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US LevFin Wrap — Hilton books a Bluegreen vacay, Clarios and GoDaddy lead repricing push
David Bell
+Bill Weisbrod
+ 1 more
•4 min read
Choppy conditions brought markets back to Earth with a bump this week — but primary activity resumed nonetheless, with Hilton Grand Vacations looking to raise acquisition debt and a growing list of borrowers such as GoDaddy continuing December’s repricing spree.
Sources said they expected the pipeline to pick up more broadly next week, though the market’s focus will also partly be in San Francisco as a host of issuers flock to JP Morgan’s healthcare conference.
Broader market gyrations took some shine off the stellar end to 2023 (high yield bonds are down almost 1% on the week, per JPM researchers) but investors are generally keen to put cash to work — although the Fed dampened the urgency of expected rate cuts this week.
“Things are tightening up and the best they’ve been in some time,” said a buyside analyst focused on high yield. ”Right now if you’re a company, you want to be focusing on 2026 maturity walls. You don’t want debt to go current.”
Still, whenever a hot streak in the stock market ends, minds inevitably turn to the downside. In LevFin, one potential banana skin is continued high rates — analysts at BofA this week estimated that over 20% of HY issuers will burn cash even if the Fed cuts rates to 3%.
“It doesn't mean that all of a sudden losses pop up,” said a portfolio manager who is wary of losses in the loan market. “But it will with time and all it needs is a match to light. This is the dry tinder, the match is the economy or some other event that causes business conditions to get even tighter. The only thing that we're missing right now would be the spark.”
Source: BofA Global Research
January getaways
Hilton Grand Vacations kicked off the largest new-money deal this week, with a $1.8bn deal that is split evenly between bonds and loans and expected to price next week.
The transaction, which will fund Hilton’s $1.5bn acquisition of Bluegreen Vacations,led Moody’s to downgrade Hilton’s secured debt rating by one notch.
Global Partners, a gas station and convenience store operator, issued $450m of 8.25% SUNs due 2032 to fund its acquisition of 25 liquid energy terminals. Buysiders took a shine to the deal, saying it was priced attractively even after coming tighter than IPTs.
For more on that company’s financials, credit outlook and covenant package, see our Credit and Legal QuickTake reports.
Elsewhere, industrial battery provider EnerSys (rated Ba2/BB+) brought $300m of 6.625% SUNs due 2032 that priced at par — tight of high 6% IPTs and official talk of 6.75%. We also produced a Credit QuickTake and Legal QuickTakeon that deal, if you’re after more information.
Meanwhile, Office Properties Income Trust is working with B. Rileyas it seeks to address looming bond maturities. The REIT has been struggling amid broader pressure on the commercial real estate space.
New year sales
The loan market continued the theme of late 2023, with repricing and refinancing the focus of most of the deals that surfaced this week.
No new LBO financing syndications have emerged just yet, but there are some encouraging signs on the sponsor side for future supply: to give one example, Advent International is reportedly in talks to acquire money manager Fisher Investments.
The IPO market is also showing hints of thawing, with Wilson tennis racket maker Amer Sportsfiling for a potential listing this week.
On the distressed side, StonePeak’s telco business Astound Broadband has fielded liability management proposals from lenders for a potential double-dip financing, as 9fin reported this week.
We also had a look into how direct lenders are looking to capitalize on distress in the real estate sector — check out our deep dive on “A/B” real estate loan structures here.
