Despite investors’ recent bad experiences, they buy potentially loser securities nonetheless.
Loan arrangers and investors are clearly feeling optimistic. Despite a bunch of silly deals in recent months–and the loan meltdown of the past two years–there have been some 16 transactions via Deutsche Bank, Barclays, Bank of America Merrill Lynch and GE Capital recently. These included a $305 million dividend recapitalization for Renal Advantage Holdings, setting talk of Libor +450, with a 1.5 percent LIBOR floor and a 99 offer price on the term loan, according of S&P LCD. The issuer will use proceeds to refinance existing loans and a $16 million portion of its seller PIK note, and to fund an $80 million dividend to Welsh, Carson, Anderson & Stowe, LCD said.
Despite ongoing weakness in the loan markets, issuers have been successful. For example, Triumph Group’s $300 million term loan has been oversubscribed, and investors are being told the 99 offer price might tighten next week as a result, LCD said. The bank deal launched last week backs Triumph’s planned acquisition of Vought Aircraft Industries. Talk includes a spread of L+325, with 1.5 percent LIBOR floor.