Ineos Sets Rate on $1 Billion Bank Debt; Loan ETFs May Increase

Ineos Group Holdings SA, a chemical maker, set the rate it may pay on a $1 billion loan to refinance bonds due in 2015. Casino operator Peninsula Gaming LLC is seeking to reduce the rate on an $823 million term loan.

The Ineos debt, due in 2018, will consist of a $570 million portion and a 300 million-euro ($390 million) slice, according to three people, who asked not to be identified because the deal is private. The dollar portion may pay interest at 300 basis points to 325 basis points more than benchmarks, while the euro portion may pay a spread of 325 basis points to 350 basis points. Peninsula Gaming pays interest on the debt due in November 2017 at 4.5 percentage points more than the London interbank offered rate with a 1.25 percent minimum on the lending benchmark, according to data compiled by Bloomberg.

The universe of loan exchange-traded funds, currently made up of two passive and one actively managed pool is expected to increase as interest in bank debt grows, Jim Ross, head of State Street’s ETF business, said in an interview today at Bloomberg News headquarters in New York.

The SPDR Blackstone/ GSO Senior Loan ETF, which began trading on April 4, is managed by GSO Capital Partners, the credit investing arm of Blackstone Group LP, and State Street Global Advisors, a unit of State Street.

The ETF, which is listed under the ticker SRLN, is the third such fund to be created to buy loans, Bloomberg data show. Invesco Ltd.’s PowerShares Senior Loan fund, started two years ago as the first loan ETF, has seen its market capitalization more than double since the start of the year to $3.4 billion.

ETF Investments

The fund will look to hold debt in lower tier of BB rated and single-B graded loans, according to Matt Quigley, New York-based senior managing director at Blackstone. With the level of inflows into the sector, the market has the capacity to absorb at least four or five big leveraged buyout deals, Quigley said.

MTN Nigeria Communication Ltd., the country’s biggest mobile phone provider, said it got a $3 billion loan from a group of 17 local banks and seven foreign lenders to upgrade infrastructure.

The price of loans rose 0.03 cent to 98.49 cents on the dollar, the highest level since July 2007, according to the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 Index.

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