Lyondell prices, trades up; Virgin Media prices £675 million; loan market remains well bid

By Paul A. Harris

St. Louis, March 30 - Leveraged loans were well bid across the board on Tuesday, according to a trader from a mutual fund.

"You get the sense that the Street is trying to front run a late-March, early April reinvestment by the CLO cash paydowns, and people want to get in front of that," the source remarked.

The LCDX 13 index was trading at 104½ bid, for a 365 bps spread, late in the afternoon.

The index will soon roll into its newest incarnation, the LCDX 14, the trader said.

And when it does, it is expected to feature a new "bullet contract," which cannot be canceled.

"The LCDX does not enjoy near as much liquidity as the High Yield CDX or the Investment Grade CDX," the source explained.

"The Street seems to be trying to proclaim that changing the contract will help things. But time will tell."

Lyondell prices

In the primary market Lyondell Chemical Co. priced a $500 million six-year senior secured term loan (Ba2//) with a Libor plus 400 basis points coupon, at a reoffer price of 99.00, on Tuesday.

The deal features a 1.5% Libor floor.

UBS, Bank of America Merrill Lynch, Barclays Capital, Citigroup, Credit Suisse, Deutsche Bank, JP Morgan, Morgan Stanley and Wells Fargo Securities are joint bookrunners.

The coupon came on top of price talk that had been cut from Libor plus 425 bps. The Libor floor also came on top of the 1.5% price talk, which had been cut from 2%. The reoffer price came on top of original price talk.

Lyondell had previously reduced the size from $1 billion after upsizing a parallel junk bond deal.

The deal is part of Lyondell's exit financing for its emergence from Chapter 11.

The deal was par 7/8 bid at mid afternoon Tuesday, according to the trader from the mutual fund, which initially put in a sizable order for the Lyondell loan.

However the leveraged markets are hot right now, and terms increasingly seem to be swinging in favor of the issuers, the trader explained.

"They shook the covenants off the deal, and tightened in the economics," the source said.

"We don't want to see things going back to the way they were, right before the credit crisis, when issuers knew they could get away with it, so they did.

"We're trying to send a message, but we may be fighting a losing cause."

Virgin Media sets pricing

Virgin Media Inc. priced its £675 million Libor plus 375 basis points five-year term loan B at 99.00, according to an informed source.

The loan priced on top of the price talk.

Deutsche Bank and BNP Paribas were joint physical bookrunners in a syndicate of banks which included Bank of America, Crédit Agricole Corporate and Investment Bank, GE Capital, Goldman Sachs, JPMorgan, Lloyds TSB Corporate Markets, RBS and UBS.

As previously reported, the banks have committed to provide the company with a £1 billion term loan A due June 30, 2015 and a £250 million revolver due June 30, 2015. Pricing on the term loan A and the revolver is Libor plus 350 bps.

Proceeds from these facilities will be used, among other things, to refinance the company's existing senior facilities agreement in full. The revolving credit facility will be available to finance ongoing working capital requirements and general corporate purposes.

Virgin Media is a U.K. entertainment and communications company.

24 Hour Fitness talk

24 Hour Fitness Worldwide Inc. talked its $600 million six-year term loan with a coupon on Libor plus 400 bps at a reoffer price of 98.5 on Tuesday, according to a market source.

The deal features a 2% Libor floor.

JPMorgan, Deutsche Bank and Wells Fargo are taking part in the syndication.

The $675 million credit facility also contains a $75 million five-year revolver.

Proceeds will be used to refinance existing debt.

24 Hour Fitness is a San Ramon, Calif., fitness center company.

Christie/AIX sets price talk

Christie/AIX Inc. talked its $172.5 million six-year senior secured term loan with a coupon of Libor plus 350 basis points, to price at 99.00, on Tuesday, according to a market source.

SG and GE Capital are the joint lead arrangers and bookrunners on the deal, which features a 1.75% Libor floor.

Proceeds will be used to refinance existing debt.

Christie/AIX is a wholly owned subsidiary of Cinedigm Digital Cinema Corp., a Morristown, N.J.-based provider of digital cinema platforms. The company was formed in June 2005 to implement the rollout of digital projection screens.

Running hard

Cash coming into the bank loan mutual funds and recent or pending prepayments including the loans of Ford Motor Co., HCA and BWAY, combined with a forward calendar that has been too thin to soak up that cash, has propelled loans skyward in the secondary market, a trader said on Tuesday.

Eleven percent of the index now trades above par, the source said, adding that at the beginning of the year it was 1% to 2%, and a year ago, the number of loans trading above par was probably 0%.

"Secondary prices are now 97 or 98 or 99," said the trader.

"A year ago you could use one hand to count the deals trading above 95."

Although new issues continue to price with original issue discounts, they quickly break up 1 or 2 points, and are bid at par, the source added.

"Libor floors had been at 3%, then moved to 2%. Now they're 1.5%," the source said.

"The market is definitely tighter.

"And a big cause of that is lack of supply."

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