RLPC-Fed move fails to boost leveraged loans

NEW YORK, March 11 (Reuters) - The Federal Reserve's move on Tuesday to add up to $200 billion to the credit markets failed to spark much activity in leveraged loans, though the leveraged loan derivative index rallied, traders told Reuters Loan Pricing Corp.

While the move by the Fed is widely viewed as a positive for the credit markets, with equities and credit derivatives markets rallying on the news, buying interest failed to revive in many loans.

The loan derivative index, or LCDX, rallied 45 basis points to 92.45 on moderate volume, however, traders said.

The main problems facing the loan market, including an overhang of nearly $150 billion in unsold leveraged loans and a falling London interbank offered rate, remain firmly in place, one trader said. Declining Libor, while positive for inter-bank lending, has made loans even less attractive for buyers such as hedge funds.

"Anything that adds liquidity to the system will be good for loans in the long term," another trader noted. "The loan market ignored a lot of the sinking in other markets and is now largely ignoring it on the way back up."

Univision Communications' bank loan is relatively unchanged, with bids at 82.75 cents on the dollar. Charter Communications'(CHTR.O: Quote, Profile, Research) term loan is also unchanged, offered at 85.75, as the company works to syndicate an add-on term loan to pay down its revolver.

Alltel's loan is down about 0.25 cent to about 89.75 cents on the dollar, while TXU Corp.'s loan is off about 0.125 cent to 91.625 cents.

Meanwhile, the larger trend of sliding loan prices has continued over the past week. The average bid for all secondary loans fell to 86.35 cents on the dollar on Monday from 86.65 cents a week ago, according to RLPC data.

(Reporting by Caleb Frazier; editing by Dena Aubin)