CIT tightens spread talk, cuts OID; Cedar Fair, Altegrity break; loan funds add $99 million

By Paul A. Harris

St. Louis, July 29 - The LCDX 14 index traded up 1/8 point on Thursday to 96½ bid, 96 5/8 offered, according to a bank loan trader, who added that the index traded in a ½ point range throughout the session.

"It's been a pretty busy week, flow-wise," said the trader.

"The market is definitely better bid."

HCA Inc.'s loan is higher, on the back of good earnings, according to the source. He added that investors seem to be taking views as to how much of the loans will be taken out when the company brings its IPO.

Also benefiting from earnings was the bank loan paper of Ford Motor Co., the trader said.

Among the higher-beta names, TXU loan prices have improved on news of the company's bond exchange.

Those loans were in the high 70s Thursday after having traded off a bid list at 73 within the past two weeks, the source added

TXU was at 77 bid, 78 offered just after the Thursday close.

And Univision, which also posted positive earnings, is now in the high 80s, the trader said.

"There is definitely a lot of positive momentum in credit spreads in general," the source remarked.

"And loans are enjoying that benefit."

Meanwhile, evidence turned up on Thursday indicating that the bank loan asset class continues to attract investor cash.

The bank loan mutual funds saw $99 million of inflows for the week to Wednesday, according to Lipper-AMG.

The inflow extends year-to-date inflows to $7.119 billion.

CIT tightens spread, cuts discount

CIT Group Inc. tightened spread talk and cut the discount on its $3 billion five-year term loan on Thursday.

Spread talk tightened to Libor plus 475 basis points to 500 bps; previous discussions had the deal coming at Libor plus 500 bps.

Meanwhile the original issue discount shrank by 50 bps to 98.5 from 98.

Bank of America, Morgan Stanley and Deutsche Bank are the lead banks on the deal.

The non-amortizing term loan comes with a 1.75% Libor floor, and call protection of 102 in year one and 101 in year two.

Proceeds from the term loan, along with $1 billion of cash on hand, will be used to repay the company's existing $4 billion in first-lien term debt.

"It's a decent loan package, and I think that the market likes that," a trader said

"We heard that there was $1 billion of orders two hours after they launched the deal at the original pricing," the source remarked, but noted that with the company refinancing $4 billion of paper, there is a big "roll" factor, with accounts scrambling to maintain exposure to the name.

Altegrity breaks

Altegrity Inc.'s $550 million term loan add-on due in 2015 (B+) priced Thursday at 98, according to a bank loan trader.

The deal traded up to 99.5 bid in the secondary on Thursday afternoon.

The issue price for the Libor plus 600 basis points loan came on top of the 98 discount talk.

The deal features a 1.75% Libor floor, and includes a 101 soft call for one year.

Goldman Sachs led the deal.

The term loan is being obtained under the accordion feature that is part of the company's existing credit agreement, and the existing credit facility will be left in place as is.

Proceeds will be used to help fund the acquisition of Kroll Inc. from Marsh & McLennan Cos. Inc. in an all-cash transaction valued at $1.13 billion.

Cedar Fair begins trading

Meanwhile, the Cedar Fair LP $1.175 billion 5.5-year term loan B (Ba2/BB-) broke for trading at an issue price of 99 early Thursday afternoon, according to a trader.

A small amount of the deal traded at par bid, par ½ offered, the source added.

The loan priced at Libor plus 400 bps, with a 1.5% Libor floor.

Last week pricing was reduced to Libor plus 400 bps from Libor plus 425 bps

JP Morgan, Keybank Capital Markets, UBS and Fifth Third Bank led the deal.

The term loan came to market sized at $1.25 billion. However it was downsized to $1.15 billion following the upsizing of the company's junk bond deal to $405 million, from $300 million.

Last week Cedar Fair LP increased the loan to $1.175 billion from $1.15 billion and decreased its Libor plus 400 bps revolver to $275 million from $300 million, and then to $260 million.

Proceeds from the credit facility and the junk bonds will be used to refinance an existing credit facility.

MultiPlan talks $1.3 billion

MultiPlan Inc. talked its $1.3 billion term loan with a Libor spread of 450 basis points to 475 bps.

Discount talk is 98 to 98.5.

Barclays Capital, Bank of America and Credit Suisse are the leads on the deal, with Barclays the left lead.

The $1.375 billion facility also features a $75 million revolver.

Proceeds will be used to help fund the buyout of the company by BC Partners and Silver Lake from the Carlyle Group and Welsh, Carson, Anderson & Stowe.

Other financing will come from $675 million of notes.

Airvana sets price talk

Elsewhere, Airvana Inc. set initial price talk for its $330 million four-year senior secured term loan at Libor plus 800 basis points to 850 bps, with a 2% Libor floor.

The loan is expected to be discounted to 98.

Jefferies, Societe Generale and Macquarie are the lead banks on the deal, with Jefferies the left lead.

The deal will include amortization and excess cash flow sweeps.

Proceeds will be used to refinance existing debt and pay a dividend.

Risk sentiment

Two traders who spoke to Prospect News on Thursday held somewhat differing views of the present appetite for risk

The B1 rated Fairmount Minerals Ltd. $550 million term loan B, which has been talked at Libor plus 450 bps to 500 bps, is going well, and appears to be shaping up at a 98.5 OID, a trader said.

"It's a riskier credit than the market has recently seen, and should give an indication that something can get done, at a price," the source remarked of the acquisition deal being led by Barclays, KeyBank, Bank of America and PNC.

However, another trader asserted that higher-beta loans are not getting the same kind of pricing benefit that some of the higher quality loans are receiving.

"The market seems to still be disciplined with regard to the riskier loans," this source specified.

"The better quality loans are trying to flex tighter. And if they are of a decent enough quality they will succeed.

"The riskier loans are struggling a little."

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