US LevFin Wrap — Charter shrugs off Disney dispute, Greenway lines up private credit back-up

David Bell

1 December 2023•3 min read

The duality of the primary market was clear this week with borrowers such as Life Time Fitness and Avis looking to opportunistically reprice their loans, while trickier deals from the likes of Greenway Health and A-Gas struggled to gain traction.

Primary activity overall remains fairly muted, but rallying loan prices have brought opportunistic repricings into play as high-quality deals printed earlier this year exit call protection. This week, borrowers including CD&R’s industrial spin-out Indicor, ZoomInfo and Sabert were all looking to cut their loan spreads, in some instances by as much as 75bps.

Given investors have few opportunities in the primary to reinvest cash at this late stage of the year, sell-side sources said repricings were an easy pitch.

“You're basically going to a lender and poking them in the eye,” said a levfin banker. “You’re telling them we know the loan’s already trading above par, so I can take your pricing down and lenders know that if they don’t roll, someone behind them will step in and replace them. The threat of replacement allows that trade to happen.”

The light supply was also a factor in a well-oversubscribed bond and loan financing for cement maker Summit Materials’ acquisition of Argos USA this week. Investors said there was a scramble for allocations given the company’s IG-like credit characteristics.

Similarly, prolific LevFin issuer Charter Communications returned to the loan market this week with a $2.3bn refinancing. A carriage dispute with Disney caused volatility in the company’s debt stack earlier this year, but it doesn’t seem to have impacted Charter’s ability to borrow at some of the tightest levels in the LevFin market.

Tough crowd

At the other end of the spectrum, deals from issuers such as Greenway Health and A-Gas have struggled to build momentum as investors are hesitant about taking on riskier paper at this stage of the year.

That’s bad news for banking bonuses, but music to the ears of private credit funds, no doubt.

Greenway and its sponsor Vista Equity Partners have lined up private credit lenders as a fallback option, in case its $375m broadly syndicated loan being marketed by Jefferies doesn’t get done. Commitments on the loan, which will be used to pay down 2024 debt, were due over two weeks ago.

Real estate advisor Avison Young meanwhile is working with lenders to try and shore up its liquidity needs as it faces debt maturities amid a generational slump in commercial real estate. Its term loan due 2026 is quoted in the 30s.

The turmoil in CRE may be bad news for the likes of Avison Young, but it has also created opportunities for lenders: check out our Cloud 9fin podcast with Rich Byrne, president of Benefit Street Partners, to hear more.

Aside from CRE, a growing pain point for debt investors is the healthcare sector, one of private equity’s happiest hunting grounds in recent years. This week, we published a deep dive on how the No Surprises Act, a law that took effect last year with the intention of curbing surprise medical bills, has hastened the decline of several borrowers in the sector, including American Physician Partners and Envision.