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European LevFin Wrap — Summer slowdown puts Altice in prime time
Alessandro Albano
+Ryan Daniel
•4 min read
Beijing might be struggling to cope with sluggish demand, but at least there's something to cheer in Washington as we push through the dog days of summer.
US consumer prices advanced 3.2% in July (year-over-year), the first increase in 13 months but, notably, 0.1% lower than consensus while core came in line at 4.7%. Thursday’s print reinforced the market’s optimism that after summer we’ll see a less aggressive Fed, which may have hiked for the last time this cycle.
Taking the flight back to China, CPI and PPI slid into negative territory for the first time since July 2020, exports slumping almost 10% in 2023. Given Beijing’s prominent role in worldwide trade, a deflationary China could spark some doubts about global resiliency — economists already predicting a mild recession for the world’s second largest economy by the end of this year.
Not to be forgotten, Italy issued a clarification of its new bank windfall tax (initially announced as a 40% levy on bank extra profits). Palazzo Chigi was forced to make a sharp u-turn just 24 hours later after Italian banks wiped out more than €9bn from the stock exchange — clarifying that a cap of 0.1% of bank total assets would be applied for the tax.
High yield
As was the case last week, bankers on the beach meant there were no new EHY primary deals.
It’s a good thing we have the Altice complex to keep us busy, right?
There were highly anticipated Q2 meetings at Altice SFR and Altice International this week. Billionaire Patrick Drahi took centre stage and told debt investors he felt betrayed and deceived by a small group of individuals, including one of his oldest colleagues.
A buysider said the meetings produced the “best outcome” from a governance perspective as Drahi sounded like he was “stabbed in the back” — as opposed to appearing complicit in the corruption allegations miring Altice.
There was a clear distinction between Altice International and the more troubled Altice France for a second buysider, who estimated that €300m a year could be taken out of the former to help the latter’s deleveraging efforts.
“Altice France should be able to sustain itself with support. It will be a challenging process but ultimately the business should be fine. Altice International — on the other hand — we have almost no concerns about given its excess cash and reduced leverage.”
It was described as “highly unlikely” by the second buysider that Drahi would need to put equity into Altice France but they didn’t rule out the possibility “if he really needs to.” Selling his BT position to Deutsche Telecom or disposing Dominican, Israeli or Portuguese businesses within Altice International were also touted as possible options.
You can check out our more in-depth recaps of the Altice calls here and here as well as in this week’s Friday Workout.
Earnings season rolls on and you can find everything you need from this week’s action in our Earnings Digest. Synlab, ThyssenKrupp, Hapag-Lloyd and Neptune Energy join the Altice complex as names summarised by the 9fin team.
Leveraged loans
Chemours finally priced its dual-currency TLB but saw different levels of demand for each tranche — leading to a downsize for the €415m (from €515m) leg but an upsize for the $1.07bn (from $960m) leg. Euros landed at E+400bps, widening from E+375-400bps price talk, and OID of 98.5. Dollars finalised at S+350bps (also slightly wider from S+325-350bps price talk) and OID of 98.5. You can find our Loan Legal QuickTake for both tranches here.
Speaking of familiar names, Dutch conveyor belt firm Ammega announced a €79m TLB add-on which priced at E+500 and OID of 97.5 to partially repay RCF drawings. It follows the same pricing as its upsized €1.01bn (from €990m) 2028 A&E TLB just a few weeks ago.
Last week Fitch affirmed the group’s rating at B- with a stable outlook, citing a “satisfactory liquidity position, supported by expected positive free cash flow (FCF) generation through the cycle.”
Euro loan technicals are supported by a CLO pipeline that’s kept coming deep into the summer doldrums, with Bridgepoint V pricing on Tuesday and Onex 2023-7 still in marketing. CLO liabilities still have a way to go to catch up to loan conditions but the market backdrop is firm enough for some of the Q4 deals last year to explore a tighter refi, with announcements this week from Barings and Cross Ocean Partners.
Rounding off the deals from a subdued week in loan land, we got word of Palex Medical, the privately-owned Spanish medical equipment distributor, coming to market for a €350m TLB (expected to arrive in September).
It follows last month’s agreement between Apax Partners and Fremman Capital (current majority shareholder) to buy the medical company.
