LCDX unchanged on the day; Ntelos 98.50 price talk seems 'fair' to fund manager

By Paul A. Harris

St. Louis, July 24 - The LCDX 12 index ended the Friday session unchanged at 91¾ bid, at a spread of 760 basis points, a syndicate official said.

"This market now, is just 'Bid, bid, bid,'" a loan investor remarked on Friday afternoon, adding that the capital markets in general are enjoying a huge technical rally.

"Every day bank loans are up, the high-yield is up and stocks are up," the investor said.

"There is a lot of money to be put to work."

Day-to-day bonds, week-to-week loans

Whereas bond prices are seen moving - mostly higher - on a daily basis, changes in loan prices seem to be taking place much more slowly, according to a syndicate banker.

Nor have bank loans rallied nearly as extensively in recent days, as junk bonds have, the official added.

A loan mutual fund investor seemed to see things more or less the same way.

However, this investor added, loans are moving, albeit on a somewhat more extended timeline.

For example, Wrigley Co. term loan paper is now at par 7/8 bid, 101¼ offered, the investor said, adding that the Wrigley paper spent the past month sitting at par 5/8 bid.

"That's a sign of the pressure at the top of the market," the investor said.

On more or less the same timeline, Aeroflex Inc. loan paper was at 87bid, 87¾ offered on Friday, whereas a little over a week ago it was at 80 bid, 82 offered, the investor said.

Ntelos pricing called 'right'

Pressed for news in the new issue market, on Friday, sources turned out empty pockets.

The Ntelos Holdings Corp. $635 million six-year first-lien term loan is going well, market sources say.

The JP Morgan-led deal is talked with a Libor plus 375 bps coupon, a 2% Libor floor, at an original issue discount of 98.50.

"It seems a little aggressive on the covenants, but the pricing seems right," a bank loan investor said Friday.

"At first they floated pricing of 98 to 99, and it firmed up at 98.50. That tells me they're not getting pushback at that price.

"A double-B with that coupon at that price seems reasonable."

The Ntelos term loan is part of a $670 million credit facility which also includes a $35 million pro-rata piece.

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

Nuveen continues to perform

Meanwhile Nuveen Investments, Inc.'s new $425 million 12½% second-lien term loan (Caa2), which priced Tuesday at 90.00 to yield 15.082%, continues to perform well in the secondary market, the investor said.

On Friday the Nuveen second-lien loan was at 94 bid, 95 offered.

The firm's first-lien loan was at 81½ bid, 82½ offered, on Friday, up a little from before the second-lien loan priced, the investor said.

Radio silence on Chester Downs

Elsewhere it has been radio silence on the Chester Downs $230 million Libor plus 900 bps seven-year secured term loan (B3/B), which was talked at the 14% area.

The books closed exactly a week ago, the investor said Friday.

Citigroup, Bank of America, JPMorgan and Jefferies are the joint leads on the deal, with Citi the left lead.

The Chester Downs operation, which is run by Harrah's, should have benefited from Friday's earnings report from Harrah's, the investor said

Cost-cutting measures and strong performances from Harrah's markets outside Las Vegas and Atlantic City, enabled the company to beat analysts' second quarter estimates.

However the bank loan investor has lately been hearing a lot of earnings news along the same lines as that reported by Harrah's.

"Earnings are not especially bad," the investor said.

"But there is concern that you can't just keep cutting costs to keep earnings up. At some point revenues actually have to start getting better."

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