Category Archives: News

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at 4:38pm

Leveraged loan returns: Loans gain 0.02%; YTD return is 3.21%

Loans gained 0.02% today after gaining 0.02% yesterday, according to the LCD Daily Loan Index.

The S&P/LSTA US Leveraged Loan 100, which tracks the 100 largest loans in the broader Index, gained 0.03% today.

In the year to date, loans overall have gained 3.21%.

A full xls of the Daily Index is available to LCD subscribers, please click here.

LCD Daily Loan Index – May 21, 2013
TOTAL RETURNS

All

Perf. Loans

L100

BB

B

CCC
For 5/21/13      0.02%      0.02%       0.03%

 0.01%

  0.00%

     0.19%
For 5/20/13      0.02%      0.01%       0.02%

 0.00%

  0.01%

     0.13%
           
Month-To-Date 5/21/13

 0.47%

      0.44%

  0.54%

0.27%

0.36%

    1.96%
12/31/12 – 5/21/13

3.21%

      3.29%

  3.28%

2.01%

3.29%

  10.11%
12/31/11 – 5/21/12

4.14%

      4.23%

 4.15%

2.96%

5.25%

    3.89%

Source: S&P/LSTA Leveraged Loan Index.

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at 2:25pm

JC Penney leveraged loan rises to bracket 102 on entering trading mart

The $2.25 billion covenant-lite term loan for J.C. Penney advanced to bracket 102 after breaking for this afternoon at 100.75/101.25, versus issuance at 99.5, according to sources. The five-year loan is priced at L+500, with a 1% LIBOR floor, and carries 102, 101 call premiums.

At 99.5, the loan yields 6.26% to maturity. The yield narrows to 5.89% at the midpoint of the opening market.

Prior to allocating the deal, Goldman Sachs, Barclays, J.P. Morgan, Bank of America Merrill Lynch, and UBS firmed the spread on the loan at L+500, the tight end of a revised L+500-525 range.

Goldman Sachs, Barclays, J.P. Morgan, Bank of America Merrill Lynch, and UBS arranged the transaction. The deal is secured by real estate and other company assets.

Corporate ratings are CCC+/Caa1. The term loan is rated B-/B2, with a 2 recovery rating from S&P.

As reported, the arrangers yesterday upsized the loan by $500 million while cutting pricing from earlier guidance of L+575, with a 1% LIBOR floor and a 99 offer price, sources said.

Proceeds are available for working capital and general corporate purposes, which could include to “acquire or satisfy and discharge” the company’s outstanding 7.125% notes due 2023, according to the company.

On April, 15, J.C. Penney announced that it drew down $850 million from a $1.85 billion asset-based revolver due 2016 to fund working-capital requirements and capital expenditures, including the replenishment of inventory levels. The revolver was arranged by J.P. Morgan, Bank of America Merrill Lynch, Barclays, and Wells Fargo. Pricing on the revolver is tied to a ratings-based grid ranging from L+150-300, with a commitment fee ranging from 25-50 bps. Based on J.C. Penney’s CCC+/Caa1 ratings, all-in pricing appears to open at L+350. – Kerry Kantin/Chris Donnelly

 

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at 9:50am

Europe: With €800M in hand BlueBay sets close of direct lending fund

bluebay logoBlueBay Asset Management has announced the final close of its direct lending fund, with more than €800 million of commitments from institutional investors including pension funds, insurance companies, and family offices, according to a company statement today.

The fund is BlueBay’s first for direct lending to European companies, and will make investments of €20-100 million to U.K. and northern European mid-market names with an enterprise value of less than €500 million, including sponsor-backed borrowers.

The fund will aim to provide predominantly senior and subordinated loans for acquisitions, capital growth, restructuring, and liquidity situations. More than 20% of the fund has already been deployed.

BlueBay Direct Lending Fund started in October 2011 and is led by Anthony Fobel. The vehicle is designed to step into the gap left by banks that have retreated from some lending activities in an effort to boost their capital ratios.

London-based BlueBay manages over $51 billion of funds, and is a subsidiary of the Royal Bank of Canada. – Staff reports

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at 8:30am

Chart: Trading yields on leveraged loans, high yield bonds continue slide

secondary yields

There’s been much news of late as to how yields on new-issue leveraged loans and high yield bonds are at or near record lows (more on that here for loans and here for bonds), but the secondary trading market for each asset class is no picnic for investors, either.

Secondary yields in the leveraged finance markets have been sliding steadily for the better part of two years amid massive inflows of institutional investor cash. Indeed, loan mutual funds and ETFs recently saw their 48th straight week of investor cash inflows, totaling $27.2 billion. U.S.  High yield bonds and ETFs have seen net inflows of $2.1 billion so far in 2013.

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at 5:15pm

Leveraged Finance Fights Melanoma event set for tomorrow, May 21

The Melanoma Research Alliance (MRA), the largest private funder of melanoma research, will hold the second annual Leveraged Finance Fights Melanoma (LFFM) benefit tomorrow at the Summer Garden and Sea Grill at Rockefeller Center in New York City from 6:30-8:30 p.m. Funds raised at the event will support the MRA’s global research program, and tickets are available online at the MRA website.

With recent breakthroughs announced in fighting cancer with immunotherapy, it is timely that the Leveraged Finance community gathers to support the Melanoma Research Alliance. Dr. Jedd Wolchok from Memorial Sloan-Kettering and Dr. Drew Pardoll from Johns Hopkins will be on hand as recipients of the recent $1.5 million LFFM-MRA Academic Industry Partnership Award co-funded by the MRA and Bristol-Myers Squibb. The dramatic results from Dr. Wolchok’s combination trial involving PD-1 and Yervoy, which was supported by LFFM, has been featured prominently in national news coverage.

The hosts for the event are Jeff Rowbottom, from KKR Capital Markets, and Brendan Dillon, from UBS, along with a host committee. Attendees will include leveraged finance professionals from banks, investment houses, law firms, select issuers, and private equity sponsors. As with the inaugural event last year, LCD is a proud sponsor.

Special attendees will include Apollo’s Leon Black, KKR’s Henry Kravis, Oaktree’s Howard Marks, Oak Hill’s Glenn August, and Simpson Thacher Bartlett’s Dick Beattie.

“Melanoma is the fastest growing cancer in the U.S. and worldwide. Nearly 80,000 Americans will be diagnosed in 2013. As Memorial Day weekend and the summer approaches, it is vital to know how to protect yourself and your loved ones against the sun’s harmful rays. With this event, we will raise funds for crucial research, while also raising awareness. Melanoma can usually be defeated if diagnosed early, but if neglected, it can become fatal,” Rowbottom said.

In support of the 2013 event, a group led by Ipreo-Debtdomain, executives from KKR, and other select supporters have made a $250,000 pledge that provides $100 to MRA for every person who has completed a skin check in the last six months or vows to make an appointment within the next three months. The goal is to promote screenings, so any person – not just event participants – can take a pledge on the Ipreo-DebtDomain website.

Roughly 600 professionals attended the inaugural event at the Bryant Park Grill in 2012, with $925,000 raised from 45 sponsors and more than 200 individual donations. 100% of all public donations to the MRA will be used directly to support research programs working toward eliminating suffering and death from melanoma.

More details, including how to purchase tickets, can be found at the Melanoma Research Alliance’s website.

Find LFFM on Facebook and LinkedIn, and see personal stories

here

.

For further information about the LFFM event, donations, and sponsorship opportunities, please Lauren Leiman of the MRA at (202) 336-8938 or lleiman@curemelanoma.org.

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at 4:29pm

Leveraged loan returns: Loans gain 0.02% today; YTD return is 3.19%

Loans gained 0.02% today after gaining 0.01% on Friday, according to the LCD Daily Loan Index.

The S&P/LSTA US Leveraged Loan 100, which tracks the 100 largest loans in the broader Index, gained 0.02% today.

In the year to date, loans overall have gained 3.19%.

A full xls of the Daily Index is available to LCD subscribers, please click here.

LCD Daily Loan Index – May 20, 2013
TOTAL RETURNS

All

Perf. Loans

L100

BB

B

CCC
For 5/20/13       0.02%       0.01%       0.02%

  0.00%

  0.01%

     0.13%
For 5/17/13       0.01%       0.01%       0.01%

  0.00%

  0.01%

     0.01%
             
Month-To-Date 5/20/13

 0.45%

       0.42%

  0.51%

0.26%

0.35%

     1.76%
12/31/12 – 5/20/13

3.19%

       3.27%

  3.25%

2.00%

3.28%

  9.89%
12/31/11 – 5/20/12

4.28%

       4.38%

  4.34%

3.11%

5.44%

     3.68%

Source: S&P/LSTA Leveraged Loan Index.

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at 12:58pm

JC Penney upsizes leveraged loan, trims proposed interest rate amid demand

A Goldman Sachs-led arranger group increased J.C. Penney’s term loan to $2.25 billion and a set a new tighter range of price talk. Commitments are due by 5:00 p.m. EDT today, with allocations likely to follow tomorrow, sources said.

The five-year term loan is now talked at L+500-525 with 1% LIBOR floor at 99.5. Call premiums will remain at 102, 101 in years one and two, respectively.

The previously $1.75 billion term loan was talked earlier at L+575, with a 1% LIBOR floor and a 99 offer price, sources said.
The deal is secured by real estate and other company assets.

Proceeds are available for working capital and general corporate purposes, which could include to “acquire or satisfy and discharge” the company’s outstanding 7.125% notes due 2023, according to the company.

Goldman Sachs, Barclays, J.P. Morgan, Bank of America Merrill Lynch, and UBS are arranging the transaction.

On April, 15, J.C. Penney announced that it drew down $850 million from a $1.85 billion asset-based revolver due 2016 to fund working-capital requirements and capital expenditures, including the replenishment of inventory levels. The revolver was arranged by J.P. Morgan, Bank of America Merrill Lynch, Barclays, and Wells Fargo. Pricing on the revolver is tied to a ratings-based grid ranging from L+150-300, with a commitment fee ranging from 25-50 bps. Based on J.C. Penney’s CCC+/Caa1 ratings, all-in pricing appears to open at L+350. – Chris Donnelly

 

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at 9:53am

US Foods sets $2.1B covenant-lite leveraged loan

US Foods is launching today a $2.1 billion covenant-lite term loan. Citigroup has scheduled a lender call for US Foods for 11:00 a.m. EDT today for both new and prospective lenders, sources noted.

The term loan due March 31, 2019 will carry six months of 101 soft call protection. Price talk and use of proceeds will be outlined on the call.

The issuer last tapped the loan market in December 2012 with a $450 million fungible add-on to its covenant-lite extended term loan due March 2017, which is priced at L+425, with a 1.5% LIBOR floor, and is covered by a 101 soft call premium that lapses next month.

In June 2012, lenders holding about $1.24 billion of the issuer’s roughly $1.94 billion covenant-lite term loan extended their paper to March 31, 2017. The term loan dates to the 2007 LBO of the foodservice distributor, then known as U.S. Foodservice, by Clayton Dubilier & Rice and Kohlberg Kravis Roberts & Co. Corporate ratings are B/B3. The secured debt is rated B-/B3, with a 5 recovery rating. – Staff reports

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at 5:06pm

Leveraged loan returns: Loans gain 0.01% today; YTD return is 3.14%

Loans gained 0.01% today after gaining 0.03% yesterday, according to the LCD Daily Loan Index.

The S&P/LSTA US Leveraged Loan 100, which tracks the 100 largest loans in the broader Index, gained 0.01% today.

In the year to date, loans overall have gained 3.14%.

A full xls of the Daily Index is available to subscribers, please click here.

LCD Daily Loan Index – May 17, 2013
TOTAL RETURNS

All

Perf. Loans

L100

BB

B

CCC
For 5/17/13      0.01%      0.01%       0.01%

 0.00%

  0.01%

    0.01%
For 5/16/13      0.03%      0.03%       0.03%

 0.01%

 -0.01%

     0.38%
           
Month-To-Date 5/17/13

 0.41%

      0.38%

  0.47%

0.23%

0.32%

    1.59%
12/31/12 – 5/17/13

3.14%

      3.23%

  3.21%

1.98%

3.25%

  9.71%
12/31/11 – 5/17/12

4.31%

      4.40%

 4.39%

3.14%

5.46%

    3.59%

Source: S&P/LSTA Leveraged Loan Index.

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at 1:57pm

Loan-fund assets grow 6% in April as records continue to fall

Assets under management of loan mutual funds grew by 6% in April, or $6.7 billion, to a record $116.8 billion, according to data from Lipper FMI, CEFConnect.com, and Yahoo! Finance.

It was the fourth straight month of muscular inflows for the asset classes. Indeed, between January and April, loan fund AUM grew by $26 billion, or 28.6%, from $96.5 billion at year-end.

 

 

 

 

 

 

 

 

 

 

 

As this chart illustrates, retail investors have embraced loans like never before.

 

The above chart is part of an LCD News analysis available to subscribers. Other charts in that analysis:

  • Annual AUM growth
  • Average secondary yields

 

– Steve Miller