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Duck Creek Technologies Prices Leveraged Loan to Refinance Private Credit Debt With Strong Investor Demand
Duck Creek Technologies, a Vista Equity-backed insurance software developer, is expected to generate roughly $25 million in pro forma interest expense savings by refinancing its existing private credit loan in the broadly syndicated loan market, according to sources.
Final pricing on Duck Creek’s $890 million first lien term loan landed at SOFR+325 bps and 99.75 OID, sources said. That price represents a reduction of about 375 bps from its private credit loan, which was priced in the neighborhood of SOFR+700 bps, according to Octus reporting.
A source close to Duck Creek’s deal noted that strong demand from buy-side participants allowed the issuer to replace its structure of first and second lien debt with only first lien debt.
JPMorgan led Duck Creek’s offering, which also included a $125 million revolving credit facility. The first lien loan will mature in 2032, and the revolver will mature in 2030.
Apollo, BlackRock, Blue Owl and Golub are all managers associated with business development companies that hold Duck Creek Technologies’ first lien debt due 2029, which priced at SOFR+750 bps, according to Octus’ BDC Database.
The loan is among a number of recent deals that have hit the primary market to refinance private credit debt in the past few months, including Vista Equity-backed Finastra and Motive Partners and Clearlake Capital-backed BetaNXT.
Duck Creek Technologies, a Boston-based intelligence services provider for the insurance industry, was acquired by Vista Equity Partners in 2023 for $2.6 billion.
S&P Global Ratings assigned a B- issuer credit rating to Duck Creek and to its new first lien senior secured facilities. The ratings agency said that its stable outlook on Duck Creek reflects “the stickiness and mission criticality of its platform despite its small scale and recent history of negative cash flow,” which will enable the company’s revenue growth and positive free operating cash flow over the next year.
Octus’ primary analysis of Duck Creek’s deal can be found HERE. A list of CLO holders for Duck Creek can be found in Octus’ CLO Database HERE.
Vista Equity Partners declined to comment. JPMorgan and Duck Creek Technologies did not respond to requests for comment.
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