Unfortunately for investors, although given choice, this wave is not reminiscent of the 2021 bull market as new issue LBO supply remains scarce. There’s new money from a variety of credits on offer, but this comes in the shape of dividend deals, 2L takeouts and incremental acquisitions, rather than full throated new buyouts.

This dearth has been the story of 2023: A&Es have reached €37bn year-to-date, or 59% of total institutional leveraged loan issuance, a new study from Deutsche Bank showed.

On average, terms have been extended by three years while margins have increased by 119bps, the report found, as maturities have continued to be pushed out with 2024 maturities falling to €5.4bn from €19bn at the end of 2023.

2028 is when loan maturities will peak at €110bn, or 39% of the outstanding market, DB said in the report.

“We expect LBO and M&A activity to pick up, especially in H2 when interest rates might drop by 25-50 bps. Valuation expectations need to reset however,” one buyer said.

The most awaited deal — debt for Cinven’s take-private of Synlab AG — is still yet to emerge. Some sellsiders expected it to be on market as early as this week given the strong market window and the appetite for a €1.5bn deal split between private credit ($500m interim PIK facility) and high yield notes.

However, the market won’t have to wait too long as “the deal will be done before Christmas,” one CLO manager told 9fin. 

See 9fin's latest European private credit pipeline here as well as coverage on the multi-tranche deal here. 

On the positive side, this week’s eurozone inflation print confirmed the downtrend — +2.4% YoY vs +2.7% consensus — strengthening market bets for an ECB cut to be as soon as April.

Similarly, on the other side of the Atlantic official data included a downward revision to core PCE — the Fed’s preferred inflation gauge — down a tenth to +2.3% in November.

High yield

It was another week of healthy flows into EHY funds (78th percentile) per Barclays — relatively balanced between ETFs and mutual funds.

Meanwhile, the market saw the return of Italian supply, which has been quiet since Piaggio, Guala Closure and Webuild came to market in September.

Italian gambling company Lottomatica axed a potential tap of its 7.125% June 2028s, deciding to print the entire €500m deal in floating format instead, selling into strong CLO demand.

The original offering memorandum included both the fixed rate and FRN issues in a single document. The €500m FRN, a 7NC1 tranche, priced at E+400bps and 99.5 OID, the tight end of talk.

“The issuer had a preference for the FRN and strong bookbuilding allowed the entire deal to be done in FRN form, hence no need for the fixed rate notes,” said one source close to the deal.

The bond partly funds the acquisition of sport betting company SKS365. The financing package also included a €50m increase to its existing revolving credit facility, taking the total facility size to €400m.

See 9fin’s updated cap table for the company here.

US packaging company Crown, a notable EHY issuer, announced a new 2029 euro denominated bond towards the end of the week to partially refinance existing term loans.

The notes were increased from €400m to €500m and priced at 4.75% from initial price talk in the 5% area.

Telecom Italia is this week’s biggest winner in EHY secondary, on the back of headlines that saw the company’s CEO say his group is ready to play an active role in any consolidation of Italy’s telecommunications sector, fresh off the back of its sale of its landline network to KKR for €22bn. 

There are also fresh reports that KKR is weighing up a move for Telecom Italia’s submarine cable unit.

Weekly high yield movers

Leveraged loans

The extensive list of names in loan land starts with KKR-sponsored company BMC Software, now in the market with a $3bn-equivalent dual-currency A&E maturing in 2028.

The borrower is offering investors E+450-475bps at 98.5 OID for the euro tranche (€1bn) and S+425-450 bps at 98.5 OID for the dollar leg ($2bn).

The deal is marketed on €987m EBITDA, 5.5x first lien leverage and 6.5x net debt, according to an investor who has a small exposure to the company.

Another US-based company, Innio, is marketing a big chunk of dual currency debt — €1.6bn-equivalent — to extend its 2025 maturities and finance the take over of Nes Wes. It also plans a dividend using its existing cash on balance sheet.

The Advent-backed gas turbine manufacturer has price talk at E+425-450bps at 98.5 OID for its minimum €900m 2028 TLB and S+425-450 at 98.5 for the minimum $500m 2028 TLB.

One buysider was concerned about the exposure of Innio to gas prices also asking if “there's a risk to deal with sanctioned countries.”

Moving to European companies, 3i's plastic packaging firm Weener Plastics is seeking to extend its debt to 2028 from 2025 and fund a “modest” payout to its shareholders. 

The 2028 €375m cov-lite TLB has price talk at E+450-475bps with 98.5 OID, and according to a buysider “the leverage is sensible.”

“3i has a good reputation in the market and the business is sensibly structured. EBITDA margins look good as well at around 20% — but we have some ESG concerns as we're worried whether the plastics are recyclable,” they said. 

German private hospital group Schön Klinik is looking to make its institutional loan market debut, marketing a €350m 2030 TLB at E+475-500bps with 98 OID, “an attractive price relative to rating but size is too small” as one buysider noted. 

“The company is family-owned which is a bit of a concern. On one hand they're less likely to over-leverage, on the other if they need equity they've nowhere to turn to,” they added. 

Monaco Resources-backed Euroports is also in the market with €570m of first and second lien TLBs to refinance its existing debt, repay its FundCo Loan and pay down RCF drawings.

The 2029 1L tranche is guiding at E+450-475bps at 98 OID, whilst the 2030 2L debt has a E+700bps margin and with 98 OID. 

Next up is French drug delivery device company Nemera which has launched a €590m 2029 TLB at E+500bps and 97.5-98 OID to refinance its second lien debt. 

Elsewhere, small divi deals filled this year-end loan rush, with PAI's Euro Ethnic Foods back with an additional €100m 2028 TLB to fund a shareholder dividend.

The add-on will go on top of the previous €365m 2028 TLB, and is guided at 96.0-96.5 OID and E+350bps. German portable toilet company TOI TOI & DIXI also finalised its €100m 2026 TLB add-on to fund a divi, pricing at E+500bps and OID of 99.625 (versus price talk of 99-99.5).

Kereis' upsized €100m (from €90m) 2027 add-on TLB ends this week’s action. The insurance broker priced the loan at 98.5 OID vs 97.5-98.0 at launch with E+400bps margin, and will use proceeds to repay its second lien and some converts.

Finally, House of HR announced a €150m 2029 TLB add-on Friday morning, with price talk guiding towards E+550bps and OID of 98-98.5.

Weekly leveraged loan movers

Forward pipeline

Link:Table