First Data term loan seen stabilizing; LandSource loan up 5 points; LCDX down 0.35

By Paul A. Harris

St. Louis, Sept. 28 - The First Data Corp. term loan was trading actively during the final session of September 2007 in the bank loan market, sources said. However traders who had seen some volatility in the paper on Thursday, after all three tranches had allocated, saw more stability on Friday.

Two of the three First Data tranches, the B-1 and B-2 tranches, were bid slightly above issue price on Friday, while the B-3 tranche, which was priced higher because of call protection, was bid below the issue price.

Elsewhere the LandSource Communities Development LLC term loan was up 5 points on news of an equity infusion.

In the primary market a Monday bank meeting was set for Bausch & Lomb's $2.6 billion of senior secured credit facilities.

Meanwhile the market-tracking LCDX index was seen going out at 96.85, down 0.35 on the day.

First Data trades actively

Friday morning a bank loan trader saw all three tranches of the First Data term loan - the B-1 and B-2 tranches, which were priced Thursday at 96.00, and the B-3 tranche which was priced at 97.00 - trading actively.

"It traded up initially, but subsequently came back down, said the trader, adding that the B-1 and B-2 tranches initially traded into the 97.00 range, but opened Friday at 96 bid, "or even a hair under."

However, said the trader, the B-1 and B-2 tranches caught a bounce as Friday morning wore on, rising to where they were pretty consistently bid up a hair above 96.

The source saw the B-1 tranche at 96 1/8 bid, 96½ offered, while the B-2 was at 96 3/8 bid, 96 7/8 offered heading into the New York lunch hour.

The B-3 was trading below the issue price, at 96 3/8 bid, 96 7/8 offered.

This trader asserted that the First Data paper "will fly around the way Ford and Chrysler did because it is largely hedge funds that were in the deal."

The trader added that there is effectively a 98.00 cap on the First Data paper because that is the price at which HSBC, which held its portion off the market, announced it will put its slice of the deal up for sale.

Past the mid-afternoon point another source also saw active trading in the new First Data paper, with the B-1 tranche at 96 1/8 bid, the B-2 tranche at 96¼ bid, and the B-3 tranche at 96¾ bid.

Shortly after the close another bank loan trader commented that the First Data tranches were notably volatile on Thursday afternoon, but seemed to settle down on Friday, with the B-1 and B-2 above issue price, while the B-3, at the close, was "still below water.

"I think it will be there for a while," the trader added.

"It's hard to understand why they came with it at 97.00 to begin with. Granted the call protection is a little better.

"The thing is, you are not getting any prepays on the B-3, and you're not getting any prepays on the B-2, which you could have gotten at 96.00.

However a high yield syndicate official, who specified that junk bond accounts got involved in the B-3 tranche, said that even if it is trading slightly lower than the issue price it still represents plenty of yield.

And, the official commented, the call protection is mother's milk to the junk guys.

LandSource up 5

One trader said that the big mover in the leveraged loan market Friday was the LandSource term loan.

"Barclays did the deal," the trader recalled.

Business had not been going too well for the developer, a joint venture between homebuilder Lennar Corp. and commercial property developer LNR Property Corp., the trader recounted.

"But on Friday the equity sponsors announced they were going to put in $150 million of equity, and the first-lien loans went up 4 or 5 points on that news," the source added, spotting the loan moving to 91½ bid from 87 bid.

Elsewhere in the secondary, another trader saw the Michael's Stores term loan off ¼ point at 96 3/8 bid, 96 7/8 offered late in the day, and recalled earlier it had been at 96¾ bid.

Bausch & Lomb on Monday

Primary market news was scarce on Friday.

A market source told Prospect News to relax - there's no hurry.

If they start hurrying the hung deals to market there will be "indigestion," the source reasoned.

And the underwriters know very well that the sooner they bring these deals, the greater the losses will be, because although original issue discounts seem to be becoming shallower they remain significant.

On the primary front Bausch & Lomb will hold a Monday bank meeting for its $2.6 billion of senior secured credit facilities (B1/B+).

Bank of America, Citigroup, Credit Suisse and JPMorgan are the lead banks.

The credit facilities consist of $1.425 billion of 71/2-year term loan debt, which is expected to include a €575 million tranche.

The deal also includes a $500 million revolver and a $300 million delayed draw term loan, in addition to a possible $375 million separate term loan to be borrowed by Bausch & Lomb BV.

Draws on the revolver may be made in dollars and, subject to sub-limits to be agreed upon, Canadian dollars, euros, British pounds sterling, Japanese yen and other agreed-upon currencies.

Proceeds will be used to help fund the LBO of the company by Warburg Pincus.

The financing also includes $1.05 billion of senior unsecured notes and/or senior subordinated unsecured notes.

ECI closes

ECI Telecom Ltd. announced that its leveraged buyout by affiliates of Swarth Group and funds managed by Ashmore Investment Management Ltd. closed.

The acquisition was valued at $1.24 billion.

To help finance the transaction, ECI obtained an $805 million credit facility via Credit Suisse. Included are a $75 million five-year revolver talked at Libor plus 325 bps with a 50 bps commitment fee, a $100 million 11/2-year asset-based revolver talked at Libor plus 325 bps, a $430 million six-year first-lien term loan talked at Libor plus 325 bps and a $200 million 61/2-year second-lien term loan talked at Libor plus 700 bps.

ECI is a Petach Tikva, Israel, provider of networking infrastructure equipment.

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