But once a cheaper debt financing option came along, Qlik took it. 

The company refinanced the unitranche in April 2017 with a $995m TLB priced at L+350bps (1% floor) and a 99.5 OID, according to Refinitiv data; In February 2021 the company combined and repriced its TLBs at L+400bp (0% floor) at par.

Since Qlik’s original unitranche, private credit deals have grown to regularly reach several billions of dollars; direct lenders increased their footprint in leveraged finance as banks struggled to offload hung debt in 2022.

But Qlik’s subsequent financings are a reminder of the overlap across these markets, and how borrowers can move between various pools of capital, depending on market conditions.

Currently, direct lenders are eyeing more large-scale financings as the appetite of banks to underwrite deals is still recovering after a difficult 2022. Carlyle’s Cotiviti buyout is set to be financed by a $5.5bn unitranche, according to various reports. 

Yet once syndicated markets thaw, it stands to reason that some private credit-backed companies may turn back to banks to refinance at a lower cost, if they can.

“In general, going from unitranche to BSL is really on a case-by-case basis. We’ve considered several candidates but passed because we thought they were way too levered,” said a banker. “In a rising rate environment, you would need to be at least B2 rated for BSL financing to be cheaper, versus the private credit path. For B3 rated credits that could go either way."

Taking a leap

Led by Morgan Stanley, Qlik’s proposed loan extension pushes out the maturity on the $1.39bn TLB by three years to April 2027. The loan is offered at S+400bps-425bps (0.5% floor) with a 99-99.5 OID.

Qlik is also seeking to extend the maturity of a $75m revolving credit facility by two years to October 2025, according to a Moody’s report. Commitments for the loan are due 8 March by 12pm ET.

For Qlik, the decision to make the leap in 2017 from direct lending to the broadly syndicated loan market boiled down to obtaining a lower cost of borrowing.

But that was 2017. Today's issuers looking to make a similar move may have other considerations, especially at a time when the window for cheap lending has closed.

One thing that may draw companies back to the syndicated market is friendlier documentation. In certain cases, rising rates have caused friction between borrowers and private lender groups seeking to raise add-on loans without triggering MFN pricing protection. Those complications could provide an opening for banks. 

“If there’s a situation where they need to expand their direct lender group that could be a catalyst for us,” a sponsor coverage banker said. “For your regular way refi it’s maybe not that attractive right now. But for people that want to recap, that’s maybe where they could go to the syndicated market.”

The difficulty for bankers on the broadly syndicated side of the market is winning mandates from privately financed companies, given the lack of transparency over terms and pricing.

“It's hard to mine the opportunities unless you’re close to a particular company,” the second banker said.

Qlik did not return a request for comment. Morgan Stanley and Thoma Bravo declined to comment.