Nuveen upsizes second-lien loan to $500 million; LCDX trades higher

By Paul A. Harris

St. Louis, July 13 - The bank loan market, along with much of the rest of the capital markets, appeared to shrug off dire headline news concerning small business lender CIT Group on Monday, sources said.

The LCDX bank loan index traded higher, closing at 86.75 bid, 87.05 offered, up from Friday's 86.30 bid, 86.60, a trader said.

Nuveen Investments Inc. upsized its somewhat novel second-lien term loan to $500 million from $350 million. That deal, which is set to price Wednesday, is going very well, sources say.

Meanwhile the secondary market passed a quiet summer Monday, with little trading taking place, traders said.

Nuveen upsizes

Nuveen Investments upsized its six-year second-lien term loan to $500 million from $350 million, market sources said Monday.

The deal is going well, they added.

Deutsche Bank is leading the deal with bookrunners Bank of America, Wells Fargo and Morgan Stanley, and co-managers UBS, Credit Suisse and CIT, officials said in the call.

The indicative coupon on the second-lien term loan is a fixed-rate of 12.5% with an original issue discount of 90, which puts it a spot over a 15% all-in yield, officials remarked.

Pricing on the loan is expected to take place on Wednesday.

The second-lien loan is non-callable for two years, then at 106 in year three and 103 in year four. There is also a 101 put in the event of a change of control.

Proceeds will be used to repay about $220 million of 5% senior notes due in September 2010 and first-lien bank debt. Specifically, amounts raised in excess of $250 million can be used for below par repurchases of the existing first-lien term loan for up to 180 days. After 180 days, excess proceeds will be required for a par paydown of the existing first-lien term loan.

Nuveen has also undertaken an amendment.

The company is asking to be allowed to issue the second-lien term loan under an already existing accordion feature and permit first-lien buy backs at a discount, officials said.

The company is also asking that the remainder of the $500 million accordion capacity after the contemplated transaction will also be converted to second-lien accordion capacity, and no longer be allowed to be incurred as first-lien debt, with proceeds from the second-lien to be used to pay down the first-lien term loan at a future date.

Lenders would get paid a 50 basis point amendment fee.

Consents for the amendment are due on July 15 and the amendment is hoped to close on that day as well. Closing on the second-lien loan is targeted for July 20.

Nuveen is a Chicago-based seller of investment products.

Commercial Barge

Meanwhile the market heard that Commercial Barge Line Co.'s upsized $390 million four-year senior secured first-lien asset-based revolver allocated last week, a banker said. The deal was increased from the original $350 million.

Bank of America, UBS, SunTrust and Wachovia led the deal.

Proceeds, along with proceeds from a $200 million senior secured second-lien notes offering, will be used to refinance the company's existing credit facility and for general corporate purposes.

Commercial Barge Line is a subsidiary of American Commercial Lines Inc., a Jeffersonville, Ind.-based marine transportation and service company.

CIT lower

The bank loan secondary market passed a quiet Monday, sources said.

CIT Group, heard to be in need of government financial guarantees in order to remain solvent, was pretty active, according to a trader.

However that activity was largely confined to the company's 6 7/8% notes due in November, one source said.

The loans may have been off slightly, the source added. However trading volume in the loan was not dramatic.

Another trader marked CIT's term loan B at 55 bid, 56 offered.

"Almost everything in the loan market is unchanged," a trader said, adding that the CIT bank loan was down, but none of it was trading.

"Some general names have been trading," said the trader, adding that loan paper of Supervalu Inc., TXU Corp., NRG Energy, Georgia-Pacific LLC and First Data Corp. traded relatively flat, and in small size.

"You saw it a quarter one way or another," said that trader, noting that sizes did not exceed $2 million or $3 million.

Another trader marked the Supervalu term loan at 94¾ bid, 95½ offered, down ¼ point on Monday.

The TXU B-2 and B-3 term loan tranches closed Monday at 71¼ bid, 71¾ offered, having eased from 71 5/8 bid, 72 1/8 on Friday.

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