Americas Leveraged Finance Weekly: Primary Market Deal Flow Picks Up as Geopolitical Fears Wane; Yahoo!, BASF Coatings Deals on Forward Pipeline 

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The primary market showed signs of life this week, with leveraged loan and high-yield bond activity picking up as leveraged finance participant sentiment improved on growing expectations that the Iran conflict could soon wind down.

The market feels more stable, participants said this week, giving issuers greater confidence to launch deals after several weeks of limited new issuance.

“When things get choppy, borrowers can step to the sidelines, and markets tend to clean up quickly,” Meghan Graper, global head of debt capital markets at Barclays, said during a recent roundtable. “There’s a strong technical underpinning driven by demand, combined with relatively contained funding needs. The M&A backlog continues to build, and that remains the key upside driver for issuance.”

Still, others cautioned that this week’s burst of deal activity may be temporary due to delayed deals rather than a sustained reopening, with issuers continuing to gauge conditions before fully committing to new deals in the forward pipeline.

As issuers begin to revisit sidelined transactions and test investor demand, BASF Coatings is preparing to launch its €4.5 billion cross-border leveraged loan and high-yield bond package imminently, with Wells Fargo leading the U.S. dollar bond tranche and Goldman Sachs leading the USD loan tranche, Octus reported this week.

BASF Coatings’ deal, which will also include euro-denominated debt, backing Caryle’s €7.7 billion acquisition has been premarketing for the past two weeks with an order book building. Sources said the banks were waiting on audited financial statements to be reported before launching.

Elsewhere in the forward pipeline, Yahoo! is preparing to launch a $1.6 billion refinancing debt package via RBC as early as next week, Octus reported. Feedback on the web portal company’s offering was due by today, Friday, April 17, sources said, with the structure expected to include a $1.1 billion leveraged loan and a $500 million noncall-one high-yield bond.

Out of several energy deals in the market this week, Traverse Midstream launched a $1.1 billion leveraged loan to partially fund ePointZero’s $2.25 billion acquisition. Price talk on talk on the term loan B is coming at SOFR+225 bps-250 bps and 99.5 OID, with the commitment deadline accelerated to Monday, April 20. Energy issuance has continued to see solid demand even amid market volatility tied to the Iran war as the sector is relatively insulated from increased oil prices, participants said.

U.K-based cybersecurity company Sophos is gauging interest on a private credit solution to its nearly $2.6 billion in senior secured debt maturing next year, Octus reported this week. Talks of a potential deal are in early stages, and the Thoma Bravo-backed company may still opt to refinance with existing lenders in the primary market.

Specialty chemicals company Archroma’s $846 million-equivalent leveraged loan offering to refinance existing debt passed a 95% minimum threshold this week. The deadline for the cross-border offering, which launched earlier this month, was extended to Friday, April 24, to accommodate review of document changes.

Meanwhile, global freight forwarder AIT Worldwide launched a $1.6 billion leveraged loan this week to fund its acquisition by Greenbriar Equity Group, alongside $500 million of unsecured debt and RCF. Commitments on AIT’s loan are due Thursday, April 23, with price talk coming at SOFR+400 bps-425 bps and 98.5-99 OID.

Refinancing deals in the primary market this week included Edelman Financial Engines’ $2.715 billion leveraged loan and Tory Burch’s $700 million leveraged loan, which will also be used to fund an ownership stake repurchase. Sotheby’s also launched a $825 million senior secured bond to refinance debt due October 2027, with over $1 billion in the books as of earlier this week.

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 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:

In the secondary market, price indications of Tungsten Automation’s more than $1.3 billion term loans due 2029 have fallen from about the mid-80s at the beginning of the year to the low 60s earlier this week as investors analyze AI risk for software companies, Octus reported.

Tungsten’s term lenders have consulted with Gibson Dunn as legal advisor about debt documents as the workflow automation provider faces elevated leverage and liquidity constraints as well as a revolver maturity in 2027.

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 286 bps, tighter than last week, according to ICE BofA data. The LSTA Leveraged Loan Index was indicated today at 97.1, up slightly from last week.

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

• RealTruck
• GrubHub
• Torrid Holdings

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.