Americas Leveraged Finance Weekly: Primary Market Issuance Slows Ahead of Easter Weekend; Sealed Air Shifts Debt Package After Buy-Side Struggles

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The primary market was mostly quiet during the short week ahead of the long Easter holiday weekend, with markets closed tomorrow for Good Friday.

Issuance was scarce this week as continued rate volatility driven by developments in the Middle East complicated deal pricing across sectors. With geopolitical conditions rapidly changing, one high-yield bond investor said market participants are struggling to account for risk in certain deals’ pricing, making some investors hesitant to participate in new issuance.

Sealed Air’s highly anticipated financing stood out as one of the lone deals in the primary market this week, as it faced a tumultuous process to price its $7.15 billion cross-border debt package this week to finance CD&R’s take-private of the bubble wrap maker.

The multi-tranche leveraged loan and high-yield bond offering for Sealed Air underwent numerous pricing and documentation revisions this week due to the $4.7 billion cross-border loan facing lackluster buy-side demand. Lead banks ultimately dropped the loan’s OID, added lender protections and shifted $500 million from the loan to upsize the U.S. secured notes to $1.85 billion, a day after commitments were due. Final pricing on the U.S. dollar loan tranche came in at SOFR+400 bps and 95 OID, alongside 8.5% for the U.S. secured notes and 10.5% for the unsecured notes.

While the primary debt financing packages have now priced for Sealed Air and Electronic Arts, both backing anticipated M&A and LBO deals, leveraged finance participants now await the deal pipeline to fill up for the year ahead. Yet market volatility stemming from AI-induced fears on the software sector and recent geopolitical issues have put a bit of a damper on dealmaking, sources say, as many participants are still in a “wait and see” mode to see how dynamics play out.

Among a handful of refinancings this week, biopharmaceutical company Grifols priced its cross-border $3.4 billion-equivalent leveraged loan package to refinance existing debt. Both the U.S. and euro tranches were upsized, with tightened final pricing for $2 billion term loan B coming at SOFR+250 bps and 99.25 OID.

Elsewhere, commitments were due this week for electric generating facility CPV Three Rivers’ $750 million term loan B to refinance debt and fund a shareholder distribution, which priced at SOFR+275 bps and 99.5 OID.

Meanwhile, Two Kings Casino launched a $345 million fungible add-on to its existing term loan B to finance a new construction and pay a distribution to the Catawba Indian Nation. Commitments on the loan are due today, April 2, with price talk coming at SOFR+425 bps.

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

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. For year-over-year comparisons, Octus provides data for the last 14 months.

Pricing by Rating

Average spreads and coupons for loans and bonds, respectively, by ratings 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 ratings category is shown below:

PLZ Corp. has told its lenders it is seeking to refinance its existing debt through private credit, Octus reported this week. The PPC-backed maker of spray products has a $100 million revolving credit facility that expires April 30 and more than $1 billion of first lien term loans due Aug. 3.

The $644 million SOFR+375 bps first lien term, due Aug. 3, was indicated Tuesday, March 31, at 97/96, up from 90/92 on March 23, while the $400 million SOFR+375 bps first lien term loan, also due Aug. 3, was indicated March 31 at 97/96, up from 90/92 over the same time period, according to IHS Markit.

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 316 bps, tighter than last week, according to ICE BofA data. The LSTA Leveraged Loan Index was indicated today at 96.83, down slightly from last week.

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

• Planet Fitness; and
• Oldcastle BuildingEnvelope Inc.

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.