Cash loans, synthetics hold in as equities drop; Health Management upsizes, tightens talk

By Paul A. Harris

Portland, Ore., Nov. 9 - Cash loans and synthetics sustained moderate losses against the backdrop of a rout in the global equity markets on Wednesday, according to a bank loan trader.

As stock indexes sustained losses well north of 3% the LCDX 17 bank loan index finished at 93½ bid, to 93 5/8 offered, down 1 point on the session.

Cash loans, which outperformed the LCDX, were generally down ¼ point on the day, the trader said, but added that some late-session bargain shopping helped higher-quality loans - especially shorter-dated paper - retrace losses sustained earlier in the session.

In the primary market, Health Management Associates Inc. upsized its seven-year term loan B to $1.4 billion from $1.2 billion, lowered price talk and moved the commitment deadline forward.

Quality and shorter maturity

Bank loan investors are seeking high-quality issues with shorter maturities, the bank loan trader said.

Those factors generated some bargain shopping in the afternoon, lifting prices of loans that were smacked by early session turbulence.

Rovi Corp.'s Ba1/BB+ rated term loan due February 2016 finished the day at 99¾ bid, well below Tuesday's close at par ¼ bid but well above Wednesday's session lows of 98½ bid.

Looking at paper of a more recent vintage, Go Daddy Group Inc.'s Ba3/B term loan followed a similar trajectory, closing Wednesday at 99¾ bid, lower than Tuesday's close of par bid but well above Wednesday session lows, the trader added.

Higher beta paper fared less well on the session because it tends to be in the hands of non-traditional bank loan investors, such as hedge funds, the trader said.

First Data Corp.'s extended term loan closed Wednesday at 84¾ bid, off about a point.

Chrysler Group LLC's term loan finished 1¾ points lower on the day, and TXU Corp.'s loan followed a similar trajectory, the source added.

"Right now there is a huge demand for better quality and shorter maturity," the trader said.

Health Management revised

Health Management Associates upsized its seven-year term loan B to $1.4 billion from $1.2 billion and lowered price talk on Wednesday.

Spread talk decreased to Libor plus 350 basis points from Libor plus 375 bps. The Libor floor dropped to 1% from 1.25%. Discount talk remained unchanged at 99, and the deal retains its 101 soft call protection for one year.

The five-year term loan A was downsized to $725 million from $1 billion. The term loan A and a $500 million five-year revolver are talked at Libor plus 275 bps.

The overall size of the credit facility (Ba3/BB-/BB+) was decreased to $2.625 billion from $2.7 billion.

The dealers moved up the commitment deadline to Wednesday. Previously the due date was expected to be Nov. 16.

On Tuesday the company downsized its new issue of 7 3/8% notes to $875 million from $1 billion.

Wells Fargo Securities LLC, Deutsche Bank Securities Inc., Citigroup Global Markets Inc., SunTrust Robinson Humphrey Inc. and Barclays Capital Inc. are the joint lead arrangers on the deal, with Wells Fargo and Deutsche Bank the bookrunners. RBS Securities Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are senior managing agents.

Proceeds will be used to help refinance existing credit facility borrowings and for general corporate purposes.

Entercom sets price talk

Entercom Communications Corp. set price talk for its $395 million senior secured credit facility.

The deal features a $345 million seven-year term loan, which is talked at Libor plus 500 bps with a 1.25% Libor floor at 97. The loan has a 101 one-year soft call.

In addition to the term loan, the facility has a $50 million five-year revolver.

Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC are the lead banks on the deal.

Proceeds will be used to refinance existing debt.

Mylan pro rata deal allocates

Mylan Inc.'s upsized $2.5 billion credit facility allocated.

The deal was upsized from $2.25 billion with the $250 million upsizing of the revolver, to $1.25 billion from $1 billion.

The deal also contained a $1.25 billion term loan A.

The facilities are priced at Libor plus 200 bps with tiered up-front fees based on commitment levels.

As previously reported, proceeds will be used to refinance its existing secured credit facility.

Mylan (Ba2/BB+) is a pharmaceutical company based in Pittsburgh.

Open Text closes on loan

Open Text Inc. closed its $700 million Libor plus 250 bps senior secured credit facility.

Pricing is based on a leverage grid. It can step up to Libor plus 275 bps if leverage is 2.25 times or more and step down to Libor plus 225 bps if leverage is less than 1.5 times.

The facility consists of a $100 million revolver and a $600 million term loan A, and the tranches are being sold as a strip.

The revolver has a 30 bps unused fee.

Upfront fees are being offered at 50 bps for commitments of $50 million, 30 bps for commitments of $35 million or more and 25 bps for commitments of $25 million or more, the source added.

Commitments are due on Oct. 21.

Barclays Capital Inc. and RBC Capital Markets LLC are the joint lead arrangers and joint bookrunners on the deal.

Proceeds will be used to add cash to the balance sheet, to refinance existing bank debt, including the revolver borrowings that were used to fund the acquisition of Global 360 Holding Corp., and for working capital.

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