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Primary Tracker
Activity in the primary market remained subdued this week as midterm election results and mounting concerns over AI-related debt added to an already cautious backdrop for leveraged loan and high-yield bond issuance. While a handful of M&A-related transactions provided some activity, the broader market remained quiet as investors weighed the implications of tighter regulation and growing scrutiny of the debt financing the AI buildout.
The Democratic sweep in the midterm elections has reignited concerns that data centers could face tighter regulation, potentially complicating the outlook for AI infrastructure financing. Those fears have dampened hopes for a resurgence in AI-related bond and loan issuance through year-end, market participants say, and have begun weighing on existing debt in the secondary market.
That pressure was on display Thursday, when a roughly $500 million bid wanted in competition, or BWIC, launched consisting entirely of a dozen first lien data center loans, Octus reported. The package, due Nov. 19, includes loans tied to Oracle, Blackstone-backed QTS, Vantage Data Centers and Edged Compute projects, many of which face growing risk of moratoriums, tighter regulations and reduced tax incentives.
The concerns surrounding AI financing add to a broader period of volatility in credit markets, although many market participants maintain a constructive outlook on the strength of the market.
“Over the better part of the past month and a half, we’ve definitely hit a pocket of volatility,” said Adam Schauer, portfolio manager on Barings’ high-yield team.
“Generally speaking, market fundamentals remain healthy, aside from a few idiosyncratic situations. We aren’t necessarily seeing any broader issues across the market, and this bout of volatility feels like a healthy reset,” Schauer added.
Despite the more cautious backdrop, M&A activity continued to generate activity in the market this week. Insurance broker The Baldwin Group came to market with a $2 billion loan and $300 million delayed-draw term loan to finance the $7.7 billion take-private by Sequence Holdings and tech billionaire Michael Dell’s family office DFO Management. The loan is offered at SOFR+350 bps and 99 OID, with commitments due Nov. 12.
Moneris widened final terms today on its $600 million loan to SOFR+475 bps and 98 OID after the deal passed its original Tuesday, Nov. 3, deadline. The loan, alongside a privately placed $250 million-equivalent Canadian dollar loan, will finance Francisco Partners’ acquisition of the company. Orthotic and prosthetic company Hanger also finalized terms this week for its $1.19 billion incremental loan at SOFR+400 bps and 98 OID, which will fund its acquisition of Numotion.
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Outside of M&A financing, software borrowers are also beginning to reemerge in the bond market, offering an early indication of how issuers in a sector that has faced heightened scrutiny are testing investor appetite. Cloud Software Group came to market with a $2 billion bond to partially refinance its 2029 debt. The notes priced at 10%, wider than the initial high-9% area, and sources say the deal was 3x oversubscribed.
Cloud Software is one of several issuers to price deals since fears around software disintermediation arose earlier this year, with other companies in the sector beginning to gauge investor interest in software. KKR-backed Internet Brands is expected to launch a roughly $1.5 billion high-yield bond via RBC to refinance its 2028 and 2029 debt in the coming weeks, Octus reported, with reverse inquiries in the 10.5% to 11% pricing range.
Among other anticipated issuance, Blackstone-backed physician staffing company TeamHealth is working on a multibillion-dollar capital structure refinancing to address its 2028 debt, Octus reported this week. The deal, which is expected to consist of Barclays-led leveraged loans and JPMorgan-led high-yield bonds, was sidelined after premarketing in recent months.
“The market was anticipating a high level of issuance in the second half of this year, but we just haven’t seen it amid the recent market volatility,” Schauer said. “If volatility subsides and the rates market behaves, it could be a very busy next few weeks.”
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:
Acrisure’s capital structure traded up after its management adopted a positive tone when discussing potential liquidity and deleveraging options during the third-quarter 2026 earnings call Nov. 2, Octus reported.
Acrisure’s 7.5% secured notes due 2030 traded up 2.9 points this week, up 5 points this month, last trading at 86, according to TRACE. The 8.25% unsecured notes due 2029 changed hands at 82.3, up 4.2 points this week and 6.3 points this month. The rest of the capital structure also traded up post-earnings.
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 348 bps, according to ICE BofA data. The Loan Syndications and Trading Association Leveraged Loan Index was indicated at 97.29.
Moody’s Ratings and S&P Global Ratings downgraded the following companies this week:
- FMC Corp.
- Mercer International Inc.
- Cogeco Communications
- Dave & Buster’s
- Symplr Software Intermediate Holdings Inc.
- Mattamy Homes
- FINThrive Software Intermediate Holdings Inc
- Gulfside Supply
- Goodyear Tire & Rubber Co.
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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