Americas Leveraged Finance Weekly: Primary Market Remains Muted Amid Select Refinancings and Cautious Demand; Secondary Trading Awaits Q3 Earnings

Overall activity picked up slightly in primary markets this week, with $19.5 billion of leveraged loans and $8.1 billion of high-yield bonds announced or priced this week. However, the majority of new deals were for refinancings, and half of leveraged loan announcements are expected to price in the coming weeks, kicking off a relatively cautious tone to start November. High-yield inflows accelerated this week to $76 million after an exceptionally slow previous week of $5 million, while inflow to loans remained moderate at $46 million, according to a report by Bank of America.

Meanwhile, activity in the primary has been predominantly “small refinancings in niche sectors,” said one high-yield investor this week, remarking on the lack of new issuance.

Notably, Energos paused its $2 billion high-yield bond and leveraged loan package after it struggled to gain traction, Octus reported this week. Though banks stopped engaging investors for feedback in recent weeks, investors said they are expecting document changes on the Barclays-led $500 million loan and Citi-led $1.5 billion bond.

One leveraged finance investor noted this week that they are surprised with how slow demand has been for recent deals, adding that although buy-side participants want paper, it’s not the “feeding frenzy” it was a few months ago.

Elsewhere, HNI launched a $500 million term loan B to partially finance its acquisition of Steelcase, a downsize from the expected $800 million loan, as reported earlier this fall. Commitments on the JPMorgan-led loan are due Nov. 19.

In addition, lottery operator Allwyn International’s $1.64 billion loan to finance its acquisition of PrizePicks was due Nov. 5 but has yet to price as of today. Inspire Brands meanwhile priced its $4.08 billion loan to reprice and extend existing debt today, a day later than the deadline with widened pricing at SOFR+250 bps.

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

In the tables and summaries below, generated with the assistance of AI, we recorded $27.5 billion of issuances closing or announced across 32 deals in the latest week.

Issuance volume year to date for leveraged loans and high-yield bonds is below:

Issuance by Use of Proceeds, Ex-Repricings

The following charts show issuance by use of proceeds for both loans and bonds but excluding repricings. Debt earmarked for leveraged buyouts and M&A have increased as a share of total loan issuance in September compared with the prior two months.

Pricing by Rating

The following charts detail average spread and coupon for loans and bonds, respectively, by rating band. Because of the limited activity of CCC rated issuance, only the months with issuance are shown.

Pricing by rating category is shown below:

Breakdown by Sector

Industrials led the way for new issuance across loans and bonds.

In the secondary market, MoneyGram’s $550 million loan due in 2030 traded down to the low-80s after news that Zelle, operated by Early Warning Services, plans to expand its platform to include cross-border money transfers, Octus reported this week.

In addition, traders flagged that bonds issued by Outbrain Inc., nka Teads Holdings, traded down to the 50s over the past week ahead of the company’s Nov. 6 third-quarter earnings release, Octus reported. The trade-off continues the digital advertiser’s downward trajectory, as the bonds began to fall from the 80s in March, when the market turned sour on the digital marketing space amid macro uncertainties and rising concerns about AI.

Elsewhere, iHeart’s bonds rallied this week on the news that the media company is in talks to license video podcasts with Netflix.

Top daily loan decliners and risers can be found in Octus’ Credit Cloud. A search for the largest bond decliners is HERE.

The LSTA Leveraged Loan Index was last indicated at 98.93, consistent with the week and slightly north of weeks prior. Average high-yield bond spreads sit at 313 bps, widening from last week.

Top daily loan decliners and risers can be found in Octus’ Credit Cloud. A search for the largest bond decliners is HERE.

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

• Cast & Crew LLC
• Xerox Holdings Corp.
• Canacol Energy
• Office Properties Income Trust
• GPS Hospitality Holdings Co. LLC
• Corus Entertainment Inc.
• Consolidated Energy

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.