Chrysler sweetens pricing on loans: sources

NEW YORK (Reuters) - Pricing has been sweetened on Chrysler Financial Services’ $6 billion of first- and second-lien term loans, sources told Reuters Loan Pricing Corp. on Thursday.

Chrysler Group announces the production of its all new 2008 Chrysler Sebring convertible (R) at the Sterling Heights Assembly plant in Sterling Heights, Michigan June 4, 2007. REUTERS/Rebecca Cook

The $4 billion first-lien loan pricing is being raised by 25 basis points to 300 basis points over the London interbank offered rate, while the $2 billion second-lien term loan is being raised by 50 basis points to 550 basis points over Libor, sources told Reuters LPC.

Call language on both term loans also is being tightened. The first-lien piece is now callable at 102, 101 and par (from 101, par), while the second-lien loan is now callable at 103, 102, 101, par (from 102, 101, par). Both term loans are being offered at discounts of 99.5 and 99, respectively.

Chrysler Financial removed the incremental term loan basket. Also, the debt to net worth covenant governing the first-lien loan will be added to the second-lien loan, which will be governed by the borrowing base.

Ratings on Chrysler Financial’s first- and second-lien term loans are “B1”/”BB-” and “B2”/”CCC+”, respectively. The corporate family rating is “B1”/”B”. A $2 billion revolver fills out the rest of the Chrysler Financial loan.

The changes come on the heels of talk of revisions to the Chrysler Corp. deal earlier this week. Chrysler Corp.’s $10 billion first-lien term loan is being talked wider at 375-400 basis points over the London interbank offered rate from 325 basis points over LIBOR, while price talk on its $2 billion second-lien piece was seen drifting to the 700 basis points over LIBOR range from 600 basis points over LIBOR.

Chrysler Corp.’s corporate family rating is “B3”/”B”. The first-lien loan is “B1”/”B+” and the second-lien loan is “Caa1”/”B-“.

As reported earlier, the financing was launched by J.P. Morgan on June 28.

Bear Stearns, Goldman Sachs, Citigroup and Morgan Stanley are on the right of the financing.

Proceeds back Chrysler Holding’s buyout by Cerberus Capital Management.

DaimlerChrysler DCXGn.DE in June sold an 80.1 percent equity stake in Chrysler Holding to Cerberus, which will invest $7.4 billion in the automaker and its finance division. DaimlerChrysler will retain a 19.9 percent stake in the new company.