Level 3 incremental starts trading; Ford inches up as debt restructuring wraps; LCDX dips

By Sara Rosenberg

New York, April 6 - Level 3 Financing Inc.'s newly syndicated incremental term loan started to see some trading levels on Monday after first hitting the secondary late Friday, and the company's existing term loan moved a little higher.

In more secondary happenings, Ford Motor Co.'s term loan was a touch stronger in a quiet Monday trading session as the company announced that its debt restructuring initiatives have been completed, resulting in less debt and lower interest expense for the company.

Also, the LCDX 10 index was slightly lower in sympathy with stocks, while the cash market in general felt firm.

Level 3 sees some activity

Level 3 Financing's incremental term loan first saw some real levels on Monday since when it freed for trading on Friday, it was so late in the day that there wasn't really time for any activity in the loan, according to a market source.

The incremental term loan was quoted at par ¼ bid, 101 offered, the source said. On Friday, it technically broke more around the par level, the source added.

As was previously reported, the $220 million term loan due March 13, 2014 is priced at Libor plus 850 basis points with a 3% Libor floor and was sold to investors at an original issue discount of 99.

Call protection on the loan is non-callable for 2½ years, then at 104 for a year, 102 for six months and par thereafter.

Bank of America is the lead bank on the deal that will be used for general corporate purposes.

During syndication, the loan was upsized from $200 million due to it being oversubscribed.

Closing and funding is expected to take place on or before April 17.

Level 3 existing loan moves up

Meanwhile, Level 3 Financing's existing term loan was somewhat stronger on Monday as "relative value pressure is pushing it higher," the market source remarked.

The existing term loan was quoted at 76¼ bid, 77¼ offered, up from Friday's levels of around 76 bid, 77 offered, the source said.

Pricing on the existing term loan is Libor plus 225 bps and it carries no call protection, which is why it trades so much lower than the incremental, the source added.

Level 3 is a Broomfield, Colo.-based provider of fiber-based communications services.

Ford gains ground

Ford's term loan was a little better on Monday after the company said that its previously announced debt tenders and exchanges have closed successfully, although the move was probably more technical driven than news driven, according to a trader.

The term loan was quoted at 47¾ bid, 48¾ offered, up from Friday's levels of 47½ bid, 48½ offered, the trader said, adding that it had been as high as 48 bid, 49 offered first thing in the morning but it came in slightly over the course of the day.

"[Tender news] mostly expected. Been trading in that range," the trader added regarding Ford's performance on Monday.

"By substantially reducing our debt, Ford is taking another step toward creating an exciting, viable enterprise," said Alan Mulally, president and chief executive officer, in a news release. "As with our recent agreements with the UAW, Ford continues to lead the industry in taking the decisive actions necessary to weather the current downturn and deliver long-term profitable growth."

Ford cuts debt

Under the restructuring that was completed, Ford reduced its debt by $9.9 billion from $25.8 billion at Dec. 31, and annual cash interest expense was lowered by more than $500 million based on current interest rates.

As part of the debt initiatives, the company received tenders for about $4.3 billion of its 4.25% senior convertible notes due Dec. 15, 2036. Ford will use $344 million to pay a cash premium to convertible noteholders who validly tendered. About $579 million of the convertibles remain outstanding.

In addition, the company is using $1.1 billion in cash to purchase $3.4 billion of its unsecured non-convertible debt securities. Approximately $5.5 billion of the notes remain outstanding following the tender.

The convertible conversion offer and the notes tender offer expired on April 3.

Also, on March 23, the company used $1 billion, up from an initially proposed amount of $500 million, to purchase $2.2 billion of its term loan debt at a price of 47. About $4.6 billion of the term loan remains outstanding.

Ford is a Dearborn, Mich.-based automotive company.

LCDX softens, cash firm

The LCDX 10 index was a little weaker on Monday as equities retreated, but cash felt more like it was unchanged to maybe up a bit on the day, according to traders.

The index was quoted around 74.30 bid, 74.50 offered, down from Friday's levels of 74.50 bid, 74.70 offered, one trader said.

Meanwhile, the overall cash market was described by another trader as "unchanged to maybe up half a point depending on the name. Think some guys came in to buy stuff. [There's] not too much activity - low volume, very slow."

As for stocks, the Nasdaq closed down 15.16 points, or 0.93%, the Dow Jones Industrial Average closed down 41.74 points, or 0.52%; the S&P 500 index closed down 7.02 points, or 0.83%, and NYSE closed down 69.27 points, or 1.3%.

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