US LevFin Wrap — Worldpay goes solo, Viasat’s satellite snafu, BDCs face refi crunch

Sasha Padbidri
+Bill Weisbrod

13 July 2023•4 min read

Cooler than expected inflation data sparked a rally in corporate bonds this week which proved supportive for a new HY print from Seadrill, but bankers are not getting overly excited about the prospect of new supply just yet.

"We will see some opportunistic issuance as companies come out of black out,” said one leveraged finance banker. “The rally is nice but not enough to release a flood of new issue.”

Underwriters are biding their time to offload a couple of chunky positions: as we mentioned in last week’s wrap, GTCR announced the carve-out of payments processor Worldpay from Fidelity National Information Services earlier this month.

The deal will be funded with $8.4bn of debt, which could be sold to investors in the weeks to come. Ahead of that, 9fin did a deep dive into what Worldpay’s future could look like as a standalone entity.

Banks are also holding on to debt from Viasat’s $7.3bn acquisition of Inmarsat, which may have hit another snag in the syndication timeline this week. The company on Wednesday disclosed a reflector malfunction that could impact the performance of its ViaSat-3 Americas satellite. Viasat’s SUNs due 2025 dropped almost three points following news of the malfunction.

Meanwhile, could the LevFin market could see some summer blockbuster M&A activity from Hollywood?

Despite the movie and TV industry being essentially at a standstill with actors and screenwriters currently on strike, French billionaire Francois-Henri Pinault is reportedly in talks to acquire a majority stake in TPG-backed talent and sports agency Creative Artists Agency in a deal that values the company around $7bn.

Fortunately for the talent agencies, the number of non-scripted performers on their rosters, such as athletes, reality stars and influencers, should help them withstand the work stoppages.

"The agencies will definitely be impacted, but it shouldn't be too material given they are all pretty well diversified," an analyst following the space said.

How now, HighPeak?

It’s been almost a month since we reported on HighPeak Energy’s high yield bond debut, and the deal has since failed to gain traction with investors. Time is running out for the company to refinance existing debt due 2024 so 9fin put together a list of options that HighPeak could potentially choose from (including private credit).

Sound Inpatient Physicians is another issuer that’s watching the clock — the company has engaged PJT Partners to address over $800m of term debt due June 2025.

Group purchasing organization Omnia Partners launched a $1.625bn term loan to fund an acquisition and refinance existing debt. The company has benefitted from strong performance, as inflation pushed clients towards GPO services to mitigate the impact of rising costs.

Internet domain registrar GoDaddy shaved off 75bps when it repriced its $1.76bn TLB this week, making it the second such deal following restaurant and entertainment business Dave & Buster’s $900m loan repricing in late June.

Other issuers that launched deals this week include offshore drilling contractor Seadrill and advisory firm AlixPartners. Both names are familiar to the distressed debt community, but more so Seadrill which has filed for bankruptcy twice.

Seadrill upsized its second-lien notes due 2030 to $500m from the initial $450m. But at least one buysider cited the company’s past as a reason for passing on the deal: “It’s a cyclical name and a cyclical industry. So if there’s any softness I think it’ll be crushed,” the buysider said.

AlixPartners also upsized its term loan offering to $400m from the initial $375m. Proceeds of the deal could go towards a shareholder distribution before year-end, while up to half the proceeds could be used for financing tuck-in acquisitions.

“It’s a high margin business,” said an analyst following the credit. “And restructuring advisory services are picking up.”

BDC refi struggle

In private credit, BDCs have a rocky road ahead of them — over $13bn of fixed-rate bonds issued by BDCs are coming due in 2026, and BDC managers have to carefully time refinancing activity so that it doesn’t eat into their investment returns.

Elsewhere this week, 9fin reported that JP Morgan’s US CLO trading head Max Besong has left to join Blackstone Credit. Trimaran Advisors and CVC Credit Partners priced new issue CLO deals, while Nuveen reset a 2022 CLO.

Bain Capital Credit, meanwhile, priced its first middle-market CLO since 2019.

On a lighter note, we hope that you were able to take advantage of National French Fry Day and get your free fry fix. If you haven’t already, here’s a list of all the fast food joints giving out free fries this week — enjoy it while you can!