Europe has been starved of LBOs since central banks started to raise interest rates in 2022. But in 2024 the narrative has started unwinding, as private equity funds have deployed some of the dry powder accumulated in these years with the exit period for pre-Covid buyouts in sight.

According to 9fin data, 11 LBO financings have been priced in the syndicated markets year-to-date compared to only 10 in the whole of 2023. The majority of this year's buyouts have been under €1bn, but Zegona's takeover of Vodafone Spain, the first large cap LBO in Europe since Synlab last year, could reopen the window for multi-billion syndicated buyouts.

Cinven's €2.9bn takeover of the Spanish real estate web portal Idealista could be another kick for major buyout transaction. This is expected to tap both syndicated market and private credit investors.

9fin reported that the shop is looking to secure a junior PIK tranche on top of senior bank debt to finance the buyout, layering it in the form of a 'hybrid' structure as we've seen in the case of Ardonagh and other large cap companies this year.

In the meantime, we've also had the smallest buyout of the years so far, as Dutch optical retailer Nexeye priced a €325m 2031 TLB to back KKR’s takeover from 3i.

Lenders were skeptical on the deal given the small size, but it closed and priced at E+450bps and 99.5 OID nevertheless.

Buysiders and sellsiders alike agree we've been experiencing possibly the strongest LevFin market run in the post-Covid era, with very tight credit spreads and a lot of CLO creation to go with it

But what can go wrong? The first round of elections in France could lead to a new round of volatility across fixed income products, after provoking a significant sell off in most Eurozone sovereign bonds in favour of a flight to quality towards German Bunds.

Following the European election results on 10 June, according to a BofA research, the reaction across EU levered markets has been strong, with loans widening 9bps and HY by a notable 33bps over the 10 days after the results — the sharpest correction since October 2023 not counting the Altice-led widening in European loans in March.

BofA expects this new round of elections to drive the direction of risk spreads across European bonds and loans, leading to “increase fiscal, economic and political uncertainty in France for the next 4-6 weeks”.

In our market this could mean an increased amount of dispersion in European loans in the near-term, as the European loan index (ELLI) features France as the largest represented country with nearly 20% of all European loans from French entities.

The country's share in ELLI has increased rapidly over the past five years from 10% in 2019 to 2x that level today — an all-time record contribution from France, BofA added.

Leveraged loans

French nursery operator Babilou priced its €797m (from €847m) 2030 TLB A&E (from 2027) at  E+400bps and 99.75. As flagged in our deal preview, if the deal landed on the tighter end of talk at E+375bps, the A&E (which usually results in a margin uplift for investors) would have actually resulted in investors swallowing a margin cut. So, there has been some pushback.

That said, the fact the company was able to keep margin at the same level of 400bps versus its existing facility underlines how tight conditions are.

The €50m downsize can be attributed to the delayed draw term loan getting dropped; it was meant to fund about €18m of bolt-on M&A, repay €23m of RCF drawings, and add €4m cash to balance sheet, according to S&P.

It’s somewhat surprising given how prevalent DDTLs have been in 2024 deals – investors have usually accepted them through gritted teeth. Check out our deep dive on the theme here.

Somewhat surprisingly given questions over election risk, another Gallic deal has decided to tap syndicated markets. French nursing home operator DomusVi priced its 2029 TLB A&E (from 2026), settling on €1.85bn from €1.97bn. The coupon landed at E+500bps and 98.

Buysiders speaking to 9fin for our deal preview flagged cash flow concerns, even if sponsor ICG is putting in an extra €100m of equity to help the deal.

“The equity injection is encouraging, but it’s a pass for me,” said one lender. “There’s too much pressure on cash flow. They’ve spent a lot on expansion previously.”

But other buysiders have been won over by a rebound in DomusVi’s topline and a deleveraging trend, as well as attractive pricing, with margins on single Bs slipping into the 300s.

“Leverage is winding down and, honestly, this A&E is what the company needed. It’s a sector that’s got all the right tailwinds, decent revenue, EBITDA growth and good scale,” said another investor, an existing lender into the business who is playing the deal.

German pharmaceutical company Stada has landed on revised price talk of E+400bps and 99.75-100 (from 99.75). The company is out with a minimum €500m 2030 TLB (A&E from 2026 and 2028).

For more specifics on the deal, check out our deal preview.

“The timing is very opportunistic given the strength of the market, they're ahead of time with their maturities,” an investor said.

Stada's A&E comes as Cinven and Bain are looking to exit the company after taking over in 2017 for €5.3bn from management and minority investor Elliott Management — they took it private one year later.

The bid was backed by €2.35bn of loan financing, comprising of a €1.65bn TLB and a €300m-equivalent sterling-denominated loan, plus €485m of seven-year FRNs and €340m of eight-year SUNs. A €400m six-year revolving credit facility was also part of the deal.

“They’re cleaning up the structure and preparing the company for the next sponsor,” an analyst said.

Check out the list of leveraged loans that priced recently below:

Here is a list of leveraged loan transactions in the market:

Weekly leveraged loan movers

On the secondary market, 9fin reported that Huws Gray hit triple C this week after another round of poor earnings for Q1 24, with EBITDA down around 40% and revenues around 10% YoY.

Sources told 9fin the seller of building material announced reported EBITDA of £13m and LTM March 24 reported EBITDA of £74m, with gross leverage hitting the double digits at 10.4x.

High yield

Issuance in the European high yield market followed the lev loan narrative, with buyouts landing in the HY space as well.

Finnish heating company Purmo marketed €380m of SSNs to refinance existing debt and back a takeover by Apollo — 9fin scooped the deal in pre-marketing, read here.

German designer and manufacturer of manual wheelchairs Sunrise Medical priced €850m of dual-tranche SSNs/SS FRNs due 2031 (upsized from €815m) to back the takeover of Platinum Equity and refinance the previous debt.

French frozen food retailer Picard took the advantage of the market window ahead of the elections in the country and launched a dual tranche €1.225bn SSNs/SS FRNs due 2029 to refi the existing debt.

Check out the list of high yield bonds that priced recently below:

We have only one bond currently in the market:

Weekly high yield bond movers

Forward Pipeline

Get in touch at marketing@9fin.com to request 9fin's weekly leveraged loan movers, high yield bond movers and forward pipeline.