Leveraged Finance Weekly: Primary Market Makes a Strong Return From Holiday

The primary market was active this week, with several sizable deals launching or preparing to launch while $11 billion of loans and $6.4 billion of bonds priced. Inflows to loans this week were the greatest in five months, at $1.35 billion, according to a report by Bank of America. Inflows to high yield, meanwhile, waned to $530 million from $1.17 billion.

“The market has adjusted to being really open one day, then so-so the next,” said a leveraged finance banker said this week about the ebbs and flows of the primary market this summer.

A high-yield bond investor this week similarly noted that the days when the primary market is open, deals are getting roughly 5x oversubscribed, even for some riskier-rated credits, speaking to the high demand from buyside participants for new issues.

Among notable primary activity this week, a $2.25 billion-equivalent leveraged loan – with tranches denominated in U.S. dollars, euros and British pounds – financing Sycamore Partners’ acquisition of Walgreens’ Boots Group is being premarketed to investors and is expected to launch imminently, Octus reported this week. The debt financing package, which includes a $2 billion high-yield bond, Octus reported, is expected to launch in July, following the special shareholder meeting to approve the Walgreens buyout scheduled for today, according to sources.

In addition, CEC Entertainment, operator of the Chuck E. Cheese franchise, is looking to potentially refinance its senior secured notes due in 2026 with private credit lenders, Octus reported this week. The loan is being offered to some of the company’s existing lenders, sources said, which include Monarch Alternative Capital and JMB Capital Partners. Still, sources cautioned that the deal is subject to change.

Meanwhile, Nissan Motor Co. Ltd. launched and priced a $4 billion offering of senior unsecured dollar- and euro-denominated notes, alongside 200 billion Japanese yen ($1.4 billion) convertible bonds, according to an Octus Primary Analysis this week.

Elsewhere, Butterfly Equity-owned Actus Nutrition has priced a $1.12 billion term loan to refinance its existing bank loans and second lien term loan, Octus reported this week. The loan was led by JPMorgan and priced at SOFR+450 bps, with 97.5 OID. Meanwhile, HighPeak Energy downsized its senior unsecured notes offering to $700 million and widened price talk to 11.5% yield, after the deal has struggled to price, sources said this week.

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, Octus’ Primary Analysis featured Gray Media’s offering of $900 million of B3/CCC seven-year second lien notes, which priced at 9.625% following initial price talk of 9.75% to 10%. The new notes at price talk offered a meaningful premium to the existing notes outstanding and rank lower in the Gray capital structure.

On July 10, the LSTA Leveraged Loan Index was indicated at 98.92, a new high for the summer.

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

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

• Everise
• Cubic Corp.
• Saks Global Enterprises
• RSA Security

In addition, S&P downgraded Thrasio to D.

Octus Covenants’ legal analysts have completed the following analyses of the documentation for new loan transactions: 1-800 contacts, Avis, Buyer’s Edge, DaVita, Flynn Restaurant Group, Goosehead Insurance, Kidde Global Solutions and Priority Technology.

Octus’ Private Company Analysis team this past week released reports on companies including Osaic Wealth, Froneri, KronosNet and Del Monte Foods.

Octus Fundamentals Coverage Weekly Update highlights new issuer coverage in Fundamentals for the syndicated credit universe, alongside transcripts for syndication calls.