LCDX drops 0.55 to 92.45 bid; cash loans trade lower; Ford, GM paper posts substantial losses

By Paul A. Harris

St. Louis, Oct. 1 - The LCDX 10 index fell 0.55 on Wednesday, going out at 92.45 bid versus Tuesday's close of 93 bid, a banker said well after the close.

"The market is very quiet," a bank loan syndicate official remarked.

"I don't think I've ever seen it this quiet before."

Cash loans, depending upon the name, traded down one to 2½ points, according to a trader who spotted Ford Motor Co. and General Motors Corp. loans 2½ lower on the day.

The primary market, as expected, remained quiet.

There could be some news, pending market conditions, sources advised, as Prospect News made the rounds inquiring about deals which - prior to the intensification of capital markets volatility in the wake of the Congress's initial rejection of the financial rescue package - had been considered near-term business.

Apria revolver launches Thursday

In a week marked with uncertainty regarding the timing of deals the launch of the Apria Healthcare Group Inc. asset-backed revolver is expected to take place Thursday as scheduled, an informed source said.

Bank of America, Wachovia and Barclays are the lead banks on the deal.

The revolver is talked at Libor plus 250 basis points, sources said.

The company is also eventually expected to bring $1 billion of senior secured notes.

With all of the debt apparently riding high on the home health care services company's capital structure, Prospect News asked the source whether all the paper is essentially backed by the same collateral.

Typically when there is an asset-backed loan and a senior secured bond, the loan gets a first lien on inventory and receivables, and a second lien on property, plant and equipment (PP&E), while the bonds get a first lien on PP&E and a second lien on the ABL collateral, the banker replied.

Timing TBD

Elsewhere there was next to no new information on expected near-term primary market business.

The Herff Jones $735 million senior secured credit facility (Ba3/BB+) might still take place on Tuesday, an informed source said, but allowed that timing could be impacted by market conditions.

The deal was originally set to launch on Sept. 16, but it was delayed as a result of the volatility in the market when Bank of America revealed it was purchasing Merrill Lynch and Lehman Brothers filed for bankruptcy.

There are no changes to the facility, which consists of a $100 million five-year revolver talked at Libor plus 325 basis points, a $210 million five-year term loan A talked at Libor plus 325 bps and a $425 million seven-year term loan B talked in the Libor plus 350 bps to 375 bps area, the source said.

All tranches have a 3% Libor floor.

Proceeds will be used to help fund the acquisition of American Achievement Group Holding Corp., an Austin, Texas-based provider of commemorative jewelry, class rings, yearbooks, letter jackets and other jewelry, from Fenway Partners.

Market seen broadly lower

The bank loan market was down from 1 to 2½ points on Wednesday, according to a trader.

Trailing news that U.S. auto sales fell 27% in September, with Ford Motor Co. suffering a 34% drop in sales and General Motors Corp.'s sales down 16%, the bank loan paper of both companies fell 2½ points, the trader said.

Ford's loan was at 62½ bid, 66½ offered, the trader said.

GM's loan was at 61½ bid, 66½ offered.

Elsewhere the loans of Lyondell Chemical Co. sustained a little less damage, the trader said, who spotting it going out at 65 bid, 75 offered, down a point-and-a-half.

Meanwhile the Fresenius Kabi Libor plus 350 bps six-year term loan B, which priced at 98 and was allocated late last week, continued to straddle issue price, according to an analyst who covers credit in the health care sector.

Last Friday it was quoted as high as 98¼ bid, 99¼ offered.

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