LCDX flat but cash firmer; Ntelos trims discount; Health Management leads hospitals higher

By Paul A. Harris

St. Louis, July 28 - The LCDX 12 index traded essentially flat on the day, according to a trader who marked it at 92.2 bid, 92.5 offered, and added that the index opened at 92.25 bid on Tuesday morning.

However bank loan synthetics outperformed their counterparts in the speculative-grade bond market. The junk bond-tracking CDX High-Yield 12 index ended the day down 1/8 point, market sources noted.

But while the LCDX was flat, cash loans firmed, traders said.

The term loan paper of Health Management Associates Inc. traded ½ point to 1 point higher, according to traders who added that Health Management led the entire hospitals sector higher on the day.

In the primary market, Ntelos Holdings Corp. reined in its OID by 50 basis points to 99 from 98.5, an indication of the market's strength, according to a trader for a bank loan mutual fund.

HMA leads rally

"The rally in bank loans continues," asserted a trader who spoke just after the close on the U.S. East Coast.

The source saw a little bit of a pull back on Tuesday morning.

However what ensued was better buying across the board, the trader said.

The bid, on Tuesday, came slightly more on a "name-by-name" basis than previously, but there were no apparent signs of weakness, the trader remarked.

One name traders mentioned Tuesday was Health Management Associates.

On Tuesday the Naples, Fla.-based company announced that its second-quarter profits increased more than 90%, beating analysts' expectations.

As a result Health Management's bank loan was stronger, according to a trader who spotted the loan at 92¾ bid, 93¾ offered, up ½ point since Tuesday morning.

There was strength in general in the hospital sector on Tuesday, the trader remarked.

Another trader concurred, spotting the Health Management loan at 93 bid, 94 offered, up a point on the day.

The loan paper of Franklin, Tenn.-based Community Health Systems also improved on Tuesday, according to the trader, who marked it at 92¼ bid, 92¾ offered, up from Monday's 91 7/8 bid, 92 3/8 offered.

Meanwhile HCA, Inc.'s loan paper was up slightly, said the trader who quoted the term loan A at 93½ bid, 94½ offered, and the term loan B at 92¾ bid, 93½ offered.

Ntelos trims discount

Ntelos Holdings decreased the original issue discount it is offering to investors for participating in its Libor plus 375 basis points six-year term loan by 50 bps on Tuesday.

Ntelos is now offering a discount to 99, whereas previously the deal had been talked at 98.5.

"That's another sign that the market is stronger," a trader said.

JP Morgan is leading the $670 million credit facility, which also includes a $35 million revolver.

UBS is also involved in the deal.

Proceeds will be used to refinance and extend the maturity of Ntelos' outstanding $603 million first lien term loan due August 2011 and for general corporate purposes.

Ntelos is an integrated communications provider with headquarters in Waynesboro, Va.

SugarHouse talks loan at Libor plus 900 bps

Meanwhile SugarHouse Casino will launch a $180 million loan at a Thursday afternoon bank meeting, according to a market source.

Credit Suisse and Jefferies & Co. are leading the deal, which is expected to price with a coupon of approximately Libor plus 900 basis points.

The deal is expected to come with an original issue discount, the amount of which remains to be determined.

The loan will also come with a 3% Libor floor.

Proceeds will be used to fund the construction of the SugarHouse Casino by HSP Gaming, LP.

The casino, which will be built adjacent to the Delaware River in Philadelphia, won final approval from the Philadelphia City Planning Commission in late June.

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