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Private Credit 

Karis Hustad

The spring sun is finally bringing a little warmth to the endless string of grey and rainy days, but the leveraged finance markets have been heating up for a while, and it feels like summer in primary.

The European leveraged finance market has been blazing hot with new deals and packed pipelines, but several recent launches have some wondering at what point issuers might be flying too close to the sun — and if a cool-down is to come?

On the loan side, US chemicals distributor Univar came back to market seeking a repricing just seven weeks after raising a $500m-equivalent TLB to fund a dividend to shareholder Apollo. At the time investors already viewed the dividend as punchy, but recognised that it was an opportunistic play in a strong market.

Now Univar is seeking to reprice its $2.754bn and €1bn 2030 TLBs from their 450bps margins. Talk was 400bps-425bps across both currencies, with the deal landing at the tight end of this range at par, for a 50bps saving.

“It’s permitted under the docs and it’s dependent on the market whether it gets done or not,” said a buysider not in the deal. ”It’s egregious, but not that egregious.”

Following marketing last week, UK car manufacturer Aston Martin launched its £1.1bn-equivalent dual tranche (£/$) refinancing, replacing its Covid-era 2025 with new 2029 SSNs. Despite its recent upgrade from S&P and Moody’s, ratings agencies were critical of its weak financial profile (including negative EBIT and FCF in recent years) and high leverage, and investors struggled to see where cash flow positivity was coming from.

“Great cars, rubbish credit,” said one buysider.

Still, it was seen as a test for just how receptive the market is. The $960m (£750m-equivalent) SSNs due 2029 priced at 10%, while the £400m sterling tranche priced at 10.375%. This was a particular result for the sterling market (the original talk was for a £350m tranche 50bps back of the dollars).

Docs were changed during syndication, with a J Crew Blocker added — 9fin’s Legal QuickTake on the original deal terms is here.

Given how Aston played out, does this mean we’re about to see more high risk high reward credits taking their chances? Here’s a look at some bond candidates paying over 9% that are due to mature — and there are precious few candidates that aren’t already grappling with serious distress or highly idiosyncratic issues.

That isn’t to say that anything goes on the issuer side. Danish hearing aid manufacturer WS Audiology is in the market with a dual currency A&E to push its 2026 term loan maturities by three years — but it is easing the deal’s passage with a substantial equity injection from shareholders, and refinancing its second lien with a holdco PIK sold to private credit.

What could change the balance of the market? Lenders are crying out for more M&A to drive new money transactions, which some are predicting could heat up in the second half of the year. Some of the biggest capital structures in European levfin are looking for exits, including Upfield and Techem. Recent IPO candidates have included German retailer Douglas, which filed for a Frankfurt listing, and Galderma, which launched its Swiss IPO this week.

Potential new entrants include chunky corporate carveouts, such as DB Schenker and Siemen’s Innomaticscarve out—though straight LBOs aren’t guaranteed. But we are hearing the pipeline of private credit to BSL refinancings will continue to grow, and already this has started to ease some of the price pressure.

"If you add all these [private credit to BSL deals] up, there isn’t new M&A, but it is new paper for to the syndicated loan market, and very quickly the demand supply balance [changes] and people having to pay up a little bit to get in deals,” said a portfolio manager.

“The market was very hot in January and prices got tight,” the source continued. “[Now] there's a lot of price tension — the market is definitely pushing back on pricing, not by like 100bps, but everything is coming 25bps or so wider than it was a month ago.”

On the macro side, doubts are rising over summer rates cuts. Futures are now pricing in roughly a one-in-three likelihood that the Fed won’t cut at all by June, according to a note from Deutsche Bank Research. Treasury yields are up, as the most recent strong PPI report and high oil prices indicate that inflation isn’t yet under control.

However, there is likely to be more clarity soon as policy decisions from the Fed, Bank of England and Bank of Japan are expected next week, alongside global flash PMIs on Thursday and inflation reports in Japan in the UK. Watch this space.

The appetite for high yield continued to be strong. Per Barclays, the seven day period from Thursday to Wednesday (7-13 March) saw inflows into €-IG and PE HY, as well as long- and short-duration funds, with a slight skew toward the latter. This marks the 9th consecutive week of inflows into PE-HY. All €-IG fund flows were in the 63rd percentile, while all PE HY fund flows were in the 78th percentile.

Three deals tested the strength of the sterling market this week: Aston Martin, Heathrow and Pinewood Studios.

First, a bit of context from our deep dive into the sterling trend. According to 9fin data, sterling issuance represented just 3% of primary supply in 2023, a notable decline from 14% recorded the year prior. But those who did test the waters last year paid up, at least in absolute yield terms: The majority of sterling tranches featured a coupon in the high-single/double-digit range in 2023.

But the price is also indicative of the risk. Aston Martin, the highest priced deal so far this year, was seen as a test for what’s possible for riskier credits — and it seems to indicate that investors are still hungry.

London’s largest airport, Heathrow, issued £350m of 2031 SSNs from its holdco, a credit one buysider described as “tricky despite being well-run by management” with leverage and post-Covid recovery as key concerns.

Price talk guided towards 6.75-7% from the 7% area (IPTs were roughly 150bps wider than outstanding 2029 notes) — and priced even tighter at 6.625% at 100. Find Credit and ESG QuickTakes here.

It was the same story for UK-based film studios company Pinewood. It initially launched £500m of 2030 SSNs with talk in the 6.25% area, then upsized to £750m and priced at 6%. Credit, Legals, ESG from 9fin.

With nearly £20bn of sterling bonds maturing before the close of 2026, we anticipate many more joining the queue in the coming quarters.

Outside of sterling, Shearwater GeoServices priced its $300m 2029 SSNs at 9.50% at 100.

Finally, PHM Holdings priced €35m of 2026 SSFRNs at E+750bps at 104.25.

As you see in the table below, Altice France has been the big bond mover on Friday, on the back of the sale of its Altice Media — opening up the option of bond buybacks. Intrum Justitia moved the other way as it announced capital structure advisors had been appointed; here are 10 Questions about the troubled debt collector.

On the loan side, investors are clearly keen to stay invested and continue deploying money at tight prices.

Thyssenkrupp Elevators upsized its €3.2bn-equivalent dual tranche A&E due 2030 to €3.7bn equivalent, with dollar tranche accounting for the increase. The additional size will be used to repay its €500m FRN due 2027. Talk was revised to 99.75 OID on both tranches, and the margins also came at the tight end — S+350bps and E+400bps respectively.

While it was tackling its debt (originally due 2027) a little early, market sources noted that for companies with large cap stacks, it continues to make sense to “chip away at it” especially while investors have fewer opportunities to deploy cash.

Events ticketing platform Stubhub also priced this week. Like TKE, it increased its planned A&E, allowing it to fully extend its $1.63bn February 2027 TLB and $321m add-on plus its €452m February 2027. It priced the euros at E+500bps and 99, and the dollars at S+475bp and 99, both at the tight end of revised price talks. Sources said the latest refi can be considered another leg of the IPO strategy, as it allows the company to go public with a capital structure that’s sustainable for the long term.

French wholesaler Prosol also priced a €250m TLB fungible add-on at E+400bps at 96.75.

Meanwhile the pipeline is filling up (though mostly with A&Es and refinancings)

German HR software firm P&I (Personal & Informatik), backed by HgCapital, is seeking a €455m TLB with price talk at E+425-450bps at 99.5. Proceeds will primarily be used to refinance an existing private loan, fund a dividend (part of which will be financed by new incremental PIK proceeds) and to cover transaction fees and expenses.

CVC-owned Finnish private healthcare group Mehiläinen launched its expected A&E, seeking to extend its €1.21bn TLB by three years to August 2028. IPTs are E+400-425bps at 99.5.

Similarly Spanish catering business Areas, backed by PAI Partners, is also out with an A&E, pushing maturities on its €1.13bn TLB to 2029. Price talk is E+500bps at 98-98.5.

Dutch testing and inspection company Normec is refinancing €665m of debt, including a €565 TLB and €100m delayed draw TLB (fungible with TLB once drawn, sold as pro rata strip). Syndicated lenders generally dislike such structures (as seen in Eleda) but the market is hot and this flexibility helps keep deals out of the hands of private credit. Price talk for the Astorg-backed company are E+425bps at 99.5.

Boluda Towage, a family-owned towage company, launched an A&E looking to push its €890m July 2026 maturity out to 2030, while also raising €210m for bolt-on M&A).

Spanish travel technology company Hotelbeds (now known as HBX Group) launched a repricing and add-on, including a €760m TLB with price talk at E+450bps at 100 and a minimum €547m TLD with price talk of E+425bps at 99.75. It will, however, keep the same 2028 and 2027 maturities.

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