Americas Leveraged Finance Weekly: Primary Market Issuers Chip Away at Hung Debt Amid Broad Investor Demand

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The primary leveraged finance market saw another busy week dominated by refinancings, as issuers look to capitalize on favorable terms and address tricky credits for previously hung deals before summer vacations ramp up next month.

“The market feels surprisingly resilient and constructive,” Stephen Burgess, head of leveraged finance at U.S. Bank, told Octus.

“One sign of a market’s health is the ability to finance across the rating spectrum, and demand is currently available for both the high-quality BB names and the CCC names. It’s not just a haves or have-nots market; there are investors for both types,” Burgess added.

Growing investor appetite for riskier-rated credit has also reopened the market for financings addressing previously hung debt, Octus reported this week. One example is a Barclays-led $400 million leveraged loan to pay down hung debt tied to KPS Capital Partners’ purchase of Ketjen. Price talk is coming at SOFR+475 bps and 92 to 93 OID with commitments due Wednesday, July 1.

Even with issuance active, one leveraged loan investor said the forward pipeline appears relatively light outside of additional repricings and refinancings addressing upcoming maturities. Blackstone-owned Ancestry is preparing to launch an offering imminently via Bank of America to refinance its existing 2027 term loan B and potentially take out its 2028 secured and unsecured notes, Octus reported this week.

Outside of refinancings, a $600 million high-yield bond by Figure Technology Solutions to help finance its acquisition of Kiavi is expected to launch as soon as next week, Octus reported.

Among transactions that priced this week, Castrol finalized its $3.75 billion-equivalent debt financing package backing Stonepeak’s acquisition of a majority interest in the oil lubricant brand. The $1.75 billion U.S. tranche priced tighter at SOFR+250 bps and 99.5 OID, while the $500 million senior secured notes tranche which launched this week priced at 6.125%.

Meanwhile, Amex Global Business Travel tightened terms for its $1.5 billion loan this week to SOFR+400 bps and 99.5 OID. The financing will support Long Lake’s acquisition, alongside a $1 billion senior secured bond launched this week at price talk of 7.75% to 8%. Yondr Group also priced $715 million senior secured notes this week at 6.875% to finance data center construction.

Other notable refinancings this week include Sound Inpatient Physicians’ $960 million leveraged loan refinancing its debt two years post-liability management exercise, coming at wider price talk of SOFR+500 bps and 98.5 OID. Culligan also finalized a $4.13 billion tranche as part of a dual-currency offering to refinance existing debt.

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 June 11 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 as of June 11 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, Symplr Software’s first lien term loan due December 2027 was indicated this week at 65/66, down from 70/72 three months ago, following its first-quarter adjusted EBITDA declining 9.4% year over year to $58.4 million and revenue declining 1% to $128.7 million, Octus reported.

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 276 bps, wider than last week, according to ICE BofA data. The LSTA Leveraged Loan Index was indicated at 96.43, down slightly from last week.

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

• AHF Products
   
• Wilsonart
   
• WestJet
   
• Perficient (Plano HoldCo Inc.)
   

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.