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Now 74-days since the last true High Yield mandate, primary’s chill is at its longest in over a decade. Alongside new Q1 reports, Elon’s bid for Twitter made headlines, as did the release of KPMG’s special investigation into Viceroy allegations at Adler Group.

Although far from a done-deal, Twitter’s take-private would be one of the largest LBOs since the financial crisis. For all the back and forth in recent days, securing $46.5bn in funding commitments is a mean achievement – though not one which seems to have convinced markets of an imminent takeover. The group’s 2027 | 2030 SUNs haven’t really moved on the announcement and are still quoted around 96.2 | 98.4, while the shares have risen only slightly to ~$48.3.

The commitment letter details an incremental freebie basket of $1,700m / 100% EBITDA – suggesting marketed EBITDA could be in this region.

Pleasingly, EBITDA of ~$1,700m and headline interest rates on the pro forma capitalisation bring interest coverage in at a comfortably round 2.0x. Cap rates for the underwrite haven’t been disclosed, but, add back anywhere between 100-200 bps and interest cover drops well below the 2.0x benchmark.

It’s also intriguing to see the debt facilities secured are well in excess of those needed to fund the proposed $54.20 / share offer. Poison pill aside, this could potentially permit Musk to table a bid up to $62-63 / share.

Clients can read our digest of FinTwit developments in full here.

Following recent reports of potential takeovers of Parkdean Resorts and Butlin’s, this week it was the turn of Brookfield-owned Center Parcs. Sky News reports the sponsor is close to appointing Barclays to advise on the sale. The news outlet suggested a potential sale was being readied back in January.

In the world of football, the FT revealed Investcorp is in exclusive talks to acquire Serie A team AC Milan from Elliott Management, in a deal that could value the club at more than €1bn. Three Italian clubs – Juventus FC, Inter Milan and AS Roma – are already HY issuers. Also from Sky News, it’s been reported that Lewis Hamilton and Serena Williams have joined a list of investors hoping to become the new owners of Chelsea FC.

Sentiment held fairly steady with the iTraxx Crossover more or less unmoved at 376 bps on Thursday’s close. But, Credit Suisse reports further EHY outflows, -1.25% this week, and -9.38% of AUM year to date. BofA Global Research detailed further outflows for Global (-$362m) and Euro (-$298m) focused funds, while US HY captured a marginal inflow (+$17m).

With an average drop of -0.30 pts across instruments we track (26% +0.47 pts | 71% -0.59 pts), only Real Estate (+0.10 pts) and Energy (+0.05 pts) sectors marked positive returns on the week. Worst performers were Communication Services (-0.54 pts), Healthcare (-0.61 pts) and IT (-0.64 pts).

In single name moves, developments were afoot for Corestate, Aggregate and Adler Group. Corestate’s delayed accounts landed on Thursday, and detailed impairment of goodwill at Helvetic Financial Services (HFS), and expensing of risk provisions, which halved 2021 Adjusted EBITDA to €43.8m. The group’s 2022 | 2023 SUNs rose +1 pts | + 4.7 pts on the week to the mid-high 60s – 9fin’s Chris Haffenden predicts some form of distressed A&E with a cash sweep from asset sales will soon follow.

Adler Group released a teaser to the KPMG forensic report on Thursday evening, citing no evidence that “there were systematic fraudulent and looting transactions with allegedly related parties”, although admitting “deficiencies in the documentation and the process handling of those transactions”. The resulting pop in Adler’s bonds early on Friday was sharply reversed following the 10.30am call. Clients can read our full coverage here.

Adler Group: 2027 SUNs reverse gains after a call held to discuss the report

Netflix stock dropped ~35% on Wednesday, as the tech giant reported its first loss of customers in a decade. Across all ten SUN tranches, instruments traded down an average of -1.7 pts to an average of 102.1.

Account sharing and competition from alternate streaming providers added to an easing of Covid tailwinds, compounded further when Bill Ackman announced the sale of his entire stake – notching a $400m loss on the investment. Despite this, sales were up +9.8% YoY, with EBITDA +3% and net leverage down to 1.3x. Moody’s retains its Ba1 (positive) outlook, suggesting they will continue to monitor the group over the coming quarters, before considering raising the company's credit ratings to investment grade.

Unsecured debt lender 4finance released an investor update this week outlining ownership changes and the sale of its Polish business. Formerly its largest shareholder with 49.05%, Vera Boiko (related to sanctioned Oligarch Oleg Boyko) reduced her stake to zero on the 13th April – the new beneficiaries are three Ukrainian relatives, and a Swiss charitable fund. In a move to avoid new sanction legislation proposed by the Polish parliament, 4finance sold its Polish business to local management, with the €18m consideration to be paid over three years. Both unsecured tranches have softened since the announcement in mid-April (now ~92), with the shorter dated 2025s by over -2 pts.

As reported by 9fin’s Toby Udofia, Swiss-headquartered direct-selling beauty group Oriflame has faced a challenging 2022. Thursday’s Q1 results revealed a sales drop of -15%, declining membership, and the designation of two Russian subs as unrestricted subsidiaries. The 2026 SSNs had slid nearly -2.4 pts by Friday afternoon, now seen in the high 70s. If you would like to request a copy of this report, please complete your details here. 

In more positive moves, on Friday Groupe Casino posted net sales growth of +4.7%, with strong performance in LatAm and improvements in net cash flows for the French segment of +€570m YoY. Continuing the €4.5bn disposal plan, €383m in proceeds have been collected so far in 2022 – Casino is ‘confident’ the plan will be completed by end-2023. The SUNs moved up an average of +1.7 pts, and SSNs +0.9 pts on the week.

Maturity is fast approaching single-asset German refinery Raffinerie Heide, whose 2022 SSNs rose +2 pts to around 95, as Everest Research posted a new memo ‘Can SSNs be refinanced even with Kalundborg insertion into restricted group?’ Our update following a non-deal investor call on 8 March can be read here.

A big question mark hung over this week. With countless buysiders expecting the market to open up after Easter, the 9fin team waited with bated breath for a copious amount of primary, but this Tuesday, the treats failed to arrive. It took another couple of days for the market to wake up, albeit somewhat sleepily.

CLO issuance continues at pace, which should help the demand side, with PGIM Fixed Income pricing their second deal this year, according to market sources. The mood was positive at this week’s IMN CLO and Leveraged Loans Conference. Managers remain calm about the lack of deals currently on offer, saying they are happy to look at the secondary.

Nevertheless, market participants are suggesting that issuance will be back very soon. One speaker at the IMN conference said there is a fair amount of demand for issuance “that checks the boxes for warehouses, so good weighted-averaged spreads, a little bit of OID. As long as you hit E+425 bps and 99 for a single B, unless it's an awful deal, you print.”

Borrowers can look at the pricing of two loans this week, Cupa and Clinigen. Both deals priced with 4 handles, despite a multitude of issues raised by buysiders for both credits.

Clinigen priced its £410m euro-equivalent first-lien TLB at E+475 bps, in line with guidance, alongside a £200m first-lien TLB guided at S+575 bps. Both tranches were floored at zero with a 98.5-99 OID for the €-tranche and 98 OID for the sterling. Pricing on the Euro-denominated loan tightened on Tuesday (19 April) from 98 OID at launch and priced at 99 on Wednesday (20 April). The facilities are rated B2/B+/B+.

Clinigen is a black sheep pharmaceutical firm tapping the LevFin market. Besides managing a generics portfolio, it has branched out to assisting clinical trials, packaging, sourcing drugs and serving unlicensed markets. Some buysiders struggled to get a grip on a company with many complex business lines. Performance is lumpy and the various segments obscure visibility on where Clinigen adds value and exactly where it can benefit from future demand. Others saw potential in diversification, and tailwinds from pharma industry outsourcing trends. Clients can our loan preview here. If you are not a client but would like to request a copy, please complete your details here. 

During syndication, management failed to give more clarity to help investors better understand a complex business, complained three buysiders. Leads emphasised a hefty equity cushion and lender-friendly documentation helped to make Clinigen a less contentious offering.

Cupa, on the other hand, faced reservations from the buyside against investing in cyclical building materials so late in the cycle. While sponsor Brookfield could boast of a low purchase price, conservative add-backs and healthy margins, the Spain-based natural slate producer still found itself in the middle of buysider debate. Difficult docs and squeezed consumer spending were topics of controversy, and the ESG credentials were not crystal clear. For more, clients can see our loan preview here. If you are not a client but would like to request a copy, please complete your details here. 

Nevertheless, a B2/B-rated €480m TLB to support the LBO priced at E+450 bps and a 98.5 OID, from price talk of E+475 bps, with a 98-98.5 OID.

The issuer also conceded a raft of docs changes including, but not limited to, the inclusion of ticking fees where there were none, and a reduction from three to two margin ratchets. See a list of docs changes to the deal here.

So it’s clear the market is coming back to life, though more in waves than with an Easter-heralded bang. Refresco could be a harbinger of the tidal wave the market expects to come. The Dutch beverage solutions provider is being acquired by KKR for €7bn, according to Bloomberg. Existing investor PAI will retain a minority stake in the B2/B+ rated business and with a hefty €3.4bn-equivalent tranche on offer, across euros, sterling and dollars, it's clear the leads are aiming to tap every available pocket of liquidity to get deals across the line.

In line with current sentiment, the euro tranche is talked at E+450 bps, the dollar tranche at S+425-450 bps and the sterling tranche at S+525 bps, with all three tranches offering a 98-98.5 OID.

Notable is the absence of HY bond tranches. EHY is shut for 74-days and counting.

KraussMaffei has also come to market with less than a tenth of the Refresco issuance, a €300m TLB. The business manufactures injection moulding machines and plastic extrusion technology and may be susceptible to the cyclicality of the plastics industry.

IMN speakers mentioned that the private debt market continues to be a credible source of funding for sponsors, noting that Morrison’s has placed its junior unsecured bonds with a private buyer, CPPIB. Morrison’s published Moody’s and S&P ratings last week, suggesting syndication is imminent. Expectations are that a chunk of the jumbo £2.4bn senior secured might migrate from bonds to loans and into Euros.

Continuing on its marginally downward trajectory, only utilities and healthcare reported upward overall movements this week.

Unsurprisingly, troubled flexible packaging manufacturer Schur Flexibles saw the most dramatic decline this week (-9 pts), as sponsors have effectively given up control of the business in favour of a lender-led solution. Per a lender presentation and an update call that occurred on 20 April, sponsors B&C Group and Lindsay Goldberg will not be putting in the required €75m of new money to get the company back on track.

As previously reported, accounting issues led to a 25-point drop in Schur Flexibles’ €475m TLB in February amid fears of a restructuring before its first interest payment. The former CEO and CFO departed in December and advisers are now investigating the company’s accounting irregularities. As well as the accounting misstatements, which mostly related to capitalisation of items, there is a continued investigation into misappropriation of funds by management. The company’s TLB now languishes in the mid-50s. Clients can see our full update here or you can request a copy here. 

Taking the week’s second place in downward movements, Holland & Barrett’s €418.9m TLB facing maturity in 2024 is down another -3.8 pts. The TLB is now indicated at 64.5, alongside a £450m TLB indicated at the same price. The UK-based health foods retailer has been one of the few LevFin names mired in the Russia conflict, with Russian oligarch Mikhail Fridman exiting the company’s board and distancing himself from sponsor LetterOne. HSBC then withheld interest payments on its TLB over sanctions, though buysiders have since confirmed those payments have now been made.

The week’s rising credits were less dramatic, such as GHD’s €360m TLB paying E+400 bps. It is now indicated at 94.2. The medical supplies and pharmaceuticals producer based in Germany has not had any significant announcements in recent months.

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