Buysiders last week were looking at deals for Interstate Bakeries and Cott Corporation and agree that the LIBOR plus 2 1/4 % pricing on the "B" tranche of the Interestate Bakeries deal marks the most aggressive pricing to date for food sector deals. Institutions have been clamoring to get allocations in the defensive sector and the demand is starting to show in pricing. "This is as low as we've seen it," said one buysider, noting that Interstate has revenue, branding and a Ba1 rating to pull off the thin pricing. Many commitments have reportedly already come in on the credit after the bank meeting.
The Cott Corporation deal also launched on the same day with its pro rata priced much higher than Interstate at LIBOR plus 3 1/2 %. A buysider said Cott was very well received, but there is talk that pricing may be shaved down to LIBOR plus 3 1/4 % as a flurry of commitments have already come in. The deal's rich pricing compared to Interstate is reportedly due to the small deal size--$150 million--rather than corporate fundamentals. "It wouldn't get done if it was much cheaper since allocations will be small," noted a buysider. The credit comprises a $50 million revolver and $100 million term "A" to fund the purchase of a $95 million concentrate supply contract from Cadbury Schweppes.