US LevFin Wrap — Investors put a positive filter on Snap debut as Getty clinches refi

David Bell

14 February 2025•5 min read

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It was a big week for social media companies in the leveraged finance market as Snap Inc added to a run of successful deals from first time HY issuers, while banks were able to offload another upsized chunk of Twitter/X debt to investors.

Though the Twitter hung debt sale has its own caveats, the general demand for credit is obvious. The big swings in equity and rates markets, in addition to the backdrop of tariffs causing “a lot of cost and chaos” for steel, aluminum and the autos issuers, haven’t really knocked debt markets off their stride.

“The feedback we are consistently getting from credit PMs is that most remain below their risk budgets, waiting for a market pullback to step in,” wrote analysts at BofA on Friday. “This probably serves as the key factor that credit is unshaken by any of this, since every 5bps-10bps move in liquid benchmarks is being met with billions of dollars on the sidelines.”

Though HY issuance dropped compared with the roughly $9bn priced last week, Snap added to a run of debut issuers hitting the bond market. Investors piled into the heavily oversubscribed deal, overlooking any concerns about heavy capex needs, sluggish US growth and competition. The bond was more than doubled in size from $700m to $1.5bn with pricing tightened to 6.875%, from low 7% area.

Banks holding the hung Twitter/X debt meanwhile were able to upsize a planned $3bn debt sale to print a $4.74bn fixed rate TLB due 2029 at par to yield 9.5%, following the sale of over $5bn of floating rate loans earlier this month.

Covenant pushback

As we pointed out last week, 2025 is on track to be one of the busiest years for the leveraged finance primary market since 2021, at least on a gross level.

Tight spreads means plenty of repricing and refinancing opportunities — this week, Churchill Downs, ADT and APi Group were able to push the cost of their loans down to a market low of 175bps.

Gen Digital (fka Norton Lifelock) is on track to match that spread with a $750m TLB due 2032 to refinance 2025 debt and fund its $1bn acquisition of MoneyLion, alongside $950m SUNs due 2033 ($150m was shifted from bonds to the loan during syndication).

Demand from CLO managers is a big factor, with February on track to see another record month of deal formation, supported by surging inflows into CLO ETFs.

This is leading some sponsors to try and push the envelope on terms. But it’s not all one-way traffic.

Investors were able to push back on privately owned brand manager WHP Global’s attempt to insert language into its loan refinancing that would have prevented lenders from forming co-operation groups — which would have potentially set a market precedent. (We discussed the evolution of co-ops and potential challenges to them at the start of the year).

Similarly, a tricky refinancing for Getty Images priced on Friday after leads tightened up the covenant package on offer, which included an “anti-LME” provision designed to protect lenders from creditor tactics similar to a provision included in a bond deal for RR Donnelley last year.

Meanwhile Cotiviti has widened the spread and OID on a $2bn loan for its acquisition of Edifecs after extending the commitment deadline by one day. Initial price talk of SOFR+275bps and 99.5-99.75 OID was seen as tightrelative to other single-B credits, despite investors seeing the merits of the merger. Price talk has been widened to S+275bps-300bps with a 99 OID, with commitments due today.

Charged up

Clarios reported a bumper fiscal Q1 25 on Thursday with EBITDA jumping 35% to $869m in the quarter, powered by operational improvements and top line growth in its aftermarket business, which offset declines in the OEM segment.

It was the first quarterly report since the battery company printed $5bn of new debt to fund a huge $4.5bn dividend to sponsors Brookfield and CDPQ last year. Investors remain wary of potential tariff impacts on the auto OEM supply chain as well as the company’s tax credits under the new administration, but the company’s debt continues to trade high. Its 6.75% SSNs due 2030 that were priced at par last month rose roughly half a point higher to 101.6 post-earnings.

Bonds issued by car rental company Hertz however dropped 1-2 points this week after the company reported a fifth consecutive quarter of negative EBITDA. The company’s new CFO told investors the business would burn cash through the first half of the year as it tackles high depreciation costs.

Our credit team also produced earnings reviews for mortgage servicer Mr. Cooper, mining company First Quantum Minerals, and private prison operator CoreCivic, which anticipates strong growth thanks to the Trump administration’s stance on migrants.

Elsewhere in the secondary market, Papa John’s bonds traded higher on reports that a Qatari-backed investor was considering a potential take-private bid for the pizza chain, while rigging company Kito Crosby saw its term loan trade down about a quarter of a point to 100.5 on the news that it would be acquired by Columbus McKinnon in a $2.7bn deal backed by committed debt financing.