Ford trades up despite Tracinda's stock sale; JDA Software restructures deal, hikes talk; LCDX ends flat

By Paul A. Harris

St. Louis, Oct. 21 - The LCDX 10 index finished Tuesday at 87.4 bid, 87.7 offered, unchanged from Monday, but up from a Tuesday morning low of 86 bid, according to a trader who added that the index was at 87½ bid at mid-day New York time.

Cash loans, meanwhile, were up 1 to 3 points, said traders, who singled out the automotive sector as being improved.

The loans of Ford Motor Co. were 2 points to 3 points higher despite the news that Tracinda Corp. announced it had sold 7.3 million of its Ford shares and intends to unload more.

Meanwhile in the primary market JDA Software Group Inc. made dramatic revisions to its $450 million five-year senior secured credit facility.

Ford loans higher

Almost the entire cash market was better on Tuesday, traders said.

"Credit markets up a few points even though stocks are down," one trader said.

"Leveraged loans up 1 point to 3 points, depending upon where you were looking."

Automotive paper was a little better, this trader added.

Ford was quoted finishing at 49½ bid, up 3 points from 46½ bid on Monday, "in spite of the fact that Kerkorian got out of the stock," the trader said.

The move in Ford paper took place even after an announcement earlier in the day that Tracinda sold 7.3 million shares of Ford common stock in the open market for an average price of $2.43 per share.

Tracinda also stated that it intends to further reduce its holdings of Ford common stock, including the possible sale of all of its remaining 133,500,000 shares - approximately 6.09% of the outstanding shares - depending upon market conditions and available prices.

The trader, parsing the fact that Ford's loans traded higher against this backdrop, said that it is possible that some short covering took place.

"Also that's a higher beta name whenever there is movement, so it might be up with the market."

Another trader also had Ford's loan paper better at 49 bid, 52 offered on Tuesday, adding that it was at 47 bid, 49 offered on Monday, and therefore was up a couple of points on the session.

"The loan market, in general, was better, with cash loans up 1 to 2 points," the trader said, adding that Ford loans had been getting crushed.

"It began its most recent fall from the mid-70s, so it's down 30 points," the trader said.

"At these levels it could start looking attractive.

"There was a lot of selling on technicals, and you may be seeing some distressed buyers starting to step in."

Elsewhere an investment banker said that Ford's bonds also traded higher on Tuesday. Its 7.45% bonds due 2031 went out at 29½ bid, having started the day at 28½ bid, 30 offered.

However Ford credit default swaps were unchanged on the day.

Elsewhere in the automotive sector General Motors Corp. loan paper was at 46 bid on Tuesday, up from 43 bid on Monday, a trader said.

Chrysler Financial loan paper was up a little, the source added.

Neiman Marcus higher

Last week a high-yield mutual fund manager reported purchasing loan paper of Neiman Marcus Group Inc. for 66, and added that at that price the five-year secured paper yields 16%.

The Neiman Marcus loan was seen at 72½ bid on Tuesday, according to a trader who recounted that it had traded as low as 63 bid last week.

"Retail names were possibly a little oversold because of the threatening economy, and the expectation that they're going to be hit hard during the upcoming holiday season," said that trader, who also saw the possibility that Tuesday's move higher could betray some short covering.

The volumes aren't necessarily big, the trader said, adding that small trades can therefore cast a significant shadow.

Alltel Corp. term loan paper was also better on Tuesday, a trader said, adding that the B-1 and B-2 tranches were in the 94 bid, 95 offered context, up from 91 bid on Monday morning.

"The B-3 tranche has 101 call protection, and it's a point, to a point and a half higher than the B-1 and B-2," the trader added, spotting the B-3 at 94½ bid, 96 offered.

Meanwhile the loan paper of VNU Group underperformed the market on Tuesday, the trader said, spotting it at 70½ bid, 71½ offered, up maybe a point on the day.

JDA revises, ups talk

JDA Software Group made dramatic revisions to its $450 million five-year senior secured credit facility on Tuesday, according to market sources.

The $425 million Libor plus 575 basis points term loan has been replaced with a $250 million Libor plus 600 bps first-out term loan priced at 95, callable at 101, and a $175 million Libor plus 950 bps first-loss term loan priced at 95, callable after one year at 103, with the call premium declining ratably.

Libor floors remain to be determined.

The company had been in the market with a $425 million term loan talked at Libor plus 575 bps at 97, with a 3¼% Libor floor, callable at 101.

There was no news on the $25 million revolver which had been talked at Libor plus 575 basis points with a 3¼% Libor floor.

Credit Suisse and Wachovia are the joint lead arrangers and joint bookrunners on the deal, with Credit Suisse the agent and Wachovia the syndication agent. Recently, Wells Fargo Foothill joined the syndicate as well.

Proceeds will be used to help fund the roughly $346 million cash acquisition of i2 Technologies Inc., to repay i2's convertible debt, to refinance JDA's existing debt and revolver, and to provide for the combined companies' ongoing working capital and general corporate needs.

JDA is a Scottsdale, Ariz.-based provider of supply and demand chain requirement software products. i2 Technologies is a Dallas-based provider of supply chain management products.

Credit improves

Elsewhere Tuesday there was a consensus among leveraged capital markets sources: credit conditions are improving.

Libor fell to 3.83% on Tuesday, down from 4.05% on Monday.

Sources recounted that at the beginning of last week Libor was at 4¾%, and as recently as last Friday it was at 4.4%.

One banker said that the Federal Reserve's moves to help money market investors and the short-term debt markets will help to stabilize short-term lending.

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