European LevFin Wrap — Carnival lands as party resumes, MasOrange sweet execution

Ryan Daniel

19 April 2024•6 min read

An inactive start to the week, with no bond or loan deals launched in Europe on Monday, suggests that issuers and banks were waiting for some fog to clear.

After grappling with more rates volatility out of the US recently, European leverage finance markets also had to monitor geopolitical developments in the Middle East this week.

“Putting those two factors together [macro and geopolitical], it made sense to wait through Monday and see what direction the market was going to take from there,” a sellsider said.

Offsetting concerns, bankers pointed out it was generally strong issuers ready to hit the market, so there was no need to step back for more than one day.

“It wasn’t necessarily a much better market on Tuesday, but looking at the deals that are out, it’s performing issuers and a lot of repeat clients, which investors have probably been aware of through pre-marketing,” the banker went on.

A second sellsider echoed this sentiment: “Given the nature of the financings we’re involved in — more opportunistic as opposed to stressed — issuers have the flexibility to go another time.”

Given some increased risks, one buysider wasn’t hopeful about the near-term pipeline: “I’m expecting it to be super slow for the next two to three weeks. I’m on some ‘early birds’ but it’s nothing amazing.”

A second buysider, however, said they were busy with pre-marketings. And a third buysider suggested that heightened uncertainty increased urgency for issuers to get deals away.

“I wonder if the conflict forced issuers to get off the fence and take advantage of a relatively buoyant market.”

“There’s a risk that the market is 100bps wider if you wait until later on,” they added.

High yield

There were outflows across the credit spectrum from Thursday to Wednesday (11-17 April), according to Barclays Credit Strategy. In European high yield (29th percentile), this was only the second weekly outflow since November last year, driven by ETFs and mutual funds.

French tubular manufacturer Vallourec priced $820m of 8NC3s at 7.5%, tightening from price talk in the 7.75% area.

Despite choppier waters earlier in the week, US cruise line operator Carnival came to market with a €500m tranche of 2030 SUNs at 5.75%, landing at the tight end of price talk (5.75-6%). This was alongside its two USD TLB tranches ($1bn and $1.75bn).

A sellsider close to the deal noted that the geopolitical news over the weekend prompted a delay.

“Carnival was due to launch on Monday but we ultimately went for Tuesday. Given the headlines over the weekend, we were cautious about launching straight away,” they said.

We saw another cross-Atlantic deal in the form of Flutter Entertainment’s SSN launch across $525m and €500m. The euro notes priced at 5%, tightening from IPTs in the mid-5s. Two other lenders speaking with 9fin admitted theywere disappointed with their allocations on this ever-popular (if you invest in gaming) credit.

French industrial engineering group Novafives has launched €425m of 2029 SSFRNs, with price talk guiding towards 525bps and the 99 area.

UK-based energy group Drax has priced €350m of 5NC2s at 5.875%, tightening from talk in the 6% area.

Boels Rental returned after its September 2023 EHY debut, this time with €600m of 6NC2s at 5.75%.

The long-awaited joint-venture between Spanish telecom MasMovil and French telecom Orange’s Spain unit MasOrange priced at 5.75% for its privately placed €600m of 5NC2s.

The €800m TLB priced at E+350bps and 99.75 whilst the $400m TLB is guiding towards S+350bps and 99.5-99.75.

“It’s just in Spain, yes, which we generally consider a concentration risk,” said a fourth buysider. “But Spain has higher fibre penetration than other European markets and we don’t view the Spanish market as stagnant as other Eurozone economies.”

You can find our full MasOrange loan preview here and for more on telecoms, check out our latest sector analysis on European TMT.

Sticking with that theme, Telecom Italia announced exchange offers on some outstanding notes in preparation for its NetCo deal.

As per this press release, the company is inviting holders of €5bn worth of notes to swap them for new securities at the same terms that will sit under the new grid company that will be controlled by KKR.

Telecom Italia agreed last year to sell its landline network to KKR for about €19bn; the transaction is expected to be completed by the end of this summer.

Leveraged loans

Laxative maker Norgine put through doc changes to wrap up its private credit refi in market this week. The company changed the call provision to 12 months and added a 12-month margin ratchet holiday, according to 9fin sources, along with anti-Chewy language and reductions on leverage thresholds on some baskets.

The private credit-to-BSL refi is a theme of 2024, and, according to our private credit database, there’s plenty more candidates to follow — here’s our latest piece where we predict other names that could migrate.

Elsewhere, All3Media’s accelerated €505m TLB deal priced at E+400bps and 99.5 (from price talk of E+425-450bps and 99), tighter than some investors were expecting.

As a fifth buysider pointed out in our loan coverage: “Banijay priced below E+400bps and is trading at par. There should be a higher premium on All3Media as the business scale is smaller.”

But All3Media’s portfolio of long-standing programmes — including British stalwarts Midsomer Murders, recent sensation The Traitors, and long-running soap opera Hollyoaks — positions the company defensively, lenders speaking with 9fin noted.

Drug delivery device solutions provider Nemera was in market for a €100m 2029 TLB which ultimately priced at E+500bps and par, tightening from price talk of 99.5-99.75.

Another pharma name, Centrient, is in market for a €515m 2027 TLB. Price talk is guiding towards E+525bps and 98.5.

Catering and hospital group WSH Investments is in market with some rare sterling supply — a £598m 2031 TLBwhich has price talk guiding towards S+550bps at 98-98.5.

Waste disposal bin manufacturer Sulo Group is hearing price talk of E+500-525bps and 98 on its €350m 2031 TLB.

Buysiders speaking with 9fin have generally been positive on the name but there are doubts over its small size, unfamiliar sponsor (Latour) and limited barriers to entry.

Rocket Software’s €300m 2028 TLB priced at E+475bps at 98.63. Check out the loan preview from our US colleagues for more on this deal which has straddled both sides of the pond.