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If you were bored by last week’s endless parade of loan repricings, the distressed debt market provided plenty of drama this week: DISH Networks, Diamond Sports, Spirit and JetBlue, United Site Services, Cano Health, Incora…it’s all happening.

Yes, we cover distressed debt now! We have a new US team focused on that beat, headed by Max Frumes. They're releasing their first weekly newsletter today, so we’ll let them explain these situations in a bit more detail. If you can’t wait, article links are in the previous paragraph.

While distressed hogged the limelight this week, investors still have capacity to lend new money to performing businesses — even if there are still relatively few opportunities to do so.

The lack of supply is enabling some private equity firms to seek payouts. This week we saw several dividend dealsfrom sponsor-backed companies, as PE funds do what they can to juice returns in the absence of attractive exit opportunities. 

So far, these financings have largely attracted support. For example, auto repair chain Caliber Collision was able to upsize and tighten the pricing on a roughly $3bn recap to fund a $1bn dividend to Hellman & Friedman.

American Securities is looking to follow its lead, with its homebuilding product supplier Foundation Building Materials today launching syndication of a $1bn TLB to repay a holdco seller note and fund a distribution.

Repricings and dividends aren’t exactly most buysiders’ idea of fun. Thankfully for them, there is some new supply coming down the pipe:

Bank of America is syndicating a $1.625bn cross-border TLB backing Platinum Equity’s acquisition of Kohler Energy (our Legal Quick Take is available to subscribers who have the term sheet, click here for more details)

Bank of Montreal is leading a $330m TLB for Monomoy Capital Partner’s acquisition of Waupaca Foundry 

Deutsche Bank is marketing a $1.22bn TLB for CD&R’s acquisition of snack maker Shearer’s Foods; the total debt package is understood to be $1.7bn, so more debt is likely on the way

JP Morgan is offering a $420m TLB to fund General Atlantic’s acquisition of travel software platform Plusgrade

Cloud infrastructure provider AHEAD, which is backed by Berkshire Partners and Centerbridge, is offering a $600m TLB via to fund the acquisition of Computer Design and Integration

UBS is arranging a $150m TLB add-on to fund upcoming acquisitions for TEAM Services, which provides senior home care

A decent roster of deals, but probably not enough to satisfy demand from investors as the market continues to rally. This is also partly supported by strong CLO formation, where new issue debt spreads have tightened to their lowest levels in over a year. 

“The new money deals don’t even dent things from a normal standpoint,” said a banker. “The tone is extremely strong from talking to investors. Everyone has cash. People are like ‘what’s in the pipeline? Everyone is pinging us.”

A private equity source said they expect deal flow to pick up as markets continue to rally, but there isn’t a bursting backlog of transactions waiting in the wings.

“Regular way auctions feel like some activity but there’s not a tremendous amount yet,” the PE source said. “It feels like we're busy, but it's stuff like we've been working on for a while, like having ongoing conversations with the CEO, or a carveout, or lenders forcing a sale.”

Still, there are sale processes out there, which means there are financings up for grabs. 

Outdoor furniture maker Polywood has attracted decent interest from buyers and lenders. This week, its current sponsors Cardinal Equity Partners and Oxford Financial Group narrowed down the list of bidders, according to 9finsources.

On the larger end of the market, as far as we know there’s still no definitive word on who’s leading the financing for KKR’s proposed acquisition of a controlling stake in Cotiviti. But as we reported last week, the rally in loans has helped push banks into the lead.

But pretty much nothing is black and white in modern financial markets, and private credit versus syndicated loans is no exception. There are many shades of grey — for example, the clubby-looking financing for Arlington Capital’s portfolio company Pegasus Steel.

Overall, primary flow remains a similar story to the one we described last week: a ton of repricings getting through the market, but overall a lack of new money opportunities to soak up demand.

“We're approaching, in the first two to three weeks, nearly the annual repricing volume of 2023,” said Ryan Munro, head of leveraged syndicate at MUFG. “If the market allows, I'm sure we'll eclipse that within the next several weeks.”

Munro said the bank was speaking to many clients about addressing the maturity “tower” in 2028, which was driven by the surge of debt issuance during Covid.

“There's nearly $900bn of maturities between loans and bonds coming due in 2028,” he said. “We’re encouraging issuers to take advantage of a good window in the market to proactively extend those maturities and de-risk that overall maturity tower.”

For now, the repricing wave is the metaphor of the moment. This week, Gen Z footwear favorite Crocs repriced its loan for the second time in six months as strong consumer demand drives positive earnings.

But there are some refinancings amid the repricings. Insurance brokers Acrisure and Hub International were among the borrowers that refinanced debt this week.

Acrisure’s offering of triple-C rated bonds could bode well for other low-rated borrowers that need to raise cash, such as Office Properties Income Trust. This week, we reported the REIT is looking to raise $1bn of secured debt to address upcoming maturities. 

Spirit Airlines said it’s also looking at refinancing options too, after its merger with JetBlue was blocked by an antitrust ruling on Tuesday. The news sent Spirit’s debt into a tailspin in the secondary market this week. Fitch saidthe company’s credit profile is under pressure after the ruling, as $1.1bn of loyalty program debt matures in September 2025.

Of course, ratings aren’t everything when it comes to market access. 

For example, private prison operator CoreCivic has $600m of debt due April 2026, and has been rekindling relationships with lenders recently. Yet as we explored in this feature, banks remain wary of getting too visibly close to the company, despite growing pushback against ESG initiatives.

Blackstone, Oaktree burned by Morgan Stanley’s block-trade leaks (Bloomberg)

Trivium owners weigh sale of US packaging company (Bloomberg)

Investors raise billions to buy discounted stakes in start-ups (Financial Times)

Cryptocurrency like Beanie Babies, says Coinbase in US regulator’s lawsuit (Guardian)

Kroger and Albertsons delay closing date for $25 billion merger (Axios)

Private equity predicts deal rebound as sellers capitulate on prices (Financial Times)

Recreating a nearly defunct, but long admired, watch brand (NYT)

No joke: Feds are banning funny messages on highway signs (AP)

Sports Illustrated lays off most of its staff, threatening iconic brand’s future (Washington Post)

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US LevFin Wrap — Crocs rides the repricing wave as distressed takes center stage

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