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Ben Hoskin

Laura Thompson

Spreads may have widened last week, prompting our suggestion that opportunistic refinancings were on their way out, as investors were becoming more risk averse. Unfortunately it looks as if we were wide of the mark - alongside three fresh refi’s, the risk-on issuance returned with a duo of plucky PIKs to test market appetite. 

Online university and e-learning platform Multiversity was the first to launch, offering €765m of SSFRNs due 2028. Proceeds were used to fund CVC’s buyout of the 50% of the company that they didn’t already own from founder Danilo Iervolino, keeping the Italian LBO market ticking over nicely. 

€36.8m of drawings on a €100m RCF were used alongside the Notes, a €41.8m contribution from CVC and an unusual €221.6m “Bridge-to-Cash” facility as the financing. Details were light on the facility, which seemed to be equal to the cash available held at subsidiary MultiSpa for the purposes of the investment in the target, being repaid within two business days following the post-closing reorganization. The transaction valued Multiversity at ~€1,456m, with a healthy equity cushion of around 58%.

The business currently benefits from new entrants completely closed out by current regulation in Italy that states no new licenses can be granted to new online universities. This is in place until academic year 2023/2024, so bondholders and the company alike will be hoping for no nasty surprises when the review of the legislation falls due during the tenor of the Notes. 

IPTs for the 7NC1 FRNs went out at the mid-4s on Wednesday, before tightening modestly to settle at E+425 bps on Thursday, with a 99.75 OID.

Next up came EQT’s Cerba, tapping May’s LBO paper to fund the acquisition of Italian peer Lifebrain for an EV of €1,195m (10.2x EBITDA). The combined group’s EBITDA used to market the deal came with some refreshing ~€330m downward adjustments to reflect healthy demand for testing during the pandemic, offset slightly by some synergies.

The €500m dual-tranche issue was split into €300m 3.5% SSNs due 2028 and €200m 5.0% SUNs due 2029, with a €300m TLB add-on and an additional €466m of equity contributions from the sponsor split €316m cash and €150m preferred equity making up the financing. The RCF was also extended €75m to bring total commitments to €400m.

Despite previously issuing a sustainability-linked loan, we note that there is room for improvement for ESG reporting across the board, with minimal information publicly available for any ESG factors, including those linked to the loan. 

Price Talk emerged Wednesday at 99.25-99.75 on the SSNs and 99.5-Par on the SUNs, with both pricing at the top end of the range.

To round up Monday’s action, British roadside assistance provider RAC Group launched a dividend recap late in the day for tri-sponsors Silver Lake, CVC and GIC. 

The £345m of Class B Notes due 2027 sit contractually subordinated to the rest of the complex cap stack (see in our Credit QuickTake here). As is becoming increasingly common, the company has uncapped RP capacity if leverage is at or below the level at issuance, with uncapped EBITDA add-backs - including more contentious revenue synergies - also permitted.

IPTs were sent out on Wednesday at 5.25-5% and struggled to move from there, with talk on Thursday the same range before the Notes priced at 5.25% this morning.

Highlighting the risk appetite in markets this week, TUI Cruises dived back into proceedings, tapping their deeply subordinated EUR 6.5% SUNs due 2026 for €223.5m to pay down some of their Tristar Term Loan, with the remaining €164m balance being converted into an RCF. 

Since the original €300m issue in May-21 to shore up the balance sheet, the company has enacted a number of liquidity measures to keep their head above water. In August, the company obtained pre-delivery financing commitments from existing and new lenders related to the new vessel Mein Schiff 7. Around the same time, they extended existing pre-delivery financing relating to two Italian new-build vessels, and secured €48m of additional state aid, before adjusting covenants on existing facilities further in Oct-21.

Returning demand as vaccination programs continue to roll out combined with a 60% reduction in operating expenses since mid-March 2020 has helped to contain cash burn, which averaged €20m since Apr-20 before the company turned cash generative again in Aug-21 (€9m) and Sep-21 (€12m). Investors were happy enough to push IPTs of 101.75-102 into 102.25, pricing Thursday. The notes were trading at 103.25, prior to the tap.

Automotive supplier ZF came on Wednesday with a drive-by MTN. €500m of unsecured debt  tightened meaningfully through the day, with IPTs sent out at 2.75-2.875% in the morning before parking at 2.375% at par later that day. The tightening may have been overdone somewhat, with the near investment grade Notes trading down to 99.25 off the break.

Rounding out this week's action were some tasty PIK coupons served up by Burger King France and Together.

Starting with the fast-food chain, Burger King France came to market with €620m of secured debt split across unallocated as of yet fixed and floating tranches, with the long-awaited refinancing of the PIK Toggle Notes coming on the side. 

Legals on the SSNs are on the conservative side, with minimal changes to the baskets and ratios from the 2017 issue other than size. The PIK Notes contained a special mandatory redemption (a hot topic this week) upon an IPO event.

Some on the buyside have questioned the Quick disposal to HIG Capital, who have subsequently announced a doubling in PoS infrastructure in the coming years, thereby increasing the competitive forces Burger King France will face. In total, €240m of disposal proceeds and €95m cash on the balance sheet are being used alongside the €620m Notes and €235m PIK to refinance ~€1,120m of debt that included PGE loans, RCF drawings, as well as a straight refi on the secured and PIK tranches. But the Quick proceeds will fail to de-lever the group much, as €174m of sponsor mezz is also repaid.

Pricing tightened significantly into Friday with the IPTs of low 5s and low 8s on the secureds and PIKs nibbled away to E+475-500 bps/4.75-5% and 7.75-8%, respectively. Then came a last minute reshuffle that saw the fixed tranche dropped and the whole €620m settling in the FRNs, which priced at E+475 bps @ 100. The PIKs also priced at par, with a 7.750% cash coupon (+75bps PIK). The lower call protection on the FRNs coupled with the special mandatory redemption contained in the PIKs could open the door to an IPO sooner rather than later.

UK mortgage and securitisation specialist Together sent £380m Senior PIK Toggle Notes due 2027 to the screens on Monday for a straight refi of existing PIKs. According to S&P, the group’s solid funding base has supported them during a difficult 18-months for alternative lenders in the UK, and contributed to the 200bps clip on the cash coupon and 287.5 on the PIK, from 8.75%/10.375% to 6.75%/7.5%.    

These two took the total PIK issuance in European HY to over €2bn for the year, with more expected to come soon as outlined in our new predictions piece looking at a list of names we think bankers should be monitoring for 2022 transactions.

How the tables turn. As we creep towards Halloween, it’s all treats for buysiders, who this week pushed deadlines, margins, OIDs while removing a number of tricks from docs.


“It’s important for banks and sponsors to acknowledge that the market is a touch sweeter than it was pre-summer,” one buysider said. “You can’t expect pre-summer pricing.”

Others, however, warned against over-exuberance. “There’s been a shift, sure, but that doesn’t change the bigger picture and that protections are getting weaker and weaker,” a second buysider cautioned, laughing outright at the idea that CLOs had gained an upper hand.

Still, B2 loans have trended up to a cosy E+400 bps post-summer and appear to be staying there, with OIDs settling down just below 99.4.

In a clear sign of shifting market conditions, Spanish telecoms firmMasmoviltoday pulled its€2.2bn repricingof anE+425 bps 2027 loan, inked in July 2020, “due to market conditions”. The loan was not only considerably larger than other deals in the market, which buysiders note have been clustering in the €300ms, but also paid noticeably lower at E+375-400 bps.

Further signs of the shift include three deals flexing wider this week: something the market has not seen since the end of Q1. These moves come from Netherlands-based TenCate Grass, Belgian The Cookware Company and US labeller Multi-Color. 


To take the first first, this manufacturer of synthetic lawns and astroturf (TenCate) conceded 25 bps and one-point on its margin and OID to E+500 bps and 98.5 on its €315m TLB (B2/B). A third buysider was unsurprised to hear of this flex. “It’s just a small company, even if looking to acquire, a small deal and a small market,” they said. “It would have had to come at a bit of a premium since there’s a lot of B-B2 repeat issuers and high quality credits around at the moment, so it would have had to at least stay in high 400s.”

A fourth buysider was more positive: “It’s not a top priority deal given its size, but it looked decent - good customer diversification, I liked management and they have a very clear market position in both Europe and the US, but it’s still a niche deal which also means more time getting to know the sector.”

Elsewhere, The Cookware Company widened +12.5 bps to E+487.5 bps to finally close its €348m TLB on 19th October after initial commitments of 14th October. Buysiders were worried about being burnt in the saturated and cyclical market, with fairly low barriers to entry, despite a hearty lockdown performance from the ceramics firm. Read more in a preview here.

Finally, Multi-Color flexed furthest, 50 bps wider to L+500 bps on its USD tranche and E+525 bps on its EUR tranche (B2/B; split pending). Some buysiders pointed primarily to heavy EBITDA adjustments, as well as raw material woes, as holding them back from putting their stamp down on this deal. Adjustments saw a net loss of -$191.2m leap to pro forma June 2021 LTM combined adjusted EBITDA of $783m, according to buysiders and the OM, whose adjustments include $85m run-rate cost savings and $150m run-rate cost synergies, giving a leverage of 5.9x on $4.657bn total debt at June 2021 pro forma the transaction.

“The adjustments are very aggressive and I have a lot of questions around whether they can actually realise those savings and synergies,” said a fifth buysider, with a sixth concurring: “It’s the reliance on things like synergies that is making me lean towards passing. Some adjustments, sure, but when it’s this aggressive, that’s off putting. It’s a decent business generally and one we’re familiar with, but this is what’s on my mind.” 

Funds support a buyout by CD&R and merger with US peer Fort Dearborn. Read more here.

The trend continues even with those deals not flexing. French pharma firm Seqens, formerly Novacap, ultimately came in at the wide end of its E+425-450 bps guidance, pushing commitments on its €830m 2028 TLB (B2/B) to 11am today from Wednesday (20 October). 

The deal backed its acquisition by SK Capital. Concerns centred on the API market (the market which makes the active ingredients in medicines) more generally, which buysiders said gets squeezed from both suppliers and pharma firms on pricing, with Seqens itself outperforming its peers of late (full preview here). Sponsors made the usual doc concessions, cutting three margin ratchets to two and shifting ticking fees in line with the market standard.

Restaurant Brands Iberia also came in wide at E+400 bps and 99.75 OID from guidance of E+375-400 bps on its €538m TLB. Buysiders speaking with 9fin confessed that the spectre of casual dining woes, the group’s lack of owned real estate and long-term trends away from meat-based fast food, made this credit difficult to digest for some. However, healthy performance through the pandemic and parent company controls on leverage bolster up the feast for others (read the preview here).

Seqens is just one of a rash of delayed deals which have been clogging up the market. Even loans pricing in line with guidance are coming in late: luxury watch brand Breitling’s €890m 2028 TLB (B2/B), which started off the week as it priced at E+400 bps and 99.75 OID, came some four business days after commitments.

A seventh buysider, who passed on the deal, was unsurprised by this delay, arguing that luxury brands have historically been a tough sell at their credit committee. “It’s a super cyclical sector,” they said, “especially now Covid has weakened many people’s spending power. They were also reliant on travel and tourism: 25% of their customers are tourists, so when that all shut down, that hit hard.”

They added: “This is CVC’s second dividend recap, so by my calculations they’ve got no equity left in and no skin in the game.” Another concern was that, with just one brand name and one product, Breitling had no diversification to bolster its offering. 

Also coming in late from initial commitments of 18th October, the €305m TLB (B/B2) supporting Towerbrook's acquisition of Bruneau instead priced on 20th October at E+500 bps and 98.25. 

Others, then, could learn from UK school workshop provider The Education Group, who managed to tighten pricing on its €300m TLB (B2/B-) to close at E+425 bps and 99.75 OID from initial guidance of E+425-450 bps and 99.50 OID. The company did, however, tidy up its docs somewhat, dropping its two margin ratchets from 4.65x and 4.15x leverage to 4.5x and 4.0x, as well as capping EBITDA adjustments at 20% (rather than uncapped) over two years.

French sponsor InfraVia is one of three PE firms buying and combining businesses this week (Multi-Color/Fort Dearborn, Equiniti/AST). The two nursery operators, Grandir and Liveli, charmed buysiders with attractive sector dynamics in childcare and stable revenue visibility, despite competition from larger peers and a lack of geographic diversification. 

“It is an interesting one, in a pretty stable sector with fairly positive regulation. It looks like I’m taking it to committee,” said an eighth buysider. 

Four new deals launched this week. First, Norwegian Marlink, a SatCom business for enterprises and the maritime industry, has sailed in with a $525m and €250m TLB (B2), currently charted for L+450-475 bps and E+450-475 bps, alongside OIDs of 99 each.


Astorg-backed Solina comes slim, topping up an earlier €585m 2028 TLB issued in June this year with a €100m add-on (B2/B). The food ingredients maker has tabled guidance E+375 bps and 99.5 OID, in line with the existing loan.

Sirius Capital is buying out and combining payment services companies Equiniti and AST, supporting the endeavour with a dollar/sterling $917m-equivalent TLB (B1/B). Dollars are set to pay L+450-475 bps and sterling L+550-575 bps. OIDs are at 99 both.

Finally, keeping the healthcare analysts busy, Synthon, in the generic pharmaceuticals business, is out with a €360m refi (B2/B), offered at E+450 bps and 99 OID.

The main event in secondary this week came in EG Group bonds, where the buyout of ASDA’s forecourt business fell-through, triggering a special mandatory redemption. The Notes issued to fund the transaction plunged in the space of a few Monday afternoon hours after it was announced they would be repaid at par.

The market was largely flat across the board this week, with the biggest moves seen in Consumer Staples (-0.53pts) and IT (-0.31pts). Within sectors, It was Alcoholic Beverage (-0.76pts) down the most following -0.66pt and -0.9pt moves in Punch Taverns and Stonegate Pubs debt, respectively, as virus concerns creep further into investors' minds once again.

The iTraxx Crossover took a breath from the tightening seen in the back half of last week, quoted at 255bps (vs 256bps last Friday). 

The great softening: October continues to drag the secondary market down (pricing-wise), with only three sub-industries of the 32 that 9fin tracks showing buoyancy. The euphemistically-named Gaming, Telecoms (despite Masmovil’s pull), Transportation & Logistics remain the only sectors afloat, with their individual names registering largely flat or tiny hops of 0.2 pts.

The three heaviest sufferers are Media Industry, Aerospace & Defense and Apparel, all dragged down by particularly troubled firms within their remit. The first is largely hit by long-struggling events business Comexposium, whose -4.4 pts pricing slide this week after it succeeding terming out the debt for 10-years after exiting Sauvegarde, offsetting other companies’ modest moves of less than +/-0.5 pts. 

Aerospace & Defense is led by Aeronova (or Air Europa Express), a Spanish regional airline. “They’re begging for a second rescue in case the IAG deal doesn’t materialise, but it’s not looking good,” said one aircraft leasing source. British airline group IAG announced it would buy Air Europa in a $1.1bn deal in November 2019, however the deal has stuttered due to Covid and competition authority approvals with Ryanair objecting. “The European Commission is due to announce something on it soon. It’s not looking too good at all.”


Reflecting this general trend downwards, positive idiosyncratic moves this week all ducked below the one-point bar. The top three -Pronovias,Unither PharmaceuticalsandOGFonly moved +0.9 pts, +0.8 pts and +0.6 pts respectively. Over at the other end, familiar faceArvos Groupleads the sliders this week at -2 pts, now at 76 pts on its€130m E+450 bps TLB.Asdacomes second at -0.6 pts on its€845m E+275 bps 2026 TLBto a still healthy enough 98.3 pts, possibly nudged by news ofEG Group’sspecial mandatory redemptionof notes supporting the purchase of Asda’s forecourts business after the transaction fell through, raising leverage (see High Yield Secondary above).

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