Americas Leveraged Finance Weekly: December Starts Strong for Primary; Issuers Rush to Market Amid Open Window

The primary market kicked off December with a strong return this week, a sharp contrast to the previous weeks’ Thanksgiving malaise. New loan transactions reached their highest volume in months, exceeding $30 billion this week, market participants said. In total, Octus tracked $34.3 billion of leveraged loans and high-yield bonds that were either announced or priced in the week ended Dec. 4 across 42 deals.

Market participants emphasized that issuers were eager to come to the primary this week ahead of next week’s Opal conference, and the expected slowdown thereafter as the holidays inch closer.

Among notable activity this week, Carlyle-backed ManTech International is now planning to refinance its existing debt with private credit lenders after initially attempting to tap the broadly syndicated loan market in November, Octus reported.

The technology and cybersecurity contractor, which provides services to the U.S. government, launched roughly $2 billion of loans led by JPMorgan on Nov. 10, which were pulled from the market weeks later. Some sources noted that ManTech’s BSL deal was likely pulled as a result of the technical environment and substantial outflows in the loan market in recent months, while others pointed out that the government services sector has been particularly challenging.

Buy-siders have generally been pushing back on riskier deals in the market right now, said one high-yield investor this week who noted that buyers are being cautious about dicey deals especially given that few are ramping up at this point in the year.

Meanwhile, healthcare services firm Sevita relaunched a $1.25 billion term loan B and $1.25 billion secured notes this week after its $2.5 billion loan was pulled in October. The offering will be used to refinance existing debt and fund the acquisition of BrightSpring Health Services. Commitments on the Goldman Sachs-led loan and Morgan Stanley-led notes are due today, Friday, Dec. 5.

Elsewhere, TJC-backed Potters Industries launched a $625 million loan to fund an acquisition by Macquarie Asset Management. The Wells Fargo-led offering was one of the only leveraged buyout deals in the market this week.

Also in the market this week, fire protection services provider Pye Barker launched a $2.2 billion loan to refinance its unitranche debt due 2031.

For more information on potential deal activity, see Octus’ Deal Origination Pipeline.

In the tables and summaries below, generated with the assistance of AI, we recorded $34.3 billion of loans and bonds that were either announced or priced in the latest week.

Issuance volume year to date for leveraged loans and high-yield bonds is below:

Issuance by Use of Proceeds, Ex-Repricings

Issuance by use of proceeds for both loans and bonds but excluding repricings is shown in the charts below. Debt earmarked for leveraged buyouts and M&A has increased as a share of total loan issuance in September compared with the prior two months.

Pricing by Rating

Average spread and coupon for loans and bonds, respectively, by rating band are detailed in the charts below. Because of the limited activity of CCC rated issuance, only the months with issuance are shown.

Pricing by rating category is shown below:

Breakdown by Sector

Industrials, consumer discretionary and materials led the way for new issue announcements across loans and bonds.

In the secondary market, Alphia, a pet food manufacturer owned by PAI Partners, experienced a significant drop in its term loan following its third-quarter earnings report, which revealed a 28% decrease in EBITDA year over year, Octus reported this week. The term loan debt is now quoted in the mid-80s context, though few actual trades have occurred, sources noted.

Top daily loan decliners and risers can be found in Octus’ Credit Cloud. A search for the largest bond decliners is HERE.

Average high-yield bond spreads sit at 288 bps, slightly tighter than last week, according to ICE BofA data.

Moody’s Ratings and S&P Global Ratings downgraded the following companies to CCC this week:

• CSC ServiceWorks
• Consolidated Energy

Octus Covenants’ analyses of the documentation for new loan transactions can be found HERE.

Octus’ Private Company Analysis recent reports can be found HERE.

Octus Fundamentals Coverage Weekly Update highlights new-issuer coverage in Fundamentals for the syndicated credit universe, alongside transcripts for syndication calls.