Leveraged finance markets have finally woken up from a post-holiday slumber, but not to the new money some had hoped would kick off 2025.

Repricings continue to dominate, pushing investors to grapple with how low pricing can really go, while the global bond sell-off puts extra pressure on the UK economy.

Repricing reload

Following on from last week, repricings made up the bulk of issuance in leveraged loans, with two-thirds of deals in the market having at least some repricing element. These ranged from media company Banijay to portaloo maker Toi Toi & Dixi, with one thing in common — the aim to lock in lower pricing while the market is hot.

"You can see why they're doing it,” said a buysider. “They're taking advantage of the prisoner's dilemma of, if you get repaid, how else are you gonna put your money to work? Because you also have to cover the bid/offer, and hopefully you get a bit of OID on the reprice, although not much."

Swiss telecoms company Salt sought the lowest margin this week, pricing a €435m TLB at E+275bps at 100.5, marking a new tight for B2-rated issuers since the beginning of the year. The tighter pricing environment is being supported by tighter liability costs in the CLO market as well, with borrowers taking advantage of market technicalities.

More on the pricing squeeze here.

There’s some dispute whether the tightened pricing is unprecedented — Applus+ and Hyperion Insurance repriced their TLBs from E+375bps to E+350bps November. But it could have implications if the market opens up as some expect this year.

"The key is to make sure you're not getting trapped when stuff widens out,” the buysider continued, pointing to credits such as LGC, a British labs company which locked in its TLBs at E+3.75bps in 2021 but ran into issues in 2023 due to difficulties adjusting to a post-COVID world.

There are others who believe the market retains some discipline — although SaaS provider Cegid aims to reprice its €700m TLB from E+375bps to 325bps-350bps, at 100, while adding a €500m TLB at the same price, relevering the business. Buysiders said the company’s growth and revenue made it a fair play.

“Demand for deals has been exceptional — it’s been mental,” said a sellsider. “But investors are not willing to pile into everything. It continues to be a market of ‘haves and have nots’. The bottom 25% of credit quality is deemed too cuspy. That's when you'll see deals struggle.”

Gilt-trip

The global bond sell-off extended into this week, with particular pressure on gilts. Gilt yields peaked last week, and positive macro news relieved some of the pressure, but there are still questions about the UK economy.

What does this mean for sterling, which was enjoying a boost in the leveraged finance markets last year?

Sellsiders say investors are clamouring for sterling, with an eye on potential rate cuts and the opportunity to obtain a currency premium. But they also point out some issuers are more hesitant than before, given continued uncertainty over the UK economy and budget.

“It absolutely has to be the right credit,” said a second sellsider. “Higher UK rates might cause the economy as a whole to suffer but if you’re in the right UK name, it’s beneficial versus euros and dollars in terms of premium on offer.”

More from our report on the bond sell-off implications for the outlook on sterling here.

Leveraged loans

Repricings are the name of the game. Single-Bs are pushing for E+350bps or even E+325bps as the year defrosts, putting out a rash of deals with short commitment deadlines, many of which were launched and wrapped within the week.

As of last night, there were 16 issuers in the loan market. And €12.2bn of the €16bn of euros they’ve bought are (at least partly) repricing efforts — including C.H. Guenther (of McGriddle fame) and everyone’s favourite portaloo purveyor Toi Toi & Dixi, as well as TV production company Banijay (which, sadly for Banijay, is not the levfin issuer behind The Traitors).

Netherlands-based business services firm TMF is even trying for as low as E+325bps on its €1.055bn 2028 TLB repricing this week — after shelving an E+350bps repricing attempt back in July last year, in a sign of how different 2025’s early market is.

Exact Software also managed to push price talk down as low as E+325bps in return for a tweak in its margin ratchet this morning. Read more here.

As above, Xavier Niel’s Swiss telecom operator Salt has, so far, pushed things the furthest. Its loan repricing closed down at a slim E+275bps yesterday (Thursday 16 January). The name is rated B2 by Moody’s, but double-B by the other two agencies. Investors grappling with a Moody’s-rated CLO struggle to make the relative value work, they told 9fin.

More euro repricings — from Boels Rental, Spanish vet firm IVC, US-based property restoration business Belfor, UK insurance intermediary group Ardonagh and B&B Hotels — joined this week’s throng.

Outliers to this trend include Irish forecourts retailer Applegreen, out with new money supply via its €535m 2032 TLB refinancing private credit debt. The five-handle on the loan signals that “there’s some hair on this one”, as one PM put it — not least a complicated structure that sits 60% of Applegreen’s EBITDA (via subsidiary Welcome Break) outside the restricted group.

“Credit quality is more important than rating — for example, Applegreen wouldn't have solved its issues just if it was a B2 or B1,” said the banker.

And there’s more new money supply to come: 9fin reported last week that AVIV Group is pre-marketing €1bn of loans.

Here’s a look at what’s in market:

Leveraged loan movers

High yield

The bond market is also picking up steam. One bank is prepping four bonds deals — mainly refis — in the pipeline for next week, a source said. Elsewhere, The Restaurant Group is preparing a unitranche refi via a sterling bond.

This week, four issuers (Salt, Cibus Nordic Real Estate, equipment rental firm Kiloutou, agro-industrial company Tereos) priced euro high yield deals, with residential real estate investor and manager Heimstaden releasing IPTs in the 8.75% area on its €350m 2030 SUNs this morning.

A smattering of European issuers (like liner and tanker operator SFL and Scorpio Tankers), meanwhile, went for dollars.

Also check out 9fin’s bond covenant trend report published this week.

Here’s a look at what’s in market:

High yield bond movers

Forward pipeline