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Vizient sets pricing for downsized term loan; bid remains strong for high quality loans
By Paul A. Harris
Portland, Ore., Jan. 26 – High quality loans continue to turn in strong performances in the bank loan market, well bid-for especially by CLOs, a bank loan portfolio manager said on Tuesday.
Gray Television’s Libor plus 350 basis point incremental senior secured term loan due June 2021 was 99¾ bid, 100¼ offered, three-by-three, on Tuesday, the manager said.
The $425 million deal, the spread of which floats atop a 1% Libor floor, came last week at 99.
High quality paper totally dominated returns last year and is continuing to do so this year, the manager remarked.
High quality loans are generically 98 bid, the source added.
However, with 40% to 50% of the demand for new bank loans coming from CLOs, and less than a year to go before U.S. risk retention regulations impacting CLOs come into effect, loans with poorer credit quality are underperforming, according to the manager.
Meanwhile retail loan funds, thought to comprise around 15% of the market, have been sustaining constant cash outflows, the manager said.
However, because “retail” represents a smaller portion of the market, the outflows they are sustaining have not had a big impact on loan prices.
Vizient sets pricing
Vizient, Inc. set pricing on a downsized $1,475,000,000 seven-year first-lien term loan with a 500-bps spread to Libor and a 1% Libor floor at 98.00, a market source said on Tuesday.
Commitments are due on Feb. 5.
The deal, which was downsized from $1,525,000,000, features 101 soft call protection for six months.
The credit facility, which is being led by bookrunner Barclays, also includes a $75 million five-year revolver.
There are no financial covenants.
The Irving, Texas-based network of not-for-profit health care organizations plans to use the proceeds to fund the acquisition of MedAssets’ Spend and Clinical Resource Management segment.
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