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This is our weekly newsletter on all the latest trends, breaking news, and deep-dive coverage in European leveraged finance. Sign up for the newsletter here.

It feels like yesterday that investors were debating how many times central banks would cut rates and if 2024 would finally see the return of leveraged buyout activity. In the blink of an eye, another year has gone, but some questions remain the same.

Rates went down, compressing benchmarks and margins, yet sponsors struggled to exit their own investments. This stagnation led to a weaker-than-expected volume of buyout transactions in the primary market, leaving lenders hungry for more new money supply — and LPs complaining to GPs as they wait for capital to be returned.

9fin data shows 24 euro-denominated TLB backed buyout deals this year, amounting to just €12.7bn of volume — a far cry from the almost €46bn observed in 2021, yet far more than 2023, when only 10 LBOs landed in LevFin for €6.7bn.

“A lot of the new money has come from private credit refinancings,” an investor told 9fin. “But on the other hand, these credits gave us more headaches than the usual LevFin names.”

The second half of the year opened the door to more activity with a sample of sizeable buyouts feeding lenders, such as Vodafone Spain, Evri and Exclusive Networks.

Yet many others have failed to land in the market: Rovi’s CDMO business carve out, for example, as well asUnilver’s ice cream division or Grifols — that one recently refinanced a chunk of its debt via private placementafter rejecting Brookfield’s buyout proposal.

The valuation gap lies at the heart of these failed transactions. This is not new, it’s been there since interest rates started going up and has been pushing down companies’ multiples.

But it has become more pressing through this year, as private equity investors urge their GPs to liquidate some investments after almost two years of dormant deal-making.

“We actually did a lot of work on potential buyouts that later collapsed,” a senior banker told 9fin. “The problem was always the valuation, especially for secondary/tertiary buyouts made in pre-Covid times when valuations were higher.”

But hold on tight for what seems a busy 2025. 9fin reported earlier in December that, among other deals, airfield lighting and gate solutions provider ADB Safegate is expected to come to market next year as banks have readied a €500m debt package to support its acquisition.

Dutch pharma manufacturer Synthon is another credit that is likely to go syndicated, as Goldman Sachs has prepared a €1bn debt package to back the acquisition of a majority stake in the company from BC Partners.

“It’s shaping up to be a busy 2025, even though the mid-market is more healthy M&A-wise,” another sellsider told 9fin.

Buyouts have missed expectations and repricings flooded the market in more than one market window — some bankers expect them to continue oi 2025 — yet CLOs reported one of the strongest years on record.

According to 9fin data, €78.3bn of European CLOs have been issued this year, of which €47.5bn were new issues.

“We can’t complain,” a portfolio manager said. “This year has been easier to navigate for large managers as we have been able to recycle loan assets between funds. New managers on the other hand who only have a few funds effectively need to buy everything in the market. I feel better than in 2022, but the M&A market needs to revamp.”

Overall, low default rates and historic low spread levels pushed 2024 to be the strongest year since the pandemic in terms of issuance.

Issuers launched €192bn of loans into the European market in 2024, a whopping 31% above the €146bn printed in 2021. Sadly for lenders, the majority took the shape of repricings, followed by refinancings and extensions.

Now enough with markets. These themes have all been broken through in our end of the year loan report. It’s time to wrap up this 2024 with our LevFun quiz!

1. Switzerland-based cargo handling company Swissport came to market this year seeking a €1.2bn dual-currency loan to refi its existing financing and fund a €505m dividend, and has been on a rebound as travel as returned post-COVID. But what is the most trafficked airport in the world?

B. Suvarnabhumi International Airport Bangkok

2. Despite some early grumbles on its less-than-stellar delivery record, Evri completed a chunky £1.4bn financing in September across bonds and loans. But it’s far from the first to tackle the tricky package delivery space. Where was the earliest documented courier service?

A. Ancient Egypt, where couriers would deliver documents etched on stone

B. Ancient Persia, sending messages via an extensive network of horse riders

C. Ancient China, which pioneered the use of home addresses

D. Ancient Aztecs, who would send baskets of goods via rafts through their agricultural waterways

3. While fintech firm FNZ may have stumbled its way into the syndication markets this year, its executive team has some impressive experience in the financial world. Which financial instrument did CEO Blythe Masters create?

4. Flora Food Group (Upfield), which came to market this year for add-ons to its already jumbo financing, produces plant-based food items. One of its main products is margarine. What world leader can it thank for the invention of its key spreadable condiment?

A. Winston Churchill, who asked scientists to create an alternative fatty spread due to wartime rations

B. Napoleon III, who offered a prize to whomever could invent a cheap butter substitute to feed the French army

C. Mahatma Gandhi, who sought a vegan-friendly alternative to butter

D. Franklin Delano Roosevelt, who wanted a way to boost the incomes of soybean farmers post-WWII

5. Supermarket chain Asda came to market in April with a jumbo refinancing of around €3bn-equivalent amid struggles to regain its market share and headlines about the future involvement of the Issa Brothers, and recently followed up with a €185m add-on. Christmas will be a blockbuster period for the supermarket — but which part of your Christmas dinner has jumped the most in price since last year?

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