Octus on Credit: Constellation Automotive could set private credit take-outs trend

When Octus revealed in December that U.K.-based used car marketplace Constellation Automotive was weighing a private credit refinancing, it caught the market off guard. The sponsor’s willingness to inject equity to make the deal work raised eyebrows—and prices, with the bonds jumping five points. But what really jolted the market was the broader signal: a public debt issuer opting for private credit in a year when the traffic had mostly been heading the other way.

The prevailing expectation was that large unitranche deals would keep moving back to banks. That trend hasn’t disappeared, but it’s not playing out universally. Europe’s largest-ever unitranche—Adevinta—is now likely to stay in private hands, and several other major unitranche financings remain in limbo.

Now, a growing number of high-yield and TLB issuers are looking to follow Constellation’s lead. Octus has already flagged several of these moves—and the team is hearing whispers of more to come.

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