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Ryan Daniel

Incredibly, January still isn’t over, though it feels like a lifetime since mulled wines and mince pies. 

Something about the furious pace of LevFin primary has put the holidays firmly in the rearview mirror.

While a sellsider agreed that things were “quite busy”, they said it still wasn’t “overwhelming”, perhaps with the blistering days of 2021 seared in the memory as perspective.

“What’s surprised me is how quickly margins have tightened, now seeing it down around 400bps and lower,” they added.

We can attribute this rapid tightening to the supportive macro backdrop we’ve seen so far this year — further strengthened by the ECB’s decision to leave rates on hold as expected this week. It’s caused investors to accelerate their rate cut bets to as early as April.

As noted by Deutsche Bank Macro Strategy: “Going into the decision, the chance of a cut by April had stood at 63%, but by the close yesterday it was up to 93%. And a full 50bps of cuts are now priced in by the June meeting.”

We’ve seen this optimism permeate across credit markets, even before the ECB decision. 

As noted by Barclays Credit Strategy, the seven-day period from 18-24 January saw continued inflows across €-IG funds and particularly PE HY funds. 

In EHY, inflows (85th percentile) were at their highest level since November and heavily skewed toward ETFs. 

Borrowers are rushing to hit the bid with refis and repricings, but investors are still pining for real M&A activity to return.

The buysider said: “There’s huge demand for paper given how infrequent new money deals have been — it’s only really been add-ons. I’m hearing that there won’t be anything meaningful M&A-wise until the summer.” 

Serving as an indication of just how strong that demand for paper is right now, both United Group and Merlinreturned to the market on Thursday after pricing deals on Wednesday.

For you meme aficionados out there, we couldn’t pass up the opportunity.

For United Group, unexpected floating rate demand and heavy oversubscription opened the door for the company to refi its €480m 2029 FRNs, rather than just the initial targets (the 2025 notes and the 2026 FRNs), which were refinanced with new 2031 issues.

The telecom group’s debt stack has historically featured a HoldCo PIK (Pay-if-you-can) note (€600m). With the new three-part deal, the company decided to downsize the PIK portion to €300m. By holding onto a small portion, the group can keep some cash flow flexibility as it continues to invest in capex alongside M&A.

Merlin also opportunistically returned on Thursday to reprice its 2029 euro TLB, only a day after its €200m add-on, which priced at E+400bps.

That debt (along with the existing 2029 loan) comes to cut 25bps off its margin to E+375bps. As a fungible add-on, the €200m piece had hit the floor of the existing debt’s E+400bps margin, despite investor appetite signalling it could have priced tighter, a source close to the deal said.

“What’s become very clear is that demand — whether on euros or dollars — is exceptionally strong,” said one sellside source. “It’s just sheer demand […] The new money demand on repricings is also sizeable.”

INEOS Group announced a tender offer targeting its 2.125% November 2025 SSNs, its 3.375% March 2026s, and its 2.875% May 2026s, offering 98, 99.25 and 98.25 respectively. Investors would rather see these notes called, but a buysider wasn’t surprised by management’s decision, suggesting it was the kind of shrewdness they’d come to expect.

“INEOS has never paid more than they've needed to. That's what they do.”

As we wrote in our preview, Manchester United fans will be hoping that it’s a sign of things to come from new partial owner Jim Ratcliffe, chairman of INEOS, after years of overspending in the transfer market.

The tender will be funded by combined loan and bond deals, with the loans launching first in the shape of €2bn-equivalent of dollar and euro TLBs. 

A sellsider said that INEOS was being opportunistic in the current market window, considering its difficult year.

“Even chem names are coming to market! INEOS is being cheeky on around halved EBITDA. That said, it has a massive cap stack so it’s not going anywhere.”

Nevertheless, company’s strong track record of execution, giant presence in the leveraged credit universe and extensive liquidity are giving investors comfort, and allowing them to look through concerns around the sector.

For the euro tranche, there is a €300m minimum with price talk guiding at E+400-425bps and 99 OID. For the dollar tranche, there is a $500m minimum with price talk guiding at S+375-400bps and 99 OID.

US-based Kronos Worldwide announced an exchange for up to €325m of outstanding 3.75% SSNs due 2025 for newly issued 9.50% SSNs due 2029 plus additional cash.

As did Kiloutou which announced an exchange offer for its €400m senior secured FRNs due 2026. 

In parallel, the French equipment rental company upsized its 2030 SS FRN launch from €250m minimum to €650m(proceeds to repurchase €200m senior secured FRNs due 2027). The upsize is intended to refinance non-exchanged 2026 FRNs.

Rounding off the action from EHY, double-B rated ZF launched €800m of Green SUNs due 2029 at 4.75%, upsized from €750m and tightening from IPTs in the 5.25% area.

As seen in the screener below, Intrum’s 2028s were the biggest faller in the secondary market this week, as the debt collector announced a major sale of its back book on Tuesday and then earnings on Thursday. See here for an in-depth look at the earnings, and here for a look at the back book sale, including the thorny issue of valuation.

Despite splitting investor opinion, Univar’s latest loan deal, which funds a dividend to Apollo just seven months after the initial LBO debt was syndicated, still managed to tighten and accelerate.

“There is the desire to source new money in a market where that is scarce, and that trumps any moral objection to the idea of sponsors taking money off the table,” said a senior banker away from the deal.

The total size was been increased to $500m-equivalent from the original $450m, split between $360m in dollars and $140m-euro equivalent, with the size increase boosting the payout.

OID guidance has also been tightened to 99.75-100 on both tranches from 99-99.50, with the margins in line with existing facilities at 450bps.

Data analytics business Kantar announced a €800m 2029 TLB (A&E from December 2026). Price talk is guiding towards E+450bps and OID of 99-99.5. 

You can find our full loan preview here.

“It remains a show me story,” said one buysider. “It needs to get one offs and working capital down so it can start generating some FCF — I don’t love the business, but it’s fairly defensive.”

Kantar is set to only partially extend its existing €1.135bn 2026 TLB, as well as repay some RCF drawings.

“A lot of deals are upsizing at the moment and this one could too to address the whole loan,” said another buysider. “But this isn’t the quality of a Merlin or a Parts Europe — you can’t risk coming to market and having to widen pricing to get allocations full.”

For more on the 2024 A&E outlook, check out our latest deep dive here.

Parts Holding Europe, following its first loan issuance of €580m, decided to upsize to €960m on the back of strong investor demand, ultimately grinding pricing down to E+375bps and par from E+400-425bps at launch. The extra proceeds will be used to address its 2027s as well as the 2025s.

We also covered some good news for buysiders on doc changes, in detail here.

Elsewhere, residential nursing care facilitator Deutsche Fachpflege has launched a €420m 2031 TLB in a loan debut — IPTs at E+450-475bps and OID of 98.5.

And just before the weekend, we saw TenCate Grass launch a dual-tranche 2031 TLB ($835m and €350m). 

The Dutch artificial turf developer was acquired from Crestview Partners by US sponsor Leonard Green back in December 2023 — it was already financed in syndicated loan markets, but it’s a genuine LBO coming to market at least.

It also represents a boon for syndicated markets as there were reports of the deal going via the private credit routein recent weeks.

Alongside Univar’s new money, the refinancings and A&Es discussed above, most of the action in the primary market has been repricing transactions on existing facilities.

On the back of 2024's hectic action so far, a buysider said their team had been doing some portfolio analysis, highlighting all holdings with a margin over 475bps and price above 100.5 as repricing candidates.

“Looking at just our names, it’s around 20% so we’re expecting another couple dozen of repricings to take place.” 

“Banks have been really quick on the trigger,” they added. “For issuers, repricings represent a quick win with 50-100bps shaved off on average.”

Here’s a recap of what we’ve seen just this week:

Eviosys: E+475bps to E+400bps on its €400m 2028 TLB

IQ EQ: S+475bps to S+425bps on its $520m 2028 TLB and E+475bps to E+425-450bps on its €500m 2028 TLB

Group of Butchers: E+450bps to E+425bps on its €337m 2029 TLB

Sebia: E+475bps to E+375bps on its €900m 2027 TLB and S+475bps to S+425bps on its $250m 2027 TLB

TMF: E+450bps to E+375bps on its €955m 2028 TLB and S+500bps to S+400bps on its $400m 2028 TLB

TOI TOI & DIXI: E+500bps to E+425bps on its €510m 2026 TLB

Restaurant Brands Iberia: E+525bps to price talk of E+425bps on its €310m (€335m maximum) 2028 TLB

Refresco: E+400bps to E+375bps on its €1.6bn 2029 TLB

Tricor-Vistra: E+475bps to E+375bps on its €827m 2029 TLB and S+475bps to S+375bps bps on its $609m 2029 TLB

Rubix: E+500bps to E+425bps on its €1.4bn 2026 TLB

SafetyKleen Europe: E+500bps to price talk of E+400-425bps on its €556m 2027 TLB

Banijay: S+375bps to price talk of S+325bps on its $555m 2028 TLB and E+450bps to price talk of E+400bps on its €555m 2028 TLB

Idemia Group: E+475bps to E+400bps on its €1.8bn 2028 TLB

“It’s a good window to reprice [for issuers], ahead of the next earnings season as it’s not expected to be amazing,” said the buysider. “Market sentiment is still very strong right now, but things can change quickly.”

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