That could be bad news for companies that make money from tax prep advice and software like Taxwell as well as H&R Block and Intuit that saw volatility in their share prices this week (though it was noted that the IRS already has rolled out a pilot for a free filing tool).

Investors said new policy plans and nominations over the coming weeks will keep traders on their toes. The spotlight is also on healthcare and financial credits, according to investors, with possible changes to Medicare billing and a proposed 10% cap on credit card rates among the many things giving concern.

“This is going to be the name of the game going forward,” said a CLO manager. “When you have non-experts thrust into these positions, there will be things said out of inexperience that markets are going to react to.”

The big question is how to quantify those risks.

“Many of these Trump policies are pretty controversial and are going to bring about huge change if they actually happen,” said a fund manager. “But we don’t actually know if they will end up getting passed.”

Strike while it’s hot

This all adds a layer of uncertainty into a market that saw a big increase in primary activity alongside a deluge of private earnings reports this week.

Monday saw the most active day in the primary this year, with more than $35bn of deals announced in leveraged finance markets. It was mostly loan repricings, including deals for benchmark names such as Cotiviti and Cloud Software Group.

But riskier second lien and PIK toggle deals for the likes of Innophos and RR Donnelley are also emerging suggesting that companies and their bankers are looking to take advantage of rampant demand for credit to print more ambitious deals.

Sources said there was strong demand for RR Donnelley’s CCC+ rated $360m PIK toggle note due 2030 which was upsized and priced with a lofty 11% coupon at 95 via JP Morgan on Thursday. Proceeds are earmarked to repay some existing PIK debt.

“Everyone is throwing out something and trying to see what sticks,” said an investor.

Against this backdrop, VistaJet has been working with bankers at Jefferies to explore a potential preferred equity raise, 9fin reported on Thursday. The potential deal could be between $600m and $1bn to pay down aircraft leases that would help improve the company’s cash flow profile and broaden its access to capital markets in the future, according to sources.

Repricings and refis dominate loan and bond volume (via 9fin, chart)

Another case in point — Deutsche Bank is looking to offload the hung debt backing 1440 Foods’ acquisition of protein bar brand FitCrunch after revamping the structure and terms. The loan has been downsized to $700m at a wider spread of 500bps and an OID of 94-95, versus initial terms of 475bps-500bps and 99. A raft of covenant changes and a $175m second lien tranche were also put in place to firm up interest.

Jefferies is also looking to take advantage next week with a $2bn bond to fund the combination of Saks and Neiman Marcus. Sources said the debt is being marketed with a hefty yield around 10.5%-11% yield given the company’s weak EBITDA profile and the fact that, somewhat unusually, the bonds are expected to be secured against leased rather than owned properties.

These high coupon deals are leaning into demand for riskier paper. Amid a broad risk-on rally across stock markets and credit, triple-C rated HY bonds have rallied 1.5% in November, according to JP Morgan, outperforming the broader HY index (up 0.76% MTD) which has rallied to historic tight levels on a spread basis.

Big books

Recaps are still hot with Qlik Technologies among the sponsored companies getting a fresh cap stack and equity injection this week. Sponsor Thoma Bravo, which is bringing in new minority investor Abu Dhabi Investment Authority, repriced some of the company’s debt and added a $1.195bn TLB due 2030 that was upsized by $100m after order books reached 4x deal size. A $505m second-lien term loan was downsized by the same amount.

Serial dividend issuer IntraFi doubled the size of its add-on 2031 TLB to $400m from $200m to pay a distribution to sponsor Blackstone, which we previewed last week.

Barclays was also able to tighten the pricing on a $675m TLB due 2031 for another Blackstone portfolio company, HVAC component company Copeland, to pay a sponsor dividend.

Other dividend recaps in the works include deals for building materials business Kodiak Building Partners, petrochemical company TPC Group and a cross-border dividend deal for cybersecurity firm Exclusive Networks.

Private earnings

Public earnings season on the whole has been pretty positive. JP Morgan analysts said on Friday that the ratio of companies beating earnings estimates versus missing stands at an elevated 2.4x, though forward guidance is more “tepid” in certain sectors.

Private earnings have been a mixed bag.

LifePoint’s upbeat Q3 earnings from late October helped the company reprice its term loan this week as the Apollo-sponsored company continues to recover from the labor pressures that weighed in 2022.

Investors took an 15% EBITDA drop at CD&R and BC Partners-backed IT company Presidio in stride, as the company’s performance normalizes from the surge in tech spending during the pandemic.

Bonds issued by Platinum Equity’s Husky Technologies didn’t move much after the injection molding equipment manufacturer posted flat revenues and a slight uptick in EBITDA for Q3.

Summit Behavioral Healthcare meanwhile posted a 40% drop in EBITDA for Q3 as a drop-off in referrals from the Department of Veterans’ Affairs and rising expenses impacted profitability.

9fin private credit networking drinks in New York

Date: Wednesday 11 December 2024 | Time: 4:30 PM - 7:00 PM ET

Join us for an evening of networking, insights, and canapés at our private credit networking drinks. This in-person event will be held at Corkbuzz, New York, and offers a great chance to learn more about the ever-evolving private credit market.

Hear from an exceptional all-women panel of industry experts as they share valuable perspectives and experiences in private credit. Moderating this session will be Shubham Saharan, senior private credit reporter at 9fin, including:

• Richa Tandon, managing director and co-head of origination at Benefit Street Partners
• Jennifer Daly, head of private credit and special situations and a partner at Paul Hastings
• Kirsten Hagen, co-founder and partner at Brinley Partners

Other stuff

MicroStrategy buys record $4.6bn of bitcoin (WSJ)

Trump picks Brendan Carr as FCC Chair. He vows to challenge a Big Tech cartel (WSJ)

Nestlé to spin off water business in attempt to fuel growth (Just Drinks)

Google’s Chrome to fetch up to $20 billion if judge orders sale (Bloomberg)

The rehabilitation of KPMG (FT)

Comcast to spin off cable networks, including MSNBC and CNBC (NYT)

The Norwegian company blamed for California’s hydrogen car woes (Wired)

How oil ‘wildcatters’ ended up in charge of Donald Trump’s energy policy (FT)

Mass X-odus: professionals desert Elon Musk’s network (FT)

Ally Financial weighs sale of credit card business (Bloomberg)

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