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US luxury retailer Neiman Marcus announced yesterday that it was seeking an amend and extend of its 2013 Libor+200 term loan, further illustrating the current strong trend of leveraged loan borrowers to seek to amend and extend their credit facilities.
The company said in a statement that is it seeking an extension of some or the entire amount of the maturity of the existing senior secured term loans and wants greater leeway to incur additional debt. In return it says it will offer an unspecified increase in spread. According to KDP Investment Advisors, pricing will likely boost the interest rate to Libor+325, with the company offering a 10bp consent fee, while the new maturity date will be April 2016.
Neiman Marcus is a widely held credit by CLOs, with 46.24% of US CLOs holding its loans according to CLO Master. CLOs have traditionally been seen as being amenable to amend and extends, so this may help to ensure a significant take-up of the offer.
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CFlux secondary
CLO index levels:
| Index | 21 May |
|
| CFlux USD AAA | ↑ | 96.2 |
| CFlux USD AA | ↑ |
88.3 |
| CFlux USD A | ↓ | 84.1 |
| CFlux USD BBB | ↓ | 75.3 |
| CFlux USD BB | ↓ |
74.1 |
| CFlux USD EQ | ↑ | 77.5 |
Perfect environment for this strategy! With rates heading down and spreads narrowing due to the Feds mandate we all take more credit risk, it appears that the "maturity wall" of 2011-2013 will be easily scaled - at least for those issuers that have any chance of survival. The price to pay down the road is simply too hazy to be bothered with now. Feels like 2005.