LCD News Today, Europe: Jan. 27, 2022

Despite a flood of new issuance this week, demand continues to outstrip supply across the European leveraged loan market, allowing borrowers to tighten terms and upsize deals.

Today, Wella upsized the euro-denominated portion of its new term loan to €925 million from a planned €800 million, having already reverse-flexed pricing earlier in the week. Wella's final terms on the B/B2 rated debt will come at E+375, with a 0% floor offered at 99.75 (yielding 3.85%), from original talk of E+400-425 at 99.50.

AutoForm Engineering GmbH also tightened talk this week — in this case on a €472 million buyout term loan — with the B/B2 rated debt completed at E+362.5 offered at 99.75 to yield 3.72%, from the original margin guidance of E+400.

In the 30 days to Jan. 27, the average yield of European single-B and unrated term loans stood at 4.33%, according to LCD — tighter than the average yield of 4.41% in the whole of November 2021; the deal count for December 2021 was too low for the average to be meaningful.

Similarly, the average yield on all loan deals stood at 4.21% in the 30 days to Jan. 27, which is inside the 4.28% reported in November 2021.

The current strength of investors' demand for paper and the attractive borrowing conditions that stem from this supportive technical have brought issuers flooding into the market this week. New loan launches in the week to Jan. 27 total €5.5 billion, and of this supply roughly €3.8 billion is earmarked to back new leveraged buyouts — notably jumbo cross-border transactions from issuers such as McAfee Corp., Hunter Douglas NV, Caldic BV and Scientific Games Corp.

However, opportunistic issuers also came into the market to take advantage of the strong demand, with Saverglass SAS and Dorna Sports SL both launching transactions to refinance debt and fund dividend payments to shareholders.

This week's transactions take the total European leveraged loan volume for the month to Jan. 27 to €13.2 billion. This tally already outstrips the €11.6 billion reported in January 2021 and makes this month busier than all but two full months in 2021, as March hosted €21.1 billion of issuance and June reported €18.9 billion.

Story links

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