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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.

The European leveraged loan market didn’t lose a minute in restarting its engine. Two deals launched the same day of the US election result, which ignited a bullish run for risk assets.

“We might see an unexpected November market window,” a sellsider said. “Looking at how the markets reacted, companies might want to come to market sooner.”

Deals in Europe mirrored, on a smaller scale, flamboyant US primary activity. Follow 9fin’s New York-based colleagues for more details on loan activity across the pond.

European high yield bonds and leveraged loans issuance YTD 2024. Charts by Arturo Alaimo | arturo@9fin.com. Link: Table

Spanish higher education institution Universidad Alfonso X el Sabio is seeking to extend its 2019 buyout financing (which backed the acquisition from CVC) with a 2029 €302.5m A&E TLB. It’s talked at E+350bps-375bps and 99.75 OID.

JP Morgan marketed a $150m equivalent dual currency TLB for US-based software company Datasite, an add-on to its $721m 2031 TLB and and €440mm 2031 term loan. It priced at S+325bps and E+375bps, the same as the existing margins.

Other deals are expected to come soon. Following the US election, a senior banker said, it should "open up a floodgate for deals in the coming weeks before the end of the year".

A building services deal of around €500m, which takes out a private credit facility, could be among the early deals in this surprise November window. 9fin subscribers can find out more here.

This credit is following a flock of issuers that moved off private credit facilities this year. Loan investors are still waiting on EMK Capital’s portfolio company VDK Groep’s €1.1bn refinancing deal. As reported, the sponsor and its debt advisor Rothschild heard pitches from direct lenders and banks, with a final decision expected to come in the upcoming days.

UAX is the only loan currently in the market, here’s what priced this week:

Speaking of PC to BSL moves, questions are hovering around financial technology firm FNZ. It came to market mid-October with a multi-currency TLB to refinance its debt, yet only the upsized $1.1bn dollar tranche finalised — it priced at S+500bps and 98.5 OID from S+475/500bps and 98.0/98.5 OID at price talk.

Its sterling tranche, also upsized to $525m-equivalent from $500m, is still in market and talked at S+600bps and a significant OID of 96. It had an initial price talk of S+575/600 bps and 97.5-98.0 OID.

Investor demand fell short on its euro leg, originally a $650m euro-equivalent loan with price talk of E+500/525 bps and 98.0-98.5 OID. It later got downsized $521m equivalent and recut into a relationship bank TLA.

Barclays is joint physical bookrunner for the euros, sterling and dollars. Deutsche Bank is joint physical bookrunner for euros and sterling. BMO is joint physical bookrunner for dollars. Standard Chartered is a joint bookrunner. Original commitments were due on 30 October, and later moved to 5 November.

9fin reported the initial lenders’ concerns over FNZ’s high leverage, weak cash flow and expansion risk. Two credit analysts noted at the time of the preview the OID could be higher given the company’s credit profile and the broader market pace of repricing.

One portfolio manager told 9fin they passed on the deal because of leverage and cash flow metrics.

And with the loan now sitting with banks, it hints that more questions on the credit mounted during syndication. “It's almost a year early [for refinancing] — you'd like to see a year of better cash flows and better positive earnings,” the first credit analyst said. “You need to take a little bit of a leap of faith which is why we want it to come a bit wider.”

Bank updates on 4 November revealed changes to the loan documentation, suggesting previous docs were too loose on certain terms. Read 9fin’s loan legal QuickTake here.

FNZ is seeking to refinance a $1.9bn unitranche provided by HPS, Arcmont, Goldman Sachs and Hayfin financed in 2021, Bloomberg reported.

Barclays and Deutsche Bank declined to comment when approached for comments on the deal development.

Primary activity kicked off again but the Trump administration’s policies could have a knock-on effect for certain credits. 9fin produced a deep dive here, highlighting that names to watch out for include chemical producer INEOS as it could be affected by tariffs on imports from production regions (including China).

As per Trump’s pledge to "end the electric vehicle mandate on day one", German car seal supplier Standard Profil is another name to look out for. The company reported 57% of orders relate to battery electric vehicles on on its €3.8bn order book as of FY 23.

On the energy front, where we might see a potential rollback of support for renewable energy in favour of fossil fuel development, UK-based extractor Ithaca Energy mentioned the US election as a factor likely to affect global oil prices as part of its latest bond offering.

9fin’s document search tool can quickly scan for risks identified by leveraged credits within their reports.

A strong risk on-sentiment flooded the markets following the US election outcome, pushing the S&P 500 and other major indexes to new highs. Banks and private equity stocks led the gains on the prospect of deregulation laws, from capital requirements to more relaxed M&A processes.

The S&P popped to 5,929.04 as of Thursday (November 7), the Dow Jones surged 3.6% to a record close of 43,729.93, and the tech-heavy Nasdaq reached all time highs at 18,983.47.

“Market reactions are primarily driven by Trump’s strong emphasis on the industrial sector and small businesses in the central U.S. states,” Filippo Diodovich, IG’s senior market strategist, said.

“This approach is expected to result in highly expansive spending policies, with a particular focus on supporting businesses by reducing the corporate tax rate from the current 21% down to 15%,” he added.

The Federal Reserve’s decision to cut interests rates by 25bps on Thursday (7 November) night, after the 50bps cut in September, fuelled more calls on shares despite Fed chair Jerome Powell not sending signals ahead of the December meeting.

The US election result and the rate cut moved US IG credit spreads to tighten another 2bps to 75bps on Thursday night, which is the tightest closing level since 1998, according to a Deutsche Bank research.

“There’s an incredibly buoyant mood right now,” the German bank said.

However, according to a separate Barclays research, what matters most from a European perspective is whether European rates would be able to decouple from such US rates moves either in terms of levels, or volatility.

“Were US rates to go higher, and European rates fail to decouple, this would run the risk of refinancing costs increasing and would be a problem for European HY markets in particular,” the bank noted.

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European LevFin Wrap — US election fuels primary; FNZ changes leave questions

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