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This is our weekly newsletter on all things leveraged finance, from the latest trends to in-depth coverage, to people moves. Explore all our market wraps here.

At debt market conferences in Amsterdam and Paris this week, the big question on everyone's mind was: When are LBOs and M&A finally coming back? Most seem to think it’ll be Q1 next year, given the geopolitical uncertainty in Europe, the Middle East, and Asia, plus the looming US elections.

The European leveraged finance market had a strong Q3, especially in loans, but the recovery still feels patchy. Even with favorable financing conditions, big M&A deals haven't fully returned to the scene just yet.

“Even though volumes are up, the percentage of deals related to LBO M&A transactions has come down,” said Eduardo Manzanera, Managing Director of EMEA Leveraged Finance at Goldman Sachs at the AFME's European High Yield and Private Debt Forum.

To that point, we've put together a deep dive on how dividend recaps are fueling a market eager for fresh capital while it waits for more M&A activity.

A major potential new deal on everyone's radar is CD&R’s €16bn buyout of Sanofi’s consumer health division, Opella. The transaction has secured backing from 22 banks a debt package of €7.5bn. The whole financing spreads across four tranches: TLBs, high-yield bonds, €1.2bn in PIK notes, and a €1.2bn RCF.

We’re also still expecting more names to come to the market (mostly refinancings as you would have expected), including a German airline, a healthcare provider from the Netherlands and a food product maker from Spain.

The resurgence in traditional leveraged finance is also reshaping private credit’s role. There was a time, not long ago, when private credit seemed to have the upper hand over syndicated deals, even for larger deals, especially when market volatility made banks wary of taking on underwriting risk.

Jeanine Arnold, from Moody's EMEA Leveraged Finance, said there has also been a shift in deal processes. “Last year what we used to see was a lot more duel tracks. Whether it was going down the private credit market or going down the syndicated market, we found out pretty late on which route it was going to go down,” she said. Now, dual tracks tend to be limited to the lower end of the credit spectrum—think B3 or Caa ratings.

“The days of peak private credit are over when it comes to broadly syndicated deals,” said Arthur van Schie, Head of Leveraged Loan Syndicate EMEA, ING.

Still, private credit remains a key player in specialised situations and structures, such as providing delayed term loans or other instruments with PIK elements.

Manzanera said that private credit would coexist more with the broadly syndicated market, in the future.

"A deal where at this point in time you have this ability to go to market in the next month or two, the syndicated market is extremely competitive," he said. "You have to go to market in a year because some deals take a long time to close. You don't want to incur the carry. That's where private credit become a bit more competitive"

Private credit also shines when currency factors are in play. Since the European syndicated market mainly deals in euros, swapping to other currencies like sterling or Nordic ones can add risks and costs.

Separately, a buysider told us that as the flow of private credit names refinancing in the BSL market is on the rise, the key is to be selective. "It’s all about avoiding the bombs, rather than picking the winners,” he said.

“For two years we haven't really had new names, especially new complicated names. Whereas that's the whole point of the direct lender market, they can spend a bit longer on credits. But some of the stuff that's come over, it's been mixed bag — some good ones and some not so good ones,” he added.

For example, we’ve got FNZ’s $2.1bn-equivalent multi-currency debt refinancing of its private credit debt in market. Investors are optimistic about the company's strong customer retention and low churn, but remain cautious due to its high leverage, weak cash flow, and expansion risks.

The sponsors tapped private credit investors for £1.2bn of unitranche debt in 2021. Now, its proposed three-part deal consists of a $950m TLB, $650m-equivalent of euros and $500m-equivalent of sterling.

You can find 9fin’s breakdown of the transaction here.

OCU is another company that has refinanced its existing private credit debt in the broadly syndicated market, with a sterling TLB component.

The refinancing package includes a €530m TLB due 2031, priced at E+425bps with an OID of 99.5, and a £200m TLB due 2031, alongside a £75m (reduced from £100m) delayed-draw term loan due 2031, both priced at S+550bps with an OID of 99. The RCF was also upsized to £150m from £130m. You can find 9fin’s breakdown of the transaction here.

Also switching from private credit to the syndicated market this week was data processing company Your.World. The company, via BNP, launched a €1bn TLB due 2031 with price talk at E+475-500with an OID of 98.5.

Elsewhere in the leveraged loans world, provider of food preparation equipment Magimix Robot Coupe came to market with a €500m TLB due 2031 to back a buyout by Ardian. That priced at E+375bps (from the initial price talk of E+400-425bps) with a 99.5 OID.

The company consist of Robot Coupe and Magimix, both of which are based in France. The former manufactures premium bench-top equipment for professional kitchens, including food processors, vegetable and juice preparators, and other categories. Magimix focuses on premium small kitchen appliances.

Despite some investor concerns about the company’s relatively small size, pricing was tightened in light of investor demand for new paper.

"It's a pretty niche and small business, with some supplier concentration—top five make up half of sales—and there are bigger competitors in the market,” said a debt investor. “Magimix has a bit of hair on it with declining performance.” The investor also cited uncertainty surrounding a longstanding Nespresso contact.

German packaging firm Fischbach made a series of documentation concessions to close its buyout deal by Onex Partners this week, according to 9fin sources.

The company priced its €350m 2031 TLB at E+475bps with a 98 OID on October 22, hitting the wider end of an initial 98-98.5 range.

AD Education and Galileo Global Education recently tapped the primary loan market to finance their acquisitions, reflecting a growing trend of using debt to support M&A in the higher education sector.

AD Education, a privately-owned French company, priced a €700m seven-year TLB at E+ 400bps with an OID of 99.75, hitting the lower end of its price range. The loan is currently trading above par. Meanwhile, Galileo, Europe’s largest for-profit higher education group, upsized its 2028 fungible add-on to €650m, priced at E+375bps at par.

Here’s a look at what’s currently in market:

Here’s a look at what recently priced:

Takko, the apparel retail group, returned to the high-yield market with a €350m SSN issuance to refinance its post-restructuring debt, leveraging a strong operational recovery. The brick-and-mortar retailer faced significant challenges during pandemic lockdowns. Read 9fin’s Credit QuickTake, ESG QuickTake and Bond Legal QuickTake.

Meanwhile, food group Boparan has launched a £390m SSN offering due 2029. The proceeds, combined with £150m from the sale of its European poultry business and some cash, will be used to repay £525m of 7.625% SSNs and a £10m TLB, both due in 2025. Read 9fin’s Credit QuickTake and ESG QuickTake.

With the climate crisis putting the spotlight on the oil and gas sector, 9fin also takes a closer look at the key environmental risks facing UK-based high-yield oil and gas credits—and whether they're ready to handle them.

Enjoyed this weekly wrap? Our customers receive this content ahead of the crowd — find out more about 9fin’s news and analysis.

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