Today's launch of the €1.3 billion deal backing CVC's acquisition of Stark Group A/S brings the largest single-tranche buyout related loan seen in Europe so far this year, according to LCD. This transaction, combined with deals from borrowers including ASDA and Apleona GmbH, brings a hefty slug of new-money supply to a still technically unbalanced market that remains wide open to opportunistic requests such as repricings.
Indeed, few think the month's current deal line up will be enough to shift the technical balance away from falling in borrowers' favor. In the first instance, deals such as Stark — as large as they are — are not new names to the market, meaning they bring an existing syndicate, many of which will be looking to maintain or increase their exposure. In the case of Stark, the firm's existing term loans total €550 million, meaning the deal still has a significant new-money requirement. Apleona's new term loan of €740 million compares with existing first lien tranches of €500 million and £170 million.
Asda is a carve-out from Walmart, making it an entirely new commitment. However, the firm's Ba2/BB- corporate rating also makes it catnip for weighted average rating factor-sensitive CLOs, and indeed the firm was able to tighten price talk on its €840 million term loan just two days after launch of syndication. Loans too have to compete with a bond market that is awash with central bank-pumped liquidity. Asda's buyout, for example, comes with a £2.25 billion secured and £500 million unsecured bond that also got underway today, bringing the largest sterling deal and largest single-tranche deal in any currency yet seen in the European high-yield space.
A pre-pandemic Asda would have likely featured a larger loan component in its capital structure. Others are also taking advantage of this liquidity to wrap in high-yield debt to previously all-loan structures. January's €2.5 billion refinancing from SCM Biogroup-LCD, for example, brought a net repayment for loans after the French labs group folded in roughly €1 billion of secured and unsecured bonds into its debt stack. The year too has brought some chunky repayments, not least from Refinitiv, which has retired its leveraged debt financing (including a €2.3 billion term loan) after the closure of the London Stock Exchange Group PLC's acquisition of the financial data group.
This means the market remains nicely liquid for opportunistic borrowers looking to add debt or reprice existing loans. In the latter case, any COVID-19-resilient name paying more than E+400 is a likely target, and today saw The House of HR NV go out with a request to reprice its E+425 loan into a E+375-400 range. Last week, Zentiva NV shaved 25 basis points from its term loan to take pricing to E+375 with a 0% floor, offered at par. Managers can also take some heart from the fact that — beyond those deals priced in the tail of last year's first lockdown — there are not so many slam-dunk European credits paying 4%-plus margins, meaning borrowers are still more likely to take advantage of the technical through additional debt requests rather than repricings.
Story links
Leveraged loans
Stark Group sets investor call for €1.3B buyout loan
AD Education slates lender call for €207.5M buyout TL
House of HR launches term loan repricing
Elsan allocates increased €1.75B loan; terms
High-yield bonds
ASDA launches £2.75B two-part bond offering
Scatec to host investor meetings for potential euro green bond issue
Cellnex sets investor calls for three-tranche bond deal
Spotlight turns to record bond tranche as supply slows
Secondary markets
Arrow Global shares surge, debt firms on latest TDR approach
European leveraged loans return 0.89% in January
CLOs
European CLO reset and refinancing pipeline swells
Middle market and direct lending
Sovendus sale begins, with Baird advising
Microwave Vision's buyout supported by Capza and Bpifrance
Distressed and restructuring
Europcar nets French and US court approvals for restructuring plan
