TXU, First Data, Alltel see selling pressure in softer market; LCDX dips; Tousa first-lien trades down

By Sara Rosenberg

New York, Jan. 16 - The secondary market was weaker on Wednesday, with pressure continuing to be particularly noticeable in the large leveraged buyout financing deals, such as Texas Competitive Electric Holdings Co. LLC (TXU), First Data Corp. and Alltel Communications Inc.

Also in the secondary, LCDX 9 headed down with the loan market and stocks, and Tousa Inc.'s first-lien term loan was lower.

The secondary cash market was softer by anywhere from an eighth of a point to a quarter of a point depending on the name, with LBO deals taking the brunt of the hit, according to traders.

For example, one trader said that Texas Competitive Electric, a Dallas-based energy company, saw its term loan B-2 drop to 96 5/8 bid, 97 1/8 offered, down from 97¼ bid, 97¾ offered. A second trader agreed that the debt was weaker, but he placed levels at 96¾ bid, 97 3/8 offered, down from 97 bid, 97½ offered.

First Data, a Greenwood Village, Colo., provider of electronic commerce and payment services, saw its term loan B-1 quoted at 93 1/8 bid, 93 5/8 offered, down from 93¼ bid, 94 offered, the second trader remarked.

Alltel, a Little Rock, Ark., provider of wireless voice and data communications services, saw its term loan B-3 quoted at 95 bid, 95½ offered, down from 95¼ bid, 95¾ offered, the second trader continued. However, the first trader had the paper labeled as unchanged on the day because he said there weren't any real buyers out there to create a solid market.

"There's general negativity out there. It's really hard to find buyers. Hearing that there's some selling coming from somewhere. Lot of selling pressure so things could go lower if we found any buyers but there aren't any buyers out there to change the market," the first trader explained.

"In general cash was lower. Guys were beating up on the LBO deals. Towards the end things felt a little bit better, so off intraday lows, but still a little weak," the second trader added.

LCDX slides

LCDX 9 was lower as well on Wednesday, following the rest of the loan market and equities, according to traders.

One trader had the index going out around 95.25 bid, 95.35 offered, while a second trader had the index going out around 95.20 bid, 95.30 offered. On Tuesday, the index was quoted at 95.45 bid, 95.55 offered.

According to the first trader, the index hit a low of around 95.00 bid, 95.10 offered during Wednesday's market hours but managed to rebound slightly by the end of the session.

As for stocks, Nasdaq closed down 23 points, or 0.95%, Dow Jones Industrial Average closed down 34.95 points, or 0.28%, S&P 500 closed down 7.75 points, or 0.56%, and NYSE closed down 98.74 points, or 1.08%.

Tousa first-lien falls

In more secondary news, Tousa's first-lien term loan fell off by about a quarter of a point in trading, while its second-lien term loan held steady, according to a trader.

The first-lien term loan was quoted at 95¼ bid, 96¼ offered, down from 95½ bid, 96½ offered, the trader said.

Meanwhile, the second-lien term loan was quoted at 90 bid, 91 offered, unchanged from previous levels, the trader added.

On Wednesday, Tousa revealed in an 8-K filing with the Securities and Exchange Commission that it failed to make its semiannual interest payments due Jan. 15 on its $200 million of 7½% senior subordinated notes.

The failure to pay interest on the notes within 30 days of the due date could result in the debt becoming immediately due and payable and cause other debt of the company to be accelerated.

As previously disclosed, the company is considering restructuring alternatives.

Earlier this month, the company announced that it didn't make the semiannual interest payments due Jan. 1 on its 9% senior notes and 10 3/8% senior subordinated notes.

Tousa is a Hollywood, Fla.-based homebuilder.

Dana influenced by market uncertainty

Moving to the primary, Dana Corp.'s $2 billion exit financing credit facility is receiving attention being that the credit story is viewed by some to be positive, but the instability in the market is also said to be affecting the transaction, according to a market source.

"Accounts like the company and they're negotiating. Compared to other exit facilities it's probably the best one out there from a credit perspective. Going well from a credit perspective but they're being impacted by the overall credit market," the source remarked.

The facility consists of a $1.35 billion seven-year term loan B (Ba3/BB) talked at Libor plus 350 basis points with an original issue discount in the 97 context and a $650 million five-year asset-based revolver (Ba3/BB+) talked at Libor plus 200 bps with a commitment fee of 37.5 bps.

Upfront fees on the asset-based revolver are 25 bps for $25 million, 50 bps for $50 million and 75 bps for $75 million.

Citigroup, Lehman Brothers and Barclays are the lead banks on the deal.

Proceeds will be used to repay the company's debtor-in-possession credit facility, to make other payments required upon its exit from bankruptcy and to provide liquidity to fund working capital and other general corporate purposes.

Dana is a Toledo, Ohio-based supplier of components, modules and systems to vehicle manufacturers and related aftermarkets.

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