US LevFin Wrap — Smooth landing for Avolon loan, Citi sweetens A-Gas terms, BofA preps Kohler LBO

Sasha Padbidri
+David Bell

8 December 2023•4 min read

It’s the most wonderful time of the year…to get deals done.

We’re heading into the final stretch of 2023 with at least 25 loans and 14 bonds launching this week alone, as borrowers take advantage of improving market conditions to price debt before the new year.

The surge of new deals included loan repricings from aircraft lessor Avolon and insurance brokerage Alliant. Avolon is majority owned by Chinese parent company Bohai Leasing via the Global Aircraft Leasing holding company. Avolon’s loan repricing sailed through smoothly thanks in part to strong ratings, even though a recent bond deal from GALC has stalled in the primary market.

Alliant, meanwhile, extended its $2.37bn TLB from 2027 to 2031 and printed the deal at par.

Adding to the busy primary market pipeline is financial services company IntraFi, which seeks a $500m TLB due 2028to fund a $447m dividend to private equity owner Blackstone. A trio of consumer lenders, including subprime auto lender Credit Acceptance Corp, also seized the chance this week to get deals done ahead of 2024 recession fears.

Trucking company XPO Logistics raised a $985m bond and loan package to finance its acquisition of bankrupt competitor Yellow’s assets. XPO did not disclose pro forma EBITDA benefit from the acquisition, but that did not stop the bonds from being more than four times oversubscribed ahead of pricing.

And just today, Carlyle-backed television production company Nep Group (rated Caa1/B-/B-) launched a multi-tranche $1.94bn TLB amend and extend.

Not all deals cruised through the market — Citi significantly sweetened terms for a $520m TLB that backs TPG’s acquisition of refrigeration gas company A-Gas. The deal has been languishing in the market for six weeks and bankers are under pressure to offload the debt as the buyout is scheduled to close by year end.

And looking ahead to 2024, we caught wind of an LBO debt package that could be offloaded to investors in the new year. 9fin reported this week that Platinum Equity tapped Bank of America to lead a roughly $1.6bn transaction to fund its acquisition of Kohler Energy. The deal is likely to be split evenly between a syndicated term loan and high yield bonds.

Prime time

Also this week, some lenders sued white goods maker Robertshaw to unwind a priming transaction completed earlier this year. 9fin first reported on the financing in May, which comprised $95m of new money in the form of a super-priority first out loan to ease the company’s near-term liquidity issues. Lenders including Bain Capital Credit participated in the new loan.

In a slightly different (but also slightly similar) situation, Michaels Stores’ lenders are feeling uneasy about the retailer’s recent asset transfer — it moved its new e-commerce business into MiKraft, a separate corporate entity outside its restricted group, and transferred the entity’s equity to sponsor Apollo. Check out our coverage of the transaction and Michaels’ 3Q earnings here.

In other news, Hawaiian Airlines’ bonds popped by 13 points following an acquisition announcement by Alaska Airlines over the weekend. It was happy news for holders of that formerly stressed debt, although Hawaiian Airlines’ bonds still trade well below par, reflecting concerns that the deal may not actually close.

We also published a deep dive credit analysis on wood pellet producer Enviva as it stands on the verge of a covenant breach — more on that situation here.

Finally, 9fin decided to catch some sun at Opal Group’s CLO Summit in Dana Point, California, where CLO investors celebrated this year’s regulatory victories (see here and here), but also warned that loan defaults could reach as high as 7% in 2024. Here are some other takeaways from the conference.