Americas Leveraged Finance Weekly: Demand Stays Hot in Primary Market; Warner Bros. Loan Upsizes by Over $8B; Smiths Detection Launches Cross-Border Buyout Offering

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Primary Tracker
 

The primary market came off the long weekend hot, with issuers jumping to capitalize on continued supportive pricing conditions and deep investor demand. Although refinancing and repricing activity continued to dominate most of the market, this week also brought a notable pickup in M&A-related financings, and several large acquisition and bridge takeout deals drew strong interest and tightened pricing.

Leading the week’s activity was Warner Bros. Discovery’s cross-border term loan refinancing a portion of its bridge facility, which saw extraordinary demand and ultimately upsized by more than $8 billion to a final package of $13 billion and €1.717 billion term loan Bs. Final price talk on the dollar-denominated loan came in at SOFR+250 bps and 99.75 OID.

The refinancing of the media conglomerate’s $15 billion bridge facility represents one step in a broader financing process tied to its merger with Paramount, where debt financing discussions have begun. Paramount’s roughly $50 billion new takeout financing package is expected to begin premarketing in June, Octus reported this week, and early price talk on the $12 billion high-yield second lien bond tranches is circulating in the 8% area.

Another closely watched cross-border financing in the market this week was Smiths Detection’s £1.04 billion equivalent term loan B to fund CVC’s buyout of the security company. The deal is split evenly between euro- and dollar-denominated tranches, and the commitment deadline accelerated to June 2 as price talk tightened on the U.S. tranche to SOFR+275-300 bps and 99.75 OID.

Worthington Steel also came to market with an M&A-related offering, pricing a $1.4 billion leveraged loan and high-yield bond package to finance its $2.4 billion acquisition of German metals company Kloeckner & Co. After shifting the tranche sizes, the final debt package included a $700 million term loan B and $700 million of senior secured notes.

Among the steady stream of refinancings, digital imaging firm Shutterfly launched $1.15 billion of senior secured notes alongside a $500 million first lien term loan and a $225 million second lien term loan to refinance existing debt after efforts to refinance upcoming maturities via private credit failed earlier this spring. Commitments on the Barclays-led high-yield bond offering are due Monday, June 1.

Other refinancing and repricing deals this week included beverage company Refresco’s $2.67 billion and €1.97 billion of leveraged loans to amend and extend its 2029 term loans and packaging machinery company Pro Mach Group’s $2.54 billion term loan B to reprice debt due 2032. Restaurant chain Raising Cane’s was also in the market, with a $500 million term loan B to pay down revolver borrowings.

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, Mega Broadband’s term loan due 2027 was indicated at 80.25/83.25 earlier this week, down from the high 90s at the beginning of the month, Octus reported this week. An ad hoc group of term lenders to Mega Broadband is working with Milbank as legal advisor amid weak earnings, uncertainties around an investment by Cable One to fully own MBI and potential balance sheet maneuvers.

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 272 bps, tighter than last week, according to ICE BofA data. The LSTA Leveraged Loan Index was indicated at 97.2, down slightly from last week.

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

• Heritage Grocers Group
  
   
• American Bath
  
   
• Tungsten Automation Corp.
  
   
• Medical Solutions

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.