Prestige, Blue Coat set bank meetings; cash, LCDX trade lower; HMA retraces lost ground

By Paul A. Harris

Portland, Ore., Jan. 13 - Cash loans and synthetics both traded lower on Friday, market sources said, and in the new issue market, the calendar continued to take shape as Prestige Brands Holdings Inc. and Blue Coat Systems Inc. set Wednesday bank meetings.

The market lost ground when Standard & Poor's relieved France of its AAA credit rating, a trader remarked.

Cash loans were a quarter-point to a half lower on the day.

The LCDX 17 bank loan index fell an eighth of a point on the day to finish. Fund flow news, however, turned positive during the most recent week.

The bank loan funds saw $34 million of inflows for the week to Wednesday's close, snapping a four-week losing streak during which the funds underwent $288 million of outflows, according to a syndicate banker.

"People have cash to put to work," the banker said, adding that in addition to the somewhat meager but positive flow for the most recent week, accounts must deploy an ample of amount of year-end interest payments.

Name-by-name trading

Bank loans are better bid since the beginning of the year, according to a trader from a mutual fund who characterized late-week action in the secondary market as "name by name."

"The market has a firm tone," the trader said.

"We're seeing new issues beginning to percolate, and people are waiting for the calendar before they start chasing the secondary."

The Health Management Associates term loan retraced ground that it gave up earlier in the week when the Naples, Fla.-based was dogged by charges of Medicare fraud, as well as a lawsuit by its former director of compliance.

The loan traded as low as 97.75 bid during the mid-week period, from 99.25 bid where it began the week.

It was 99 bid at Friday's close, although the loan regained most of that ground on Thursday, the trader said.

The $1.4 billion Libor plus 350 bps seven-year term loan (Ba3/BB-/BB+) broke into the market last November.

Elsewhere, falling natural gas prices are taking a toll on the loan paper of TXU Corp., the trader said.

The non-extended term loan has thus far sustained the greatest amount of damage, down 2 points on the week, ending the Friday session at 64 bid, 65 offered, down from 65 bid, 67 offered earlier in the week.

The TXU extended loan sustained slightly less damage, finishing Friday at 61 bid, 62 offered, down from 62.5 bid earlier in the week.

Prestige, Blue Coat launches

Prestige Brands plans to hold a Wednesday morning bank meeting for its $620 million seven-year covenant light term loan.

The deal is part of a $670 million senior secured credit facility, which also includes a $50 million five-year revolver.

As previously reported, both tranches are expected to be priced at Libor plus 500 basis points with at least one 25 bps step-down based on first-lien net leverage.

Also, the term loan is expected to include a 1.25% Libor floor, and the revolver will have a 50 bps unused fee.

Amortization on the term loan is 1% per annum, with the balance due at maturity.

Citigroup, Morgan Stanley and RBC are the lead banks, with Citi the left lead.

Also, Blue Coat Systems will host a bank meeting at 1 p.m. ET on Wednesday for its $415 million term loan.

The loan is part of a $465 million senior secured credit facility, which also includes a $50 million revolver.

Jefferies & Co. is the lead bank.

As previously reported, the revolver and term loan are expected at Libor plus 650 basis points with a 1.5% Libor floor.

Proceeds will be used to help fund the buyout of the company by Thoma Bravo LLC and Ontario Teachers' Pension Plan for $25.81 in cash per share. The transaction is valued at roughly $1.3 billion.

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