RGIS returns with $370 million deal; Astoria Energy launches $900 million; General Growth firms

By Paul A. Harris

St. Louis, Jan. 17 - The broad leveraged loan market was marked up an eighth of a point on Tuesday by sources as the holiday-shortened week of Jan. 16 got underway in the U.S.

One source, remarking that the forward calendar is now rife with $1 billion-plus bank deals, said that secondary levels remain firm in spite of the fact that a number of them are expected to allocate in the next two weeks.

"It's an interesting phenomenon," said the source, a trader.

"You would figure that some of the accounts would be selling going into some of the bigger deals in order to make some room.

"But the market continues strong."

Meanwhile in the primary market Astoria Energy (U.S. Power Generating Co. LLC) held a bank meeting for its $900 bank loan, and RGIS Inventory Specialists returned to the market - this time with a $370 million facility sans a second-lien piece.

RGIS returns

RGIS Inventory Specialists will host an investor call on Friday for its $370 million credit facility via JP Morgan.

The dividend-funding facility from the Michigan-based inventory services provider is comprised of a $300 million term loan talked at Libor plus 250 basis points to 275 basis points, as well as a $70 million revolver.

RGIS was in the market last November with a $570 million credit facility, and has returned with a deal that is downsized by $200 million, and comes without a second-lien loan that was part of the original deal.

The buy-sider, commenting that RGIS is a family-owned business, said that the original deal was withdrawn due to a family transition issue, as well as to softness in the issuer's merchandising business.

Asked if second-lien loans were facing an increasing amount of resistance, the investor said: "You hear it both ways.

"The sell-side says no. But when you watch it looks as though they are having trouble getting done. It's hard to tell how many second-liens are disappearing into the hands of a dealer to be dished out later."

Having said it, however, the buy-sider added that as long as bank loans remain hot, and "there is leveraged money out there looking for spread," it follows that there will be continuing demand for second-lien bank deals.

The source added, however, that hedge funds are heard to be less involved in second-lien bank loans because of rising interest rates. And banks are not traditional consumers of second-lien loans.

"They could be going to the CLOs," the source added.

Astoria Energy, with a second-lien tranche

Elsewhere Tuesday Astoria Energy held a bank meeting for its $900 million credit facility via Morgan Stanley and Goldman Sachs, with Morgan Stanley as the left lead.

The facility is comprised of a $430 million first-lien term loan talked at Libor plus 225 basis points and a $300 million second-lien term loan talked at Libor plus 450 basis points.

The facility also contains a $50 million revolver and a $120 million synthetic letter of credit.

Proceeds will be used to fund the purchase of three New York City power plants from Reliant Energy by Madison Dearborn Partners LLC and U.S Power.

A source close to the deal said that the Astoria second-lien tranche is getting a good reception, but added that it will also be a relatively high credit quality.

"It will probably go into CLO hands," the source said, adding that there is anecdotal evidence that there has been pressure on the low-single B second-lien deals.

Secondary feels firm

Although the week began quietly, with players straggling in from the extended weekend, one trader saw the broad market up an eighth of a point on light volume.

The source had both General Growth Properties term loans "a touch better bid" on rumors of a potential refinancing.

Each one was up an eighth, the source added, spotting the term loan B at 100.375 bid and the term loan A at 100.125 bid.

"Away from that we just saw a little flow-trading," the source added.

Another trader who also heard the General Growth "refinancing" rumor saw the term loan A at 100 bid, 100.25 offered and the term loan B 100.125 bid, 100.50 offered.

"The on-the-run names were better bid," the trader said late Tuesday afternoon.

The source also said that the loans of Eastman Kodak Co. "had a nice bid," and spotted the company's term loan at 100.375 bid, 100.50 offered, a touch better than its recent 100.25 bid, 100.50 offered context.

"The calendar is full," said the trader who added that the $1 billion-plus deals are consuming a great deal of the buy-side's time at present.

"All of the billion-plus deals are doing very well," said the trader, adding that most, if not all, are heard to be oversubscribed.

Nevertheless the secondary feels firm, the trader asserted, adding that presently bank loan paper is better bid.

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