NEW YORK, Jan 29 (LPC) - Lamar Media has locked in an interest rate more reminiscent of the buyout boom of 2007 than the current market.
The outdoor advertising company has cut pricing on a US$600m term loan B to 150bp over Libor with a 0% floor on the benchmark, according to a source. The coupon is among the tightest rates on a broadly syndicated loan since 2007 when energy company Kinder Morgan and Weight Watchers were among issuers able to lock in the same rate, according to Refinitiv LPC data.
JP Morgan and Wells Fargo are arranging the loan for Lamar, which may allocate later today.
The US$1.2trn US leveraged loan market has seen a number of issuers come to market in January to cut their interest payments as prices of the debt improved with the LPC 100, a cohort of the most widely traded loans, rising to a two-year high of 99.21 January 16.
The average yield for BB rated loans in January is 3.89%, according to Refinitiv LPC data. Lamar has a Ba2 corporate family rating and the US$600m loan has a Baa3 rating, assigned on January 21, from Moody's Investors Service.
The company’s 150bp coupon “will breach the low end of any other term loan B issued by a high-yield company heretofore,” a KDP Advisor analyst wrote in a research note Wednesday.
“In the case of Lamar, however, the fully investment grade ratings – at the secured level – along with the fact that the vast majority of its debt load is unsecured, have combined to make Lamar appealing to enough conservative buyers to get the deal done without meaningful (Collateralized Loan Obligation) CLO buyers,” the analyst wrote, noting CLO buyers typically request a coupon of at least 175bp. The funds are the largest buyers of leveraged loans
A Lamar spokesperson did not immediately return an email seeking comment. (Reporting by Kristen; Editing By Jon Methven)