steady at 100 1/2. The paper dropped slightly to 100 3/8 in a handful of $5 million trades, dealers said. Buyers and sellers could not be determined. Meanwhile, Dresser Equipment, another strong new credit, started to creep up.
There was little market chatter explaining Suiza's move. "It's just trading off a little bit. It's tough to say why it's moving," said one trader, explaining that even though it was one of the hottest tickets to hit the market recently, "In August it's tough to say things are happening for a reason." Cory Olson, treasurer, said the company's not concerned with the change in level on the debt. "It's not fully funded yet, so the fact that it traded up after the deal is indication of market receptivity," he said. Olson added, since deal close there has been a lot of activity with the paper, but he expects the paper to remain steady once the deal's funded when it finalizes its acquisition of Dean Foods by year end.
Another dealer noted that Suiza would probably hold steady in its current context as food credits are still in demand by managers of collateralized loan obligations. "They're looking to fill their portfolios with this sector," he said.
Energy concern Dresser Equipment, another new issue from a favored sector, is experiencing a different story, as bids for the paper reportedly ticked up slowly, reaching 101 last week. "It's a name that fits the structure they [investors] want," he said. Calls to officials at Dresser were not returned by press time.