Rexnord pricing emerges, Allied Waste slips, Nextel Partners rises

By Paul A. Harris

St. Louis, Mo., Oct. 30 - Pricing emerged on bank deals from Rexnord Corp. and Bell ActiMedia during Wednesday's "quiet" session in the leveraged loan market and Oncor Electric Delivery Co. announced it had obtained a commitment for $1 billion credit facility.

Meanwhile in the secondary market the paper of Allied Waste was heard trading down while Nextel Partners was up, and Charter Communications was "sideways."

With both pieces of the Dex Media East $975 million junk bond deal having priced in the high-yield primary market on Wednesday, one loan market source pointed to the recently transacted bank piece and said it contains evidence that investors are presently doing the driving in the loan market.

Pricing had flexed up on the $1.49 billion facility (Ba3/BB-), led by JPMorgan, Bank of America, Deutsche Bank, Lehman Brothers and Wachovia Securities, the source said, adding that the facility also has call protection of 102 for the first year and 101 for the second year.

The call protection, the source said, is a pretty good indication that buyers have the initiative.

One investor who spoke with Prospect News on Wednesday also professed the belief that at present the momentum is with the buyers. This source compared the present circumstances in the loan market to ones that have prevailed for well over three months in junk bonds.

"The bank loan market isn't exactly like the bond market because they don't put a book together to come to a price," the source pointed out. "They go out with pricing and either flex up or down.

"Now we are seeing a little bit of flexing up."

Also pointing to the Dex Media East deal the source said: "Loan managers played a pretty influential role in the pricing of that."

Where the loan market truly seems to be paralleling the junk bond market, the investor added, is in the comparative attractiveness of the secondary market versus the primary market.

"There are some deals out there," the manager said. "But there is so much going on in the secondary market - so much trading at a discount - that the bank loan market is becoming a little more like the high-yield market. The high yield managers say that the new issue market is dead because there is so much of the secondary.

"I'm just not interested in a par loan at Libor plus whatever when people are saying they have a liquidating fund and they're looking for a home for XYZ loan and it's going to come at a huge discount. Why wouldn't I work on that instead?"

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