CIT revolver due 2010 trades sharply higher; Ford loan up ahead of earnings; LCDX 12 eases

By Paul A. Harris

St. Louis, July 17 - CIT Group continued to hog the spotlight on Friday, loan market sources said.

The troubled commercial lender's revolving credit facility traded up sharply in what was perceived to be a move on the part of investors to position themselves for a possible bankruptcy.

Also Ford Motor Co.'s term loan strengthened ahead of its second-quarter earnings call, set for Thursday.

The LCDX 12 was at 88¼ bid, 88.55 offered heading toward the Friday close, down 0.30 points on the day, a trader said.

The primary market remained quiet. However there was amendment news.

CIT loans trade higher

Throughout the July 13 week loan traders, pressed for color on CIT bank debt, passed along bond prices instead, and commented that the bank loan had not been seen trading.

A buy-side source remarked that the CIT loan is probably unsecured, and therefore unfamiliar to a good many players in the leveraged loan market.

Friday, however, there was news on the loan: $45 million of the revolver due in 2010 traded at 60 bid, 62 offered, up sharply from Thursday's 55 bid, 57 offered, a trader said.

The buyers appear to be trying to put together a deal ahead of a bankruptcy, the trader commented.

They are buying in cheap in order to be in position to amend the deal.

Although the buzz on the Street regarding the possible outcomes for CIT remained feverish, one story garnered a modicum of traction, sources said: CIT, in a last ditch effort to avoid bankruptcy, is in discussions with JP Morgan and Goldman Sachs regarding short-term financing.

Ford outperforms

Elsewhere, the loan paper of Ford Motor Co. "outperformed" on Friday, according to a trader who gave spots of 76½ bid, 78½ offered.

The source did not quantify the move, except to say that the loan was higher.

The reason: investors are moving into the loan ahead of what is expected to be a strong second quarter earnings call on Thursday.

On Friday the mainstream financial services were citing a Credit Suisse report noting that Ford has increased its domestic market share by 200 basis points, while at the same time cutting incentives by approximately $1,100 per vehicle.

Apart from CIT and Ford, the secondary market was relatively quiet on Friday, traders said.

Nuveen amendment passes

The primary market was ultra-quiet.

The Nuveen Investments Inc. credit amendment passed on Friday, clearing the way for its $350 million six-year second-lien term loan to price.

The fixed-rate deal, with an indicative coupon of 12½%, could price and allocate on Monday, the source added.

Price talk remains firm at 90.00.

The official deal size remains at $350 million, however it has the potential to grow.

Earlier in the week buyside sources told Prospect News that the deal would upsize to $500 million.

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.

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