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Huw Simpson

Laura Thompson

It was just the one major deal this week, as stale numbers and school half term offered a welcome break. After such a deluge throughout April and May there’s a slight sense of shell shock here at 9fin. However it’s good news for those who feel as if they’re missing out, supply is set to return in force from the 7th.

Following a quiet Monday, Synthos, the Polish rubber and styrenics maker launched €500m in Senior Secured Notes due 2028 (Ba2/BB/BB+) on Tuesday. IPTs of high 2% 's followed, and later a €100m upsize. Pricing settled at 2.5% (the tight end of guidance of 2.5-2.625% (WPIR)). Initial proceeds from the loan to bond refinancing were ticketed to repay a €443m term loan tranche under the credit agreement, and €47m for general corporate purposes. The revolving credit facility was also increased to €500m.

The group recently announced a $491m acquisition of Trinseo’s synthetic rubber business, expected to close in late 2021. The move will increase pro forma 2020 revenues from rubber to 53%, from 42% prior to the transaction; management anticipates an accretive EBITDA contribution of ~€50-60m. A PLN 450m (€97m) equity injection is available to ensure leverage remains at a maximum of 2.5x pro forma for the transaction, and on our calculations, around €80m will be required without any further cash generation from the group.

The covenant package was straightforward, although there remains significant PR and RP capacity available from day one. Interestingly, a ‘green energy’ PI basket has been added which on our reading is uncapped. Bloomberg recently reported Synthos was ‘pursuing the construction of a dedicated 300-megawatt nuclear power plant for its operations in Poland’ and speculated ‘that a small nuclear power plant, called a small modular reactor (SMR), could cost $1 billion’. The Company has a 50% owned subsidiary (Synthos Green Energy) which is referenced in press releases in relation to the Company’s nuclear ambitions. The remaining 50% is owned by ‘Black Forest Sicav-Sif Societe Anonyme’ - the vehicle through which the principal shareholder Michał Sołowow owns his stake in Synthos.

Other primary this week include crossover credit Cellnex and Media and Games Invest.

The Spanish Telecom business issued €1,000m 1.50% Senior Notes due 2028 (BB+/BBB+), naming 23 bookrunners for the programme debt - pricing came at 99.585.

Malta-based Media and Games invest mandated Pareto Securities and Jeffries as joint bookrunners on a €150m (max) tap of its existing 2024 5.75% Senior Secured FRNs. The roadshow will run from Monday to Thursday.

And finally, guesses are on after Barclay’s posted a save-the-date for new Fixed and Floating rate notes in the leisure sector, investor calls start on Tuesday.

British buysiders will be running with open arms towards the bank holiday weekend and away from an ongoing “deluge” of lower quality credits, as one buysider put it this week.

“It’s quantity, definitely not quality,” the buysider bemoaned. “I’m manically covering all these deals in the market, but so many of them are low quality that they end up taking up even more time. The only positive is that some are so bad I don’t need to bother looking through the docs.” Single B names have made up 83% of May’s fresh leveraged loans so far, versus 70% in April.

With opportunistic B3 names taking advantage of open capital markets, stronger names are correcting financing set in place during the rough seas of the early pandemic. In a neon sign of how far particularly Covid-vulnerable names have come, this week cruise operator Carnival halved margins on both its €794m 2025 senior secured TLB (Ba2/BB-) and $1.9bn 2025 TLB, repricing at E+375 bps and L+300 bps respectively – down from a sky-high E/L+750 bps.

Less dramatically, Boels, a Dutch equipment and tools rental company, also set final guidance on its €1.45bn repricing of Covid-inked loans. The TLB is offered at E+325 bps, down from E+375 bps, and a 99.875 OID, from 99.5-99.75 OID at launch. The original June 2020 TLB paid E+400 BPS and 93.5, while a €275.5m TLA paid E+375 bps. Boels also upped the deal by €115m ahead of close.

One such name that investors struggled to see the investment case for was German lens and glasses manufacturer Rodenstock. The firm ultimately priced wide on its €780m LBO financing (B3/B-) this week: a €660m 2028 TLB closed at E+500 bps and a noteworthy 97 OID, up from E+475 bps and 98.5-99 OID at launch. A €120m RCF sits alongside. The margin bump came after the firm already extended the commitment deadline and worked in some more investor-friendly doc changes, buysiders said.

“I think they misjudged the appetite out there,” mused a second buysider, who expected allocations would be wider than hoped for for some who played the deal. “They’ve got this chequered past of restructurings and some question marks around some key contracts. There’s also been a few eyewear names in the market recently – people can’t take them all on.”

Apax Partners and Mubdala Investment Company agreed to buy 73% and 24% of Rodenstock respectively from Compass Partners earlier this year. See our loan preview here.

BME joined the recent swarths of B3 credits as agencies squirmed over its third add-on in six months – and the new likely delay in deleveraging. The Netherlands-based building materials distributor is seeking a €200m senior secured 2026 add-on (B3/B) guided at E+400 bps and 99.5 OID. Previously, BME raised a €300m add-on and repriced a €920m loan in March. Both priced at E+400 bps with a 0% floor at par, while a €220m E+500 bps 2026 TLB priced at 98.50 in November 2020. The group – which both supplies building materials and operates DIY stores – also paid a €40m recap to shareholder SIX in Q1 after pocketing €81m from the sale of its Swiss real estate assets.

Along with €150m cash, this new add-on backs a continued spate of acquisitions: this time, Germany’s Mahler Group, Spain’s Grupo BMV, Saint Gobain Distribution Netherlands and the remaining Maxmat stake in Portugal.

One name buysiders are pumped for is Clayton, Dubilier & Rice-owned Motor Fuel Group. The UK forecourts operator is serving a £367m recap as part of its a €1.98bn-equivalent refinancing that will leave CDR with no cash equity left in the business, buysiders report. But investors are nonetheless keen on this credit after a Covid-resilient year with little concern for any long-term threat from state anti-fuel sentiment or electric vehicles. It is one of the week’s loans leaning on a credit adjusted spread (CaS) to smooth the transition away from LIBOR.

The refi includes an existing £700m TLB, which is guided at S+Cas+475 bps with a 0% floor, up from the current margin of L+450 bps. An existing €785m TLB, meanwhile, is guiding at E+375 bps with a 0% floor, up from E+350 bps. Fresh money comes as a €300m non-fungible TLB at E+375 bps and 99.75 OID, as well as a £70m add-on at S+Cas+375 bps that is fungible with the existing sterling TLB.

In a frustrating move for any analyst tasked with the deal, fibre network operator Vocus Group dropped the euro tranche of its AUD1.85bn-equivalent TLB (B1/BB-) last-minute ahead of commitments this week. The funds, which back a buyout by Macquarie Infrastructure and Reast Assets (MIRA)and Australian pension fund Aware Super, were originally divided up between euros, US dollars and Australian dollars.

The euro portion was guiding higher than the dollar tranche – E+375-400 bps rather than L+350-375 bps. Now, the financing is made up of a $725m TLB and $25m AUD delayed-draw offered at L+350 bps and 99 OID, plus BBSY+400 bps and 99 OID on a remaining AUD tranche.

“They don’t really have European expenses, so I’m not surprised this was pulled,” mused a third buysider.

The euro pull came alongside a smattering of doc changes. This includes introducing a cap on EBITDA adjustments at 25% within a 12-month period, cutting a ‘no worse’ test from ratio debt incurrence test, upping contributions from debt basket to 200% from 100%, and changing the ICR test on junior/incremental debt to a leverage test.

Joining the recent rush of French healthcare firms, Sante Cie’s €530m TLB (B3/B) priced at par and E+400 bps this week. The home healthcare provider, Adrian-owned, will refinance existing debt and reimburse convertible bonds. The loan comes with a +/-7.5 bps ESG ratchet subject to certain KPIs.

In a continuation of the above ESG trend, Ardian-owned market technology firm Jakala won a €200m sustainability-linked TL, Be Beez reported, to support Adrian increasing its stake in the business.

Global payment service and technology provider Planet, part of the Fintrex Group, took commitments on its €418m TL this week. Allocations were low on this name, according to one buyside source: the Galway-based business, guiding at E+525 bps and 98.5 OID, offered up an attractive margin alongside a Covid recovery story. It wasrumoured for a €1.98bn sale back in 2020.

Average price per industry may be an imperfect indicator of relative performance, but the convergence you can see underlines the ‘perfection pricing’ theme many market commentators have expressed in recent months. Since February however, it’s worth noting those industries with highest average prices have trended back towards par.

Secondary traded up marginally this week, with  small positive moves across the majority of names (75% +0.34 pts | 21% -0.43 pts). Industrials again tracked the greatest gains (+0.42 pts), closely followed by Energy (+0.23 pts), while Healthcare saw the only loss (-0.24 pts).

The iTraxx European Crossover tightened somewhat, quoted today at 247 bps, moving in by around 12 bps from last week.

The secondary market stays steady. With minimal average movements across sectors, buoyant names continue to be those on the cusp of reopening – this week three loans from UK cinema chain Vue. Its €114m E+465 bps 2026 TLB, €631m E+475 bps 2026 TLB and €114m E+525 bps 2023 TLB all rose +2.40 pts, back into the 90s this week.

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