Companies from SeaWorld Entertainment Inc. to mattress maker Tempur-Pedic International Inc. are seeking lower borrowing costs in the loan market where investor demand for corporate debt exceeds supply.
SeaWorld, the theme park operator Blackstone took public last month, is seeking a $1.4 billion term loan that pays interest at 2.5 percentage points more than the London interbank offered rate, with a 0.75 percent minimum on the lending benchmark, according to a person with knowledge of the matter. Tempur-Pedic is asking lenders to lower the rate on $743 million of an $868 million loan to 2.75 percentage points more than Libor, from 4 percentage points, according to a person with knowledge of the matter. The company also wants to reduce the minimum on Libor to 0.75 percent from 1 percent.
“Market conditions remain incredibly strong for loans,” JPMorgan Chase & Co. said in a May 3 report. “There is not enough loan supply at this point to satisfy demand, and not surprisingly these conditions are keeping prices in the secondary market firm and the primary market environment in favor of issuers.”
Loan prices climbed for an eighth straight day to 98.7 cents on the dollar, according the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 Index. The $295 billion of high-yield, high-risk loans raised by companies this year includes $135 billion of “re-pricings,” according to the JPMorgan report.
Jimmy Sanders Inc., the agricultural services provider bought by Apollo Global Management LLC and Pinnacle Agriculture Holdings LLC last year, is seeking to lower the rate on a $350 million term loan it got to back the acquisition, according to a person with knowledge of the transaction, who asked not to be identified because the deal is private.
Global Tel*Link Corp., the American Securities Capital Partners LLC-controlled provider of calling services to inmates, is seeking $885 million in loans to fund a dividend and refinance debt, a person with knowledge of the transaction said, asking not to be identified because the deal is private.
Entravision Communications Corp., a Santa Monica, California-based Spanish-language media company, is seeking $405 million of loans to refinance debt and paydown bonds, according to a person with knowledge of the deal.
In the commercial lending market, U.S. banks have eased terms on loans to businesses, according to a Federal Reserve survey.
“Domestic banks, on balance, reported having eased their lending standards and having experienced stronger demand in several loan categories over the past three months,” the central bank said in its quarterly survey of senior loan officers released in Washington today. The fraction of banks easing standards for business loans was described as “relatively large.”