Ford loans gain 2 points on results; LCDX up 1 point-plus; loan funds see $79 million inflows

By Paul A. Harris

St. Louis, July 23 - Ford Motor Co.'s term loan and revolver gained 2 points Thursday as the company's reported earnings beat the forecasts, a trader said.

Meanwhile the bank loan tracking LCDX 12 index gained 1.2 points to close at 91.9 bid, 92.2 offered, according to an investment banker.

Cash loans were ½ to 1 point better on the day.

There was no primary market news.

However cash flows to bank loan mutual funds remained positive.

The funds saw $79 million of inflows for the week to Wednesday, according to AMG Data Services, a market source said.

"Credit is having a huge run," said a trader.

"You're seeing positive earnings releases, the S&P 500 is up over 2%.

"You can argue that the bar was set too low, and that it's been all about cost-cutting.

"But the fact is that there is a lot of cash that is quickly being put to work, and it seems to be driving everything higher."

Ford rises on earnings

News that Ford is positioned to actually make money in 2009, should the U.S. economy rebound, sent its bank loans higher on the day, traders said.

Ford was up 2½ points right away in the morning, then pulled back a little later in the day, when some of the buyers went away, one trader said.

Nevertheless the Ford term loan settled at 81½ bid, 82 offered, up about 2 points, while the revolver settled at 80 bid, 82 offered, also up about 2 points.

New CIT loan edges higher

Meanwhile CIT Group's new funded $2 billion loan was up slightly from Wednesday's close, a trader said, spotting the loan at 104¼ bid, 105¼ offered on Thursday morning.

The Libor plus 1,000 bps paper, which priced at 95 with a 3% Libor floor earlier in the week, immediately broke to 101 bid, 103 offered, the trader recounted.

It was seen late Tuesday as high as 105 bid, 106 offered, the source added.

$79 million of inflows

The bank loan mutual funds flows remained positive for the week to Wednesday, a trader said.

The funds saw $79 million of inflows on the week.

That follows the previous week's $41 million of inflows, extending to slightly more than $3 billion the year-to-date flows into funds which report to AMG on a weekly basis, according to a market source.

High-yield mutual funds saw $722 million of inflows, a trader noted, adding that the performance of the loan market appears to be tracking that of high-yield.

"A lot of cash coming from the equity market, and there is pent-up demand for credit," said the trader.

"The Barclays loan index is up 35%, year-to-date, and up close to 2% in July."

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