US LevFin Wrap — Uber outdoes itself, Authentic Brands keeps it real

Sasha Padbidri

24 February 2023•4 min read

This week might have been short, but it felt long — partly because (for now at least) the loan market still seems to be cranking pretty hard.

It’s all about household names this week: Uber Technologies, Authentic Brands and Cirque du Soleil are among the issuers that launched new loan offerings this week.

Uber is seeking a $1.43bn term loan B to refinance an existing TLB due 2025. The company wants to hit $5bn of EBITDA by 2024, which could bump it up to investment-grade status. Commitments have been accelerated to 27 February, from 1 March originally.

Authentic Brands is out with a $2.125bn loan package, comprising a $1.525bn TLB-2 and a $600m delayed-draw term loan. Proceeds will be used to refinance an existing first-lien term loan and pre-fund the company’s planned acquisition of surf-apparel group Boardriders.

That name might ring a bell: the Oaktree-backed company was at the center of a debt priming transaction which ended up being scrutinized in the New York State Supreme Court (check out our distressed team’s coverage of the situation here).

Cirque du Soleil is another name that may resonate, not just if you’ve been to Vegas but also if you followed distressed debt and restructuring. The renowned circus production company filed for bankruptcy in November 2020; it’s now refinancing its exit debt.

Also in the loan market right now: Cetera Financial Group, Vantage Specialty, Smyrna Ready Mix Concrete and M6 Midstream (You can find a list of all in-market syndications here).

Deep and wide

Elsewhere this week, some recently launched deals made it across the finish line, including offerings from World Wide Technology and SubCom.

At Ba2/BB, World Wide is one of the better-rated issuers in the market. But some sources were skeptical about the company’s business model as an IT product reseller, given its thin margins and high customer concentration.

Nevertheless, the loan offering was upsized to $750m from $650m, and priced at the tight end of guidance at SOFR+CSA+325bp.

Not so for SubCom, which finalized pricing on a $470m TLB on Friday, at the wide end of guidance (the final coupon was SOFR+CSA+525bp) despite geopolitical tailwinds that should bode well for the company’s business.

Proceeds will be used to fund a dividend to sponsor Cerberus Capital Management, which adds SubCom to the growing pile of issuers that have taken advantage of the hot loan market to fund shareholder payouts this year.

Transdigm was the sole bond issuer this week, bringing a $1.1bn tap of its recently issued notes to take out some Covid-era debt. By trimming its overall borrowing costs, the company will likely improve its interest coverage ratio — a good job too, because this metric is well and truly back in fashion.

Low flow

While there are a good few deals to choose from right now, bankers and investors are saying that the forward calendar is sparse — and may remain like that for a while.

On that note, perhaps the big outflows from high yield this week will help cool the market a little. The $6.65bn outflow from high yield was the largest since 2014, according to BofA — it outpaced a $2.58bn outflow a week earlier, and came alongside loan fund outflows too.

In the longer run, there is appetite for dealmaking (take-privates in the software space, for example) but it may take time for those potential deals to come to fruition. And there may still be a fight between BSL and private credit for the debt financing.

Speaking of private credit, look out for some 9fin content in the run-up to DealCatalyst’s direct lending conference, which is happening in Fort Lauderdale in late April (agenda here, tickets here).tr

And speaking of events, the Vegas securitization conference is coming up. We know of several 9fin readers who are attending — if you’re one of them, please let us know how the vibes are. Extra points if you can give us first-hand info for our reporting on Cirque du Soleil!