Leveraged Finance Weekly: Primary Market Quiets Ahead of Independence Day; Walgreens’ Boots Group and Patterson Deals Prepare to Launch After Holiday

The primary market was quiet this week in anticipation of the market’s close for Independence Day. Despite the lack of new issuance, a number of notable deals were priced and began premarketing to investors, making it a fairly interesting start to July.

Among such notable primary activity, Sycamore Partners is premarketing a $2 billion-equivalent high-yield bond – split in euros, pounds sterling and U.S. dollars – to finance its acquisition of Walgreens’ Boots Group, Octus reported this week. The bond is expected to launch in July, following a special shareholder meeting to approve the Walgreens buyout next week. Alongside the bonds, the debt financing package for the $23.7 billion buyout includes $2.25 billion of leveraged loans.

Meanwhile, Patterson is premarketing a $2.35 billion debt financing package for its $4.1 billion buyout by Patient Square Capital, Octus reported this week, signaling a strategic return to market after the deal struggled to garner interest amid tariff-induced volatility in April. Sources familiar with Patterson’s deal noted that Citi, which is leading the $1 billion bond, has been fielding calls to investors for the deal, and they expect it to relaunch after Independence Day.

Meanwhile, Patterson’s $1.35 billion loan was officially pulled from the market by UBS in June, Octus reported last week, with a source familiar with the deal noting that documents were weak, which contributed to the lackluster reception. Still, sources say the deal will likely be reworked.

Elsewhere, Clayton Dubilier & Rice-owned cloud software developer Presidio repriced its $1.84 billion term loan B maturing in June 2031, Octus reported this week. Pricing for the JPMorgan-led loan came at SOFR+300 bps. In addition, Radiology Partners priced its senior secured notes and term loan B – upsizing the notes to $900 million from $800 million and downsizing the loan to $1.4 million from $1.5 million. A total of $8.7 billion in loans and $6.7 billion in bonds priced this week.

Inflows for high-yield bonds in the last week waned to $1.34 billion from $2.03 billion, as of July 1, while inflows for loans increased to $1.12 billion from $690 million, the largest inflow in seven weeks, according to a report by Bank of America.

Leveraged loans that priced this week are shown in the chart 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:
 

On July 2, the LSTA Leveraged Loan Index was indicated at 98.79, continuing a steady climb from weeks past.

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:
 

• RSA Security
   
• New Fortress Energy
   

Octus Covenants’ legal analysts have completed analyses of the documentation for the following new loan transactions: American Bath, Convergint, Rithum (fka CommerceHub), Patterson Cos. and White Cap.

Octus’ Private Company Analysis team this past week released reports on companies including Barracuda Networks, West Deptford Energy and Rithum.