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US LevFin issuers ripped back into action in the first full workweek of 2025 with the regular diet of loan repricings as well as deals from PIP Global Safety and Clarios bringing some new money supply with sponsor carve-outs and dividend financings.
High yield supply was more muted as 10-year Treasury yields climbed and bond markets took a half day holiday on Thursday to mark the funeral of former US president Jimmy Carter.
Natural gas producer Kimmeridge Texas Gasraised a $500m debut bond despite its small footprint and reported negative cash flow, with investors drawn to a hefty coupon and its plans to boost production in the coming years.
In the secondary market, bonds at gaming credit Flutter dipped after it warned of a Q4 earnings hit brought on by FanDuel’s bettors winning on NFL games. Meanwhile, sources said there was buying interest in tire company Goodyear after the company announced the $701m spin-off of its Dunlop brand.
Overall, more than $19.6bn of loan deals and $3.3bn in bond deals were slated for commitments this week, according to 9fin data. For comparison, the first full trading week of 2024 saw $30.4bn in loans and $6.85bn in bonds priced.
An additional $22bn worth of loan deals were announced this week and are slated for commitments between 13 January and 17 January. BofA analysts said HY bond supply is expected to ramp up to around $6bn-$8bn next week and $25bn-$30bn total for January.
In other words, New Yorkers braving 50 mile-per-hour winds aren’t the only ones stepping into a brisk 2025.
Pictured: 9fin staff coming back from lunch (Nickelodeon)
Loan markets are continuing the trend of mass repricing from the end of last year. JP Morgan noted that December 2024 had the largest monthly gross institutional loan issuance on record with $188.6bn issued via 190 deals.
That wrapped up a year in which an “unprecedented” 80% of leveraged loan issuers either repriced (52%) or refinanced (27%) obligations, according to JPM.
Repricings set sail
Cruise operator Carnival and Norwegian Cruise Lines both tackled existing debt in the week.
Meanwhile, NCL issued $1.8bn 6.75% SUNs due 2032 to partially redeem $1.2bn from its 5.875% SUNs due 2026 that total $1.425bn in principal, and to fully redeem its $600m 8.375% SUNs due 2028.
Sizeable repricings were on offer from Worldpay ($5.2bn), Hunter Douglas ($3.3bn) and Parexel ($3.1bn).
Another notable repricing is Envu, the pesticide maker that Cinvencarved out from Bayer’s environmental business in August 2022 for $2.6bn. Envu is consolidating three 2029 term loans with coupons at SOFR+437.5bps into one $1.797bn TLB due 2029, with price talk set at SOFR+375bps-400bps.
However, activity could slow down amid a jittery selloff in rate markets.
The US 10-year yield has climbed above 4.7% with the prospect of persistent inflation via a ripping-hot jobs market, growing global debt and geopolitical risks. Bank of America noted that long-end Treasury yields have climbed 100bps while the Federal Reserve has cut the same from its prime rate, “effectively and unintentionally tightening financial conditions.”
"People are being rate sensitive right now," one bond portfolio manager told 9fin. "We've rallied over the last three days on pricing, but Treasuries have only risen. So if you're looking for a refi, do you want to really go today, or do you want to wait a month and see if you can get better pricing?”
LBOs, M&A, recaps hit market
The first set of new-money deals also debuted in a year that commentators expect to usher in an M&A and LBO boom, thanks to lower rates and the expected merger-friendly regulatory environment under the incoming Trump administration (check out the 9fin credit team’s January pipeline of potential debt deals here).
PIP Global Safety is in pole position to land the first LBO financing of the year with a $1.925bn TLB due 2032 in market, with price talk set at SOFR+400bps-425bps and a 99 OID. The Odyssey Investment Partners-backed maker of safety workwear is buying the personal protective equipment unit of Honeywell as that company faces investor pressure to trim its conglomerate structure.
Brookfield and Quebec’s public pension fund CDPQ announced a $4.5bn dividend recap via car battery maker Clarios that includes a $2.5bn TLB, a €800m TLB and some additional $1.2bn of debt with structure to be determined. The dividend financing marks a pivot from last year’s stated strategy of reducing debt and earned the company a one-notch downgrade from Moody’s.
Getty is also looking to refinance or extend $1.34bn and €450m in near-term maturities as part of its planned acquisition of Shutterstock announced earlier this week. The deal, a tie-up between the two dominant stock image providers, may draw antitrust scrutiny.
Elsewhere in the LevFin universe
Both debt and equity investors largely shrugged at a short report from Hindenburg Research that targeted Carvana’s lending strategy, among other practices. The online car marketplace has roared back after its distressed debt exchange in 2023. But 9fin’s asset-based finance editor Owen Sanderson asks: is Carvana a tech platform or a lender on steroids?
Finally, check out our deep dive into the private prison sector which is expected to benefit under the incoming Trump administration — here’s our 2025 sector outlook for issuers such as CoreCivic and GEO Group.
