Banged-up cash loans firm slightly; Schaeffler sets dual-currency deal; funds see outflows

By Paul A. Harris

Portland, Ore., Oct. 16 – Cash loans firmed a touch on Thursday but were still dramatically lower relative to prices seen earlier in the week, a bank loan trader said.

In the primary market, Schaeffler priced $1.3 billion and €750 million term loan B tranches with 350 basis points spreads to Libor and Euribor, respectively.

Pilot Travel Centers LLC term loan B was 99½ offered on Thursday, whereas it was par ½ offered on Tuesday, the trader said.

The trader attributed downward price moves in the leveraged loan market to widening credit spreads in the leverage markets in general.

Meanwhile, the LCDX 22 index of bank loan credit default swaps ended the session ¼ of a point higher at 102 5/8 bid ,103 1/8 offered, according to a hedge fund manager.

And dedicated bank loan funds saw $946 million of outflows during the week to Wednesday's close, according a market source, who was citing information reported by Lipper-AMG.

The most recent outflow follows the previous week's $825 million outflow.

The flows largely represent retail cash in the bank loan market and are believed to represent about 15% of the total cash in the market, according to an institutional bank loan investor.

Pabst Brewing Co. (Blue Ribbon LLC) set pricing on $525 million of terms loans, according to a market source, including a $395 million seven-year first-lien term loan and a $130 million eight-year second-lien term loan.

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