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Leveraged Finance Weekly: Loan Primary Busy With Repricings, Refinancings; Riskier-Rated Issuers Take Advantage of Open Primary
The primary market continues to be busy, with an onslaught of repricings and refinancings, as issuers seek to come to market ahead of an expected slowdown this month. $24.1 billion of loans priced this week, and Octus has identified at least $12 billion of loans that were announced and are expected to price in the coming weeks. Of loans that priced this week, almost half were to reprice existing loans, with the median spread tightening at 50 bps. Meanwhile, new bond activity slowed this week, with only $4.6 billion of issuance and $3.5 billion of other issues announced but yet to be priced as of publishing.
Market participants said this week that riskier-rated issuers aim to take advantage of an open window in the primary. Of notable primary activity, Vista-backed KnowBe4 priced a $1.46 billion first lien term loan due in July 2032, Octus reported this week. KnowBe4, along with First Brands, Finastra, C&S Grocers and Patterson are such examples of recent offerings with single-B or triple-C ratings in the market to either refinance debt or finance an acquisition.
Investors also highlighted this week that much of the new-money coming to market at this time is private credit debt moving over to the broadly syndicated loan market. For example, Vista-backed Duck Creek Technologies launched a $890 million first lien term loan and $125 million revolving credit facility this week to refinance its existing private credit debt, Octus reported. Other deals hitting the BSL market to refinance private credit debt include Finastra and BetaNXT.
In addition, a number of deals that either priced or launched this week were to fund dividends or other shareholder distributions, including SPX Flow, IFCO Systems and Atlas Air Worldwide, which all operate in the industrial sector. Liftoff Vungle, a technology company providing marketing and advertising services, launched a $1.855 billion seven-year loan that is expected to price next week and would refinance the company’s existing debt as well as pay a $280 million distribution to shareholders.
A chart of leveraged loans with commitments due this week can be found below:
Additionally, loans that have yet to price but are currently in the market are below:
A chart of high-yield bond issuance this week can be found below:
This week in the secondary market, investors said that loan shops are using the strength of the market to clean out their portfolios and offload unwanted credits.
One loan investor flagged that MoneyGram has been trading off in the secondary as a result of deportations that affect its immigrant customer base. The loan is trading in the low 90s, the investor added, about 9 points lower than where it was trading at the start of the year, according to Solve.
Others flagged that Leslie’s reported weak preliminary earnings this week, and its debt has been trading in the 50s.
In addition, Tronox’s term loans were lower by 8 points in the week following the company’s disappointing second-quarter results in which EBITDA declined year over year by 42%. The titanium dioxide maker warned of weaker demand across most of its end markets as well as increased competition.
On July 31, the LSTA Leveraged Loan Index was indicated at 99.04, down marginally from recent weeks.
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:
Octus Covenants’ legal analysts have completed the following analyses of the documentation for new loan transactions: KnowBe4, Digicel, AlixPartners, AssetMark Financial, Finastra Ltd., Ontic, Savage Enterprises, SPX Flow Inc. and Wash Multifamily Acquisition.
Octus’ Private Company Analysis team this past week released reports on companies including Duck Creek Technologies, Arden University and M2S Group.
Octus Fundamentals Coverage Weekly Update highlights new-issuer coverage in Fundamentals for the syndicated credit universe, alongside transcripts for syndication calls.
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