Distressed loans continue to run; LCDX finishes Friday flat; funds see $29.5 million inflows

By Paul A. Harris

St. Louis, Sept. 18 - Bank loans traded flat on Friday, according to a trader who noted that many market participants headed out early to attend Rosh Hashanah celebrations.

The LCDX index also finished the day flat at 97.85 bid, 98.15 offered, said the trader.

The new issue market remained inactive on Friday.

$29.5 million inflow

The bank loan mutual funds saw $29.5 million of inflows for the week ending Sept. 16, according AMG Data Services, a buy-side source said on Friday.

Although it's not necessarily a conspicuous number, it lends a decent tone to the market, the source remarked.

The most recent inflow extends the year-to-date inflows to $16.2 billion, the buy-side source said.

Repayments causing the market to run

It was a notably busy week in the high-yield market, said a source from a bank loan mutual fund.

Heading into Friday's close junk issuers had raised more than $5.8 billion of proceeds, according to Prospect News data.

More than 43% of those proceeds will be used to retire bank debt.

"That's causing the market to run, a little" said a trader on the US East Coast.

Everything seemed to move upwards early in the week, the trader added.

However on Thursday and into Friday, quality loans that trade close to par tended to soften somewhat.

For example, the loans of SuperValu Inc. finished the week at 96 bid, but had been as good as 96½ bid early in the week.

Likewise Cracker Barrel Old Country Store, Inc. It was off ½ point in the same timeframe, the trader said.

Meanwhile distressed loan paper was still climbing pretty hard, even into Friday, according to the trader.

The American Axle & Manufacturing Holdings, Inc. term loan was headed toward the Friday close at 93 bid, up from 87¼ bid at the start of the week.

Distressed media names had also been gaining, the trader added.

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