Americas Leveraged Finance Weekly: Blockbuster M&A Deals See Strong Demand in Primary Market; EA Prices $18B Deal While Sealed Air Markets to Investor

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The primary market found its footing this week after billions of dollars in debt financing was sold off that is tied to highly anticipated LBO and M&A deals. While geopolitical and AI-related tensions have not entirely eased, leveraged finance participants are hopeful that the buy-side demand for deals this week instilled some confidence in the market after a turbulent month.

Octus tracked 13 leveraged loan deals and eight high-yield bond deals that either launched or priced in the latest week totaling $32 billion of principal.

In spite of the recent primary market volatility, Electronic Arts finalized pricing this week for its anticipated $18 billion-equivalent cross-border debt financing tied to its $55 billion leveraged buyout. The video game developer’s deal was more than 2x oversubscribed, gathering over $45 billion in demand from investors, Octus reported.

EA’s deal has been viewed as a catalyst transaction for the leveraged finance market to improve overall confidence in the market, sources said. The upsized $6.125 billion term loan B priced at SOFR+350 bps and 98.5 OID. The $2.875 billion senior secured notes priced at 7.25%, while the $2.5 billion senior unsecured notes came in at 8.75%.

Another long awaited deal in the market this week, Sealed Air launched approximately $2.25 billion of cross-border high-yield bonds as part of the financing for its $10.3 billion take-private by CD&R. Commitments for the total debt package are due Tuesday, March 31.

Sealed Air’s bond financing, which launched at deal size fully on reverse, comes alongside a $4.1 billion U.S. dollar-denominated term loan, Octus reported. The loan has garnered weaker demand, according to investors who have given mixed opinions on the sponsor and timing of Sealed Air’s deal.

“The loan market is particularly exposed to the current environment, given it’s more correlated with private credit and more exposed to software, which is under pressure,” said Ben Burton, global head of leveraged finance capital markets at Barclays, during a roundtable this week regarding recent challenges in the leveraged loan market.

“CLOs tend to behave in a very similar way – that creates a kind of ‘consensus trade’ dynamic. Right now, that consensus is about holding cash and being highly selective,” Burton added.

Elsewhere, Nexstar Media priced a roughly $6.9 billion debt package financing its acquisition of rival Tegna. The deal shifted to include more high-yield bonds after its term loan B struggled to price by its commitment deadline last week. The $3.39 billion of new senior secured notes priced at 6.5%, and the $1.725 billion of new senior notes priced at 7.25%.

Janus Henderson’s $2.6 billion term loan B was another M&A-related offering this week, financing the asset manager’s acquisition by Trian and General Catalyst. The loan priced at SOFR+275 bps and 99.5 OID, and despite a brief bidding war, the deal received strong investor demand, resulting in upsizing the loan with an accelerated commitment deadline.

Among refinancings currently in the market, sports AI company Stats Perform launched a $475 million term loan B to refinance existing credit facilities. The loan is coming at a notably wide price of SOFR+700 bps and 96.5 OID, with commitments due April 8.

Biopharma company Grifols launched a $1.73 billion and €500 million cross-border loan package this week to refinance existing debt. Price talk for the U.S. tranche is coming at SOFR+250 bps-275 bps and 99 OID. Meanwhile, Molycop priced a $700 million term loan B financing its $1.45 billion acquisition by a consortium formed by Tega Industries and Apollo. Revised pricing came in at SOFR+350 bps and 99 OID a day after commitments were originally due.

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

We recorded $32 billion of loans and bonds that were announced or priced in the last week, as shown in the tables and summaries below.

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. 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:

Electronic Arts’ pricing for its $18 billion debt financing deal included a deliberate new-issue discount to ensure a strong secondary performance upon breaking, Octus reported this week, which sources said could also boost broader market sentiment and help reopen the primary market for other issuers.

EA’s 7.25% 2033 notes were last quoted today at a price of 102.09 to yield 6.7%, while its 8.75% 2034 notes were last quoted at a price of 103.03 to yield 8.02%, according to MarketAxess. Its 2033 term loan B was last quoted at 99.25/99.59, according to Solve.

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 321 bps, tighter than last week, according to ICE BofA data. The LSTA Leveraged Loan Index was indicated today at 96.98, up slightly from last week.

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

• U.S. LBM

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.