Level 3 allocates, softens in secondary; Metaldyne prices, firms; CLO issuance in record territory

By Paul A. Harris

Portland, Ore., Oct. 10 – The new issue market has been quiet for the past fortnight, according to a bank loan portfolio manager. And it's apt to stay that way for a while, which means the secondary market should pick up, the source added.

Outflows of cash from retail accounts probably don't help, said the investor.

Most recently, the market heard that dedicated bank loan funds tallied $825 million of outflows for the week to Wednesday. That represents about 15% of the market, the manager said.

“So outflows are not moving the market because CLO demand is propping it up,” he said.

“The CLO market is particularly active right now. It just set an all-time record for yearly issuance at $97.11 billion year to date, so CLOs are filling in the gap left by those retail outflows.”

Level 3 Financing Inc. upsized its senior secured term loan B due in 2022 to $2 billion from $1.5 billion and priced the deal with a 350 basis points spread to Libor and a 1% Libor floor at 99.25, according to a trader.

However, upon entering the secondary market the deal was seen drooping at 99 1/8 bid, 99 5/8 offered.

Meanwhile, Metaldyne LLC priced its upsized $1.35 billion Libor plus 350 basis points seven-year term loan at 99.50. The deal allocated and traded up to 99¾ bid, par ¼ offered.

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