Approximately $70 million of Northrop Grumman's pro rata traded at 99 1/4, with dealers citing a $1.5 billion bond deal as helping to push up levels. Dealers said high hold levels in the bank group should prompt a flurry of trades in the near-term. They noted, however, that there are buyers for the credit, which should buoy prices. A Northrop Grumman spokesman did not return calls by press time.
J.P. Morgan Chase and Credit Suisse First Boston lead the $5 billion credit facility, which is split between a 364-day revolver and a five-year term loan. Despite the early action, dealers said they do not expect the credit to trade much after banks get comfortable levels. "You have so many banks with over a $300 million hold," one trader said. "You've seen banks take big holds before, like in AT&T, but they knew they were in it for a year. But anyone in Northrop Grumman is committed to five years. The[ 364 day] piece is also an unfunded revolver, and people tend to react poorly to that." Prices are expected to hover around 99 1/4.
Northrop Grumman signed a new deal to acquire Litton Industries for $3.8 billion plus debt. The bond deal, sold last week, will help pay down bank debt. Based in Los Angeles, Northorp Grumman is in the aerospace and defense industries.