Tyco sets Monday meeting for $500 million deal; all eyes on mega-deals as market holds firm

By Paul A. Harris

St. Louis, Jan. 18 - Sources saw the leveraged loan market remaining firm on Wednesday.

Although passing comments were heard about the financial news out of Asia, its impact on the U.S. bank loan market seemed to be judged as minimal.

In the primary market all eyes are trained on the mega-deals, sources said, as the expectation was heard that some of those deals could allocate in the next fortnight.

However the session did produce news on the timing, structure and price of Tyco Plastics' $500 million facility, while details emerged on a new deal from Stratus Global Corp.

A little softness trailing Asia news

News that Japan's Nikkei index had to close 20 minutes early on Wednesday following allegations of fraud at the high-profile internet company Livedoor did not register a big impact upon the U.S. leveraged loan market, U.S. sources maintained.

However one trader who focuses on both the high-yield bond market and the leveraged loan market said on Wednesday morning that there was less activity in the loan market than had been seen in the Tuesday session and commented that the equity and high-yield bond markets, where the impact of the Livedoor news was definitely being felt, were "taking some of the steam out" of bank loans.

"Prices aren't going down, they're just not going up any more," the trader said.

Having said it, however, the source spotted General Growth Properties' term loans at 100.25 bid, up a quarter from Tuesday. A rumor circulated at the beginning of the week that the company might be looking to do a debt refinancing deal.

All eyes on the mega-deals

This trader maintained - and other sources subsequently confirmed - that presently in the bank loan market investors are zeroed in on the billion dollar-plus mega-deals.

"Slowly but surely they're getting done," said the source.

"They're all oversubscribed. They're trying to generate as much interest in those deals as they can.

"They're going well just because of the size."

The source said that Georgia-Pacific Corp.'s $11 billion senior secured credit facility, via Citigroup, Bank of America, Deutsche Bank and JPMorgan, is doing fine.

The deal is comprised of a $2 billion five-year term loan A, a $1.5 billion five-year revolver and a $5 billion seven-year term B, all rated Ba2 and talked at Libor plus 225 basis points, in addition to a $2.5 billion eight-year second-lien term loan (Ba3) talked at Libor plus 350 basis points.

Elsewhere, according to the trader, Ameritrade Holding Corp. closed the books Tuesday on its $2.2 billion deal (Ba1/BB/BB) via Citigroup.

The components include a $1.65 billion seven-year term loan B talked at Libor plus 175 basis points, in addition to a $250 million six-year term loan A and a $300 million five-year revolver both talked at Libor plus 150 basis points.

Meanwhile NRG Energy's $5.2 billion deal is "an absolute riot," with regard for the demand for the paper, the source said.

The Ba2/BB-/BB deal, led by Morgan Stanley and Citigroup, is comprised of a $3.2 billion seven-year term B and $1 billion five-year synthetic letter-of-credit facility, both talked at Libor plus 225 basis points, as well as a $1 billion five-year revolver talked at Libor plus 200 basis points, with a 50 basis points commitment fee.

Tyco takes shape

In primary market action Princeton, N.J.-based Tyco Plastics will hold a bank meeting on Monday for its $500 million credit facility (B1/B+) via Bank of America.

The facility will be comprised of a $325 million seven-year term loan talked at Libor plus 250 basis points and a $175 million six-year revolver.

Proceeds will be used to help fund Apollo Management LP's purchase of Tyco International Ltd.'s plastics and adhesives business for $975 million in cash.

Stratus bank meeting Thursday

Closer at hand, Bethesda, Md., satellite company Stratus Global Corp. will hold a bank meeting on Thursday for its $270 million credit facility (B1/B+).

RBC Capital Markets and Bank of America are joint bookrunners for the acquisition financing and debt refinancing deal.

The facility is comprised of a $225 million six-year term loan B and $20 million five-year delayed draw term loan A. The price talk on both is Libor plus 250 to 275 basis points. The facility also has a $25 million five-year revolver.

Automotive, tech names active

Late Wednesday a trader saw the secondary market active with volatility in the auto sector.

The source also saw a bid for technology paper, and spotted the Amkor Technology Inc. term loan at 103.50 bid, 104 offered, up a quarter from earlier in the week.

Meanwhile in the automotive sector the loans of Hayes Lemmerz International Inc. and Key Automotive Group were better bid, "even though the bonds faded," the trader said.

The source spotted the Hayes Lemmerz first-lien loan 100.375 bid.

The Key Automotive Group paper was seen at 99.75 bid, 100.25 offered, the source added.

Demand still strong

Elsewhere another buy-sider told Prospect News that new deals have been slow to materialize because of the amount of investor attention on the above-mentioned mega-deals that were carried over the 2005-2006 threshold.

The source maintained that demand for bank loan paper remains strong - even for second-lien paper, a sector of the asset class for which other sources have lately reported evidence of diminishing demand.

"CLO issuance is still going strong," the source insisted.

"I think hedge funds are still interested in second-lien deals, and there is a lot of money out there."

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