Americas Leveraged Finance Weekly: New-Money Deals Lead Issuance as Resilient Demand Supports M&A Financings 

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New-money issuance took the lead in the leveraged finance market this week, as a steady stream of acquisition-related financings kept the calendar active amid resilient investor demand.

At least $8 billion of leveraged loans and high-yield bonds launched across 11 deals so far this week, according to Octus data. Of these, $5.7 billion across seven transactions represented new-money issuance, including M&A financings, recapitalizations and general corporate purposes.

Investor appetite has remained strong amid a wave of leveraged buyout financings following Labor Day, according to Ben Burton, Barclays’ head of global fixed income syndicate.

“The demand profile of the market has been very resilient and we’ve seen high degrees of oversubscription, which has enabled pricing to be tightened,” Burton said at a media roundtable last week. “We’ve seen the market digest the LBO supply really without issue post-Labor Day.”

Market participants are now shifting their attention away from concerns over supply and toward the trajectory of interest rates, according to Burton, who noted that already tight credit spreads leave limited room for further compression in a rising-rate environment.

Meanwhile, the geographic mix of leveraged finance activity is becoming more balanced after deal flow was concentrated in Europe for much of the past two quarters, Burton said, pointing to attractive new underwriting opportunities in the United States and Asia.

Among the largest acquisition-related financings in the market this week was a €4.7 billion-equivalent term loan B package backing Bain Capital’s acquisition of a majority stake in Everllence SE from Volkswagen Group.

The seven-year financing is split evenly between euro- and dollar-denominated tranches, with price talk at Euribor+350 to 375 bps and SOFR+350 to 375 bps, both at 99.5 OID. Commitments for the deal, led by Goldman Sachs, UBS and BNP Paribas on the U.S. side, are due Tuesday, Oct. 13.

Flow Control Holdings also launched a $1.05 billion first lien term loan to finance Blackstone’s purchase of a majority stake in the company from Audax Private Equity. The seven-year loan, led by UBS, is talked at SOFR+375 to 400 bps and 99 OID, with commitments due Thursday, Oct. 15.

Attindas Hygiene Partners also entered the market with an $855 million first lien term loan B to fund its €245 million acquisition of French hygiene products manufacturer Activ Medical Disposable and refinance existing debt.

Meanwhile, H.B. Fuller priced its $969 million extended first lien term loan B and a $600 million incremental term loan B at SOFR+175 bps and 99.5 OID for new-money lenders and 99.75 OID for rolling lenders.

Apex Service Partners revised pricing on its $2 billion term loan B to SOFR+375 bps from initial talk of SOFR+350 to 375 bps. The company also removed a 25-bps margin step-down tied to leverage.

Looking ahead, the digital infrastructure sector is set to remain in focus, with Volta Infrastructure Holdings expected to price its $5 billion financing package next week. The JPMorgan-led financing comprises a $1.3 billion term loan C and a $3.71 billion GPU term loan, talked at SOFR+625 to 650 bps and 97 to 98 OID. Commitments are due Wednesday, Oct. 14.

Despite tight spreads, the outlook for issuance remains constructive provided interest rates remain stable, according to Burton.

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

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Issuance by Use of Proceeds, Ex-Repricings

Issuance by use of proceeds for both loans and bonds, but excluding repricings as of Oct. 8, 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. 2 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:
 

 

 

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 315 bps, according to ICE BofA data. The Loan Syndications and Trading Association Leveraged Loan Index was indicated at 97.

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

• Angi Inc.
• Advancing Eyecare
• CHC Group Ltd.
• Patterson Companies
• Syniverse Holdings Inc.
• Champion Iron Ltd.
• Syniverse Corp.
• BakeMark
• American Trailer World Corp.
• Paramount Skydance Corp.
• Warner Bros. Discovery
• Xplore 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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