Americas Leveraged Finance Weekly: Primary Market Spooked as Issuance Slows Ahead of Midterms Next Week

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Primary Tracker
 

The primary market was haunted by a host of uncertainties in the final week of October, as leveraged loan and high-yield bond issuance slowed amid a cautious macro backdrop.

The quieter calendar of less than a dozen loans and bonds this week comes ahead of the midterm elections next Tuesday, Nov. 3, which market participants say will hopefully lead to an open window for issuance. While dispersion and bifurcation remain prevalent in the market, software issuance is expected to pick up in the coming weeks, according to a leveraged finance banker who said these deals will provide an important test of risk appetite and help restore some confidence to the market.

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Even with subdued issuance, the limited deals in the market continued to find strong demand. Italian technology conglomerate Bending Spoons finalized its $1.8 billion dollar-equivalent cross-border high-yield bond, including an upsized $1.25 billion five-year senior secured note priced at 9.625% and a €500 million senior secured note priced at 8.625%. The deal’s dollar tranche was heavily oversubscribed at roughly $8 billion in size, or about 6x over.

Much of the activity in the loan market this week continued to support acquisition-related financings, which is a trend that has shown up throughout October. Hanger, an orthotic and prosthetic patient care service company, launched a $1.19 billion loan to fund its acquisition of Numotion, alongside $325 million of preferred equity. Price talk is coming at SOFR+375 bps-400 bps and 98.5-99 OID, with commitments due Thursday, Nov. 5.

Canadian fintech company Moneris also launched a $660 million USD loan and a privately placed $250 million-equivalent CAD loan to support Francisco Partners’ acquisition of the company.

Elsewhere, Morgan Stanley is beginning to premarket a $2.75 billion loan backing The Baldwin Group’s $7.7 billion take-private by Sequence Holdings and tech billionaire Michael Dell’s family office DFO Management, Octus reported. The loan for the Tampa, Fla.-based insurance broker is being offered to prospective investors in the mid-SOFR+300 bps area, according to sources.

Meanwhile, the AI infrastructure buildout has slowed further as the market digests the continuing volatility. A $15 billion debt package for Anthropic-tied Nexus Data Centers was postponed amid a Texas moratorium on data center permits and ongoing market scrutiny of AI infrastructure debt, Octus reported this week.

The first tranche of Nexus’ $15 billion bridge loan is now projected to launch as early as January 2027 and is expected to be roughly $5 billion to $7 billion of high-yield bonds. The deal joins a string of AI-related high-yield bond deals that are stalled in the pipeline as market worries mount over AI debt exposure to local regulations, construction delays and rising interest rates.

With the end of the year approaching, numerous jumbo debt financings are joining the growing pipeline into next year to finance take-private acquisitions. Thrive Holdings is looking to raise a roughly $9.6 billion debt financing package from banks to support its $15.3 billion take-private acquisition of home security company ADT, Octus reported this week.

The broadly syndicated loan market is Thrive Holdings’ preferred financing route, but is also considering a record-breaking private credit package with Apollo Global Management. The proposed bank financing package would comprise of a $4.35 billion term loan, a $2.7 billion delayed-draw term loan, an additional $1.9 billion loan tranche and a $700 million revolving credit facility.

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, as of Oct. 30, is shown in the charts below. For year-over-year comparisons, Octus provides data for the past 14 months.
 

 

Pricing by Rating

Average spreads and coupons for loans and bonds, respectively, by ratings band as of Oct. 30 are shown 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:
 

 

 

The technology market selloff accelerated last week, driven by data center and AI infrastructure credits, Octus reported this week.

On the week, a weighted average price index of select sub-investment-grade dollar-denominated data center and AI infrastructure bonds and loans led the decline, falling 2.5%. The selloff in software credits has been more broad based and largely followed more of a risk-off sell-down with lower-rated bonds and loans seeing greater declines.

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 326 bps, according to ICE BofA data. The Loan Syndications and Trading Association Leveraged Loan Index was indicated at 96.94.

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

• HS Midco Inc.
• Cogent Communications Holdings Inc.
• Whirlpool Corp.
• Qlik Technologies Inc.
   

Octus Covenants’ analyses of the documentation for new loan transactions are HERE.

Octus’ Private Company Analysis recent reports are HERE.

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

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