EMEA Leveraged Finance Weekly: Recordati Prices Jumbo €6B-Equivalent LBO Debt Package; Bending Spoons Prices Upsized Dual-Currency Deal Despite AI Concerns; Loan Supply Thins Out

 

While deal count was thin, European primary markets were back in action this week thanks to a handful of jumbo deals in the high-yield space. This included a €6.05 billion-equivalent deal by Italian pharmaceutical group Recordati, as well as an upsized dual-currency issuance from digital business operator Bending Spoons.

By contrast, the leveraged loan market was much quieter, with only two deals out since Monday. These came from software provider Personal & Informatik and telecom and energy infrastructure services group Infra Group, both launching fungible add-ons to existing term loan Bs.

Tensions were higher on a macroeconomic level, after dual interest rate and energy shocks hit leveraged finance markets. The European Central Bank kept its three key interest rates unchanged on Thursday Oct. 29, noting continued upside risk to inflation from rising energy prices. ECB President Christine Lagarde also announced her premature resignation, scheduled to now take effect on Feb. 7, 2027.

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In the United Kingdom, markets turned their attention to Chancellor John Healey’s debut budget. The Debt Management Office raised planned gilt issuance for 2026/27 by £4.4 billion to £250.6 billion, while cutting long-dated gilt sales by £6.9 billion to £15.5 billion. Twenty and 30-year yields fell to one-month lows after the remit was published. Ten-year yields fell about 2 bps to 5.32% on budget day, then dipped below 5.3% on Thursday, their lowest in more than a month.

Recordati Prices Popular Jumbo Dual-Currency Debt Package to Support Acquisition

Italian specialty pharmaceutical group Recordati priced its dual-currency €6.05 billion-equivalent debt package, attracting investors who praised the company’s solid performance in comparison with peers.

The deal priced as follows: the €2.45 billion seven-year floating rate senior secured notes at Euribor+387.5 bps; the €1.25 billion five-year fixed rate SSNs at 6.375%; the €750 million seven-year SSNs at 6.875%; the $950 million five-year SSNs at 7.625%; and the $840 million seven-year SSNs at 7.875%.

Earlier in the week, investors speaking to Octus concurred that market participants would at least have to look at, if not play, Recordati’s latest issuance. According to one buy-sider, the bonds will represent a big part of the index, so it would be advantageous for managers to own them.

Investors liked the business as well as the bonds, praising good cash generation and limited capital expenditures. One buy-sider said that Recordati had seen good growth in drugs for rare diseases over the last few years, but also in older products, where sales have remained steady.

A second buy-sider agreed, adding that while management picks the right assets and monetizes them well, even off-patent products are very stable, with legacy products performing much better than Cheplapharm’s. Generally speaking, buy-siders thought Recordati was a more attractive investment than Cheplapharm, with less execution risk thanks to some in-house manufacturing and a more effective formula to offset patent losses.

Octus Covenants’ legal analysts completed an updated analysis based on Recordati’s revised terms posting memo. The Octus Bond Score improved to 4.01 from 4.29, which corresponds to a “Weak” rating.

Our proprietary bond score evaluates issuer flexibilities and noteholder protections in high-yield bond documents. It ranges from 1 to 5, with 5 being the least protective for holders and 1 being the most protective.

Further Octus analysis is available HERE.

Bending Spoons Prices €500M and $1.25B SSNs Due 2032 As Enthusiasm Beats AI Concerns

Italian digital business operator Bending Spoons finalized a dual-currency senior secured note offering this week, pricing a €500 million senior secured note euro tranche at 8.625%, and a $1.25 billion SSN dollar tranche at 9.625%. Both tranches are due January 2032.

The deal was well oversubscribed, despite hesitation from some investors earlier in the week, who were concerned that software-focused products were at risk of being overtaken by artificial intelligence. One buy-side said that while the yield was enticing, it did not outweigh the risk of holding the bonds, calling the issuance a “ticking time bomb”.

A second investor described the deal as an “inverse SoftBank”, referencing the group’s mammoth cross-border deal backing its acquisition of an equity stake in OpenAI. SoftBank is a bet that AI valuations hold up and that AI-related assets can be monetized, whereas the Bending Spoons deal is the opposite, a bet that traditional software will remain relevant, continued the second buy-sider.

Nevertheless, a few sources were more optimistic. Investors told Octus colleagues across the pond that order books on the dollar tranche were heavily oversubscribed, at roughly $8 billion in size, or about 6x over, with it launching heavily on reverse.

The Octus Bond Score for Bending Spoons’ new issuance is 3.76, which corresponds to a “Weak” rating. Further Octus analysis is available HERE and HERE.

Pearl Petroleum Prices $500M SSNs Due 2031 at 10.375%, Tightened From IPT of 10.5%

Kurdistan-focused natural gas producer Pearl Petroleum priced its $500 million Nordic SSNs due 2031 at 10.375%, tightened from final guidance of between 10.375% and 10.5%, and IPT of 10.5%.

Nevertheless, some investors lacked enthusiasm for the issuance, and were reluctant to participate after IPT on price and oil risk. One buy-sider who was negative on the credit and said the bonds only looked good because of recent oil prices. They reasoned that when assuming lower oil prices, the return would not be attractive enough across a full cycle to justify playing the deal.

A second buy-sider said they had sold their existing bonds at “a good price” after seeing the most recent issue. He added that once you subtract hedging costs, the headline yield shrinks and what’s left fails to compensate for the risks associated with the name.

One broker was a little more optimistic about the company looking forward, and noted that existing bond holders had done very well, with the old notes paying a big coupon and having been repaid well above par.

Further Octus analysis is available HERE.

P&I Personal & Informatik, Infra Group In Market With Fungible Add-Ons to Existing TLBs

Germany-headquartered cloud HR software provider P&I Personal & Informatik, backed by private equity sponsor Hg, launched a €320 million fungible add-on to its euro TLB on Oct. 26, taking the facility size to €1.525 billion on a pro forma basis. Margin guidance is Euribor+375 bps when senior secured net leverage is above 5.3x. It can ratchet down to either E+350 bps when leverage is between 4.8x-5.3x, or E+325 bps when leverage is 4.8x or below, with an OID of 98-98.5 and a maturity of May 2032, in line with the existing loan.

Proceeds will partially repay HoldCo PIK notes and fund a shareholder distribution. Goldman Sachs is sole bookrunner. Moody’s and S&P rate the company B3 and B, unchanged from pre-transaction. Commitments are due at 12 p.m. UKT on Oct. 30.

Belgium-headquartered telecom and energy infrastructure services group Infra Group priced a €250 million fungible add-on to its TLB on Oct. 27, via RBC. The loan, due Sept. 2030, carries a margin of E+300 bps and has a 0% floor. Proceeds will be used to support acquisitions, pre-fund ongoing projects, and repay revolving credit facility drawings.
 

 

 

 

 

 

 

 

 

 

 

 

 

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