European LevFin Wrap — A pre-Christmas deal window with private credit presents

Karis Hustad
+Ryan Daniel

15 November 2024•4 min read

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With some political certainty emerging, market participants are eyeing the next few weeks as the final push to get deals out the door.

"Categorically, there is more to come with both new money and refi in the short term pipeline,” said Charlotte Conlan, vice chair of global leveraged finance at BNP Paribas.

“I haven't given up on this market window — but it's lighter than initially expected,” said a second banker.

“I'm telling my team, even if a credit has 2027 maturities, get it done now and then they can come back to reprice if it's a good credit. It costs nothing to reprice,” the banker continued.

While so far European deal flow has been quieter than the firehose that restarted post-election in the US, there have been a steady stream of a few issuers in the market that mirror the trends of the year: a mix of A&E (IU Group), repricing (Cooper Consumer Health) and private credit to BSL refinancings (OCS Group).

And pre-marketing activity indicates that private credit to BSL pipeline isn’t slowing down yet.

Banks are currently sounding out lenders on an €1.25bn unitranche refinancing for British veterinary pharmaceuticals company Dechra. Sponsor EQT and Dechra and did not respond to a request for comment.

There is also pre-marketing of a circa €1bn leveraged loan deal for an Irish forecourt retailer to refinance its existing private credit facilities, expected to land later this month.

Other loans recently wall-crossed include names in the gaming and healthcare spaces, with one €1.9bn deal from a jobs classifieds business set to land next week.

Looking ahead, there are dual-track processes underway that could turn into syndicated deals in the new year, such as the ongoing auction for Dutch pharmaceutical company Synthon. More information on the banks and bidders here.

Still, with the dust around FNZ settling, there have been questions on whether all private credit issuers that are big enough to go to the syndicated markets are really ready for the move.

“The market is in good health, as shown by the FNZ transaction,” said the second banker. “Investors are not saying yes to everything — they are actually showing discipline.”

Leveraged loans

The credits that quickly returned to market sought smaller tickets, with confidence in getting the deal done, judging by their quick turnaround. Commits on IU Group and Action Retail were both due Thursday after launching on Monday.

“It’s a very well known name, double B, it’s solid,” said a buysider on Action. “When credits like this hit the market, it’s mostly a pricing exercise.”

Action Retail revised the price talk tighter on its €3.125bn dual-tranche TLB A&E/repricing ahead of commits.

Similarly, UAX came back with tightened pricing and docs changes, eventually landing at E+350bps at 100 from E+350-375 at 99.75, the latest in a number of education credits that have sailed through the syndicated market.

Here’s a look at what’s in market:

Here’s a look at what priced this week:

Weekly leveraged loan movers

High yield

Money has continued to flow into European high yield funds as investors European sovereign bond pricing has continued to slide and investors anticipate the need for higher returns.

In the seven-day period ending on Wednesday, PE high yield funds saw another week of inflows, according to Barclays. While the inflow was modest, it was driven by ETFs.

On deal flow, it was a relatively quiet week as investors focused on earnings. There are no high yield issuers currently in market.

Here’s a look at what priced: