“Looks like it’s a good landscape to encourage some refis next week, from BB [rated] issuers that have been on the fence to come,” said a syndicate banker. Following on from its jumbo refinancing announced on Thursday, Ineos is widely touted to be issuing bonds to take out their 2025 and 2026 maturities.

Conversely, even though the syndication landscape is improving, bond primary has emptied out this week and Europe only had two syndicated prints compared to five last week. Resilient issuers that were expected to refinance easily have emptied their pipelines early and now hairier maturities are waiting on sidelines to see if the water is warm enough for them to tip their toes.

“The deals we’ve seen - none of them are a surprise. Opportunistic A&Es, incremental add-ons, Foncia repaying its RCF. The surprise is that they’re coming so quickly,” said a CLO analyst.

The ability of the market to digest Altice France’s gigantic A&E with new accounts entering the name shows there is enough demand for the right paper, but we are still in buyer’s market and investors will pick and chose.

Swedish shipping business Stena (B1/BB-) successfully raised €325m SSNs due 2028 to refi €350m 2024 SSNs, showing appetite for euro-denominated credits. The new notes printed at par to yield 7.25% on Wednesday coming down from 8% area talk, thanks to a strong order book, with several investors bemoaning poor allocations. 9fin published Credit, ESG and Legals QuickTakes on the deal earlier this week. If you are not a client you can request a copy of the full report package here.

French property management company Emeria (formerly known as Foncia )(B2/B) also managed to tighten in pricing for its €400m SSNs due 2028. The bonds priced at 7.75%, at the tight end of 7.75%-8% talk.

A favoured credit who’s success lies in scale, Emeria has a firm market-leading position and stable recurring revenues. It regularly taps the market to repay RCF drawings which it uses to fund bolt-ons. As of September 2022, the RCF funded the acquisition of Billon (€56m), Efficity (€26m), other acquisitions (€38m), and paid for transaction costs (€9m). Read 9fin’s preview of the credit last November, there are also Credit and Legals QuickTakes for the latest deal.

Movers & Shakers

In generally calm secondary markets, the biggest shakeup was the deep dive in 888s notes. The Gibraltar-based online betting group said its CEO left with immediate effect. Yariv Dafna, the 888 CFO had announced his departure two weeks earlier, but has now said he will stay in his post until the end of 2023. The CEO departure was linked to an ongoing investigation into VIP operations in the Middle East, with best practices in anti-money laundering and KYC not being followed.

It’s 2027 SSNs have wiped out most of their gains since their tap at 84.5 in early December, plummeting to below 86 from 93, almost two whole percentage points higher in yield at 9% from 7.1%.

“888, that is pretty shocking. CFO disappears, CEO resigns. Maybe the absolute figures aren't that material, but it's a case of "sell the news" just in case things get worse. They have some PR to do,” said a banker.

CMA CGM announced this week it is pressing ahead with its decarbonisation drive, with a $2bn investment into methanol-fuelled ships and going ahead with first sailing cargo ship. The company's 2026 SSNs paying 7.5% are still trading above par at 103.89, yielding over 5%.

Distressed French building materials group Consolis was the best performer this week, with its €300m 2026 SSNs rising five points to 76.

The second best rise of the week was recorded by French supermarket Groupe Casino as Bloomberg broke news of talks of a merger of its retail arm with TERACT. Casino then confirmed that exploratory talks had begun over combining the two companies distribution activities. Casino’s €525m 2027 SSNs and €900m 2026 SSNs both picked up from 58.1 to 64.1.

Stonegate Pubs bonds rose by 2-3 points on news that company may sell up to a thousand of its watering holes valued at £800m to cut debt. The pub chain is coming to terms with the fact that the demand has never returned back to pre-pandemic levels as consumers are squeezed by high inflation costs and business is hit by huge operating costs and lack of workers.

HY spread risers (price declines)

HY spread decliners (price risers)

Loans Primary

Loan primary remained active this week, as A&Es remain the name of the game. Even though that means no net new money is being raised it is still an opportunity for investors to exit without taking a hit in secondary and a chance for CLO warehouses to enter new names.

“Loan liquidity and trading volume has improved in the last couple of weeks compared to the start of the year. The BWICs helped, but we're also seeing profit taking from investors that bought at a discount, plus the A&E deals always help,” said a portfolio manager at one CLO.

Demand for paper is there as CLOs are trying to ramp up printed deals from the end of last year but still finding not enough loans to fill in. “You might now take a chance on names you passed on in October, but overall we need more supply,” said a second CLO analyst.

Telecommunications provider Altice France proved there is a demand for a giant A&E if the credit is liked. It successfully extended 75% of its offering, or €5.9bn (equivalent) of its 2025 and 2026 TLB maturities to August 2028. Additionally, Altice also raised €150m of new TLB, following excess demand.

Even after Altice’s success, just one other loan deal, from another LevFin behemoth, braved to launch this week.

Chemical conglomerate Ineos Group is tapping the market to raise €2bn-equivalent of euro and US dollar denominated term loan Bs and other secured debt. Proceeds will be used to repay the company’s remaining euro- and US dollar-denominated TLBs due 2024, and for general corporate purposes.

Ineos appears to have changed tack, after undertaking an A&E in November, and was widely expected to go down the same route. The Euro-denominated add-on will mature in November 2027 and is guided with a 87-97.5 OID paying E+400bps while the USD TLB due February 2030 is guided at 98.5 with S+ 375bps-400bps price talk. The instruments are expected to be rated Ba2/BB/BBB-.

Even though primary is showing signs of slowdown some names are willing to take peek at reaping the rewards from an improving market.

“We have a few deals coming up in the next few weeks. It is in line with market sentiment, a general mixture of A&Es and new money. Two of them are new money, but A&E is the biggest thing now, all issuers are focused on it,” said a second syndicate banker.

9fin has reported that Alloheim, the German elderly care business, is coming this month to market with an A&E to push out maturities on its €500m TLB maturing in February 2025.

Sweden-based B2B distributor OptiGroup is also readying an add-on to repay drawings on its €60m RCF following a recent acquisition. The company announced the acquisition of Facility Trade Holding — a Dutch distributor specialised in hygiene & cleaning products, foodservice items and personal protection equipment — on 19 January. The purchase followed something of an acquisition spree in 2022, which included Finnish peer Pamark, Netherlands-based SG Verpakkingen and Dutch Scholte Medical.

The loan pipeline has gone quiet in the near term as the market patiently awaits earnings to refresh. Event though the loan market is busier than many had expected, the buyside sees it as nothing more than expected credits taking advantage of the improved conditions.

Even if the improving sentiment persists, we are still several months away from really brand new LBOs, awaiting M&A to pick up. “Banks are starting work and PE is deploying funds but we think proper LBO supply is more of a topic for early summer,” said the PM.

We are yet to test the hypothesis of how large a new LBO could be while being successfully digested within a 2023 syndication. A one billion ticket of solid credit with low leverage is starting to have a sensible appetite, said the second syndicate banker.

“What we’re not seeing is the banks underwriting new deals — and that’s what we want, we want to see new money coming in — but technicals are strong and supportive, so we are positive for the second quarter,” said a second CLO analyst.

Advent International’s Rubix will be the first A&E to print next week. The UK industrial group is pushing out its €1.19bn September 2024 TLB out by two years. Investors polled by 9fin have few business concerns, but are less happy about EBITDA adjustments and loan pricing.

Price guidance is currently E+ 500-525 bps with a 96.5-97.5 OID, with two buysiders and the market source expecting the deal to price at the tight end of guidance. The outstanding 2024s pay a margin of 375 bps. One buysider called the UK-based industrial maintenance firm “downturn-proof” and a second buysider said it is a high-performing, stable business. Read more in 9fin’s preview of the credit.

Dutch artificial grass provider TenCate Grass (TCG) is also back in the market with €274.3m fungible add-on on Tuesday carrying a margin of E+ 500bps. The original deal was pulled in September due to the market turmoil. It is now guided at a 92-93 OID compared to 90-91 when the leads pulled the plug in September.

TGC is offering an enticing yield to fund its acquisition of US peer Hellas and is more confident of a successful syndication after a significant uptick in EBITDA from five months ago. The deal is marketed at 4.2x leverage, down from 4.7x prior as EBITDA LTM to December jumped to €154 from the €134m LTM to July 2022.

“[The] Numbers are consistent but [I] need to get comfortable with the more than 10% uptick in a very short time and what should be a global difficult trading environment,” said the second CLO analyst. More to follow in 9fin’s preview of the credit next week.

Loans Secondary

Secondary remained fairly quiet in the loans space and biggest moves were mostly driven by aforementioned names 888 and Consolis.

The most interesting development in loan secondary was BWIC activity spurred by Birch Lane Capital’s exit from five equity warehouse positions which have been taken over by Anchorage, according to market sources. A deep dive of this process was explained latest issue of Owen Sanderson’s Excess Spread.

The newest list linked to Birch Lane Capital’s equity exit was due this Friday (3 February) 1pm UK time. A circa €50m (equivalent) portfolio of loans had across 43 line items.

Tranches are mostly euro-denominated TLBs but also includes seven US dollar pieces from Arvos, Duravant, Kantar, Life Scan Global, Sivanton and Veritas and two sterling facilities from Ethypharm and Virgin Media.

Gas heater manufacturer Arvos Group is one of the highly distressed names on the list alongside oncological provider GenesisCare, whose loans are quoted at 56-mid and 33-mid, respectively.

As earnings season slowly kicking in, buysiders are patiently awaiting first ever numbers from Ultra Electronics. The defence manufacturer is expected to report this February and company has not reported financial information to its lenders since it priced a debt package in November 2021.

The company has been paying 100% ticking fees since 91 days after the transaction was closed. “The ticking fees just add up to financial strain on the company,” the first lender complained. Read more in 9fin’s report by Kat Hidalgo.