Winding Up — Hot refi market for speculative grade credit pushes out short term maturity walls

Alessia Argentieri

22 November 2024•5 min read

Special Announcement: 9fin users now have access to US Federal Court filings via 9fin’s PACER feature “Docket Rocket”.

See full details here, and here are shortcuts to some relevant Dockets on the 9fin platform: Spirit Airlines, Northvolt AB, Intrum Justicia.

Winding Up is 9fin's weekly newsletter, incorporating summaries and commentary from our European distressed coverage for the past week. Find out more about what we do for distressed here.

Top News

According to a recent report published by S&P, bond issuance year-to-date is up 77% for speculative grade (rated BB+ or below), with the majority of this issuance going for refinancing.

Despite borrowers making progress at reducing near-term speculative grade maturities — which have eased for 2026 and 2027 since the beginning of the year by 24.9% and 10.4%, respectively — larger debt maturities are approaching in 2027, and an even sharper rise is expected in 2028, the report said.

In Europe, the sectors with most debt maturing through 2029 include consumers, automotive, and utilities, according to S&P. These verticals have been some of the hottest in the restructuring space this year.

In the utilities sector, we’ve been following the long struggle of Thames Water to avoid nationalisation and the fight between Class A and Class B noteholders. Today (22 November) the company published a practice statement letter to state that it is moving forward with its liquidity extension transaction and that it has entered into a transaction support agreement.

Furthermore, another water company has come under the spotlight: Southern Water, which has just been downgraded by rating agency Fitch and is now one downgrade away from becoming the second UK water company to breach the conditions of its license with regulator Ofwat.

In the automotive space, Standard Profil, which provides sealing systems for car manufacturers, and a group of its bondholders have hired financial and legal advisors to address the company’s looming maturities.

Meanwhile, Northvolt, a Swedish producer of electric car batteries, has just filed for Chapter 11 in the US, while trying to find an investor to develop a comprehensive recapitalisation or possibly a sale, after facing an acute liquidity crisis.

Let’s take a deeper look at this week’s news …

This week’s news

AMC Entertainment — The cinema operator responded to its first lien noteholders’ complaint with a motion to dismiss and a supporting memorandum on 20 November. The second lien notes agent GLAS trust company filed for this relief as well.

HSE24 — Bondholders in the German teleshopping retailer have mandated Rothschild as financial advisor to address the company’s looming maturities due in 2026, while HSE24 is working with Latham & Watkins as legal advisor.

Intrum — Swedish-based debt purchaser had a contentious first-day hearing for its Chapter 11, with a group of 2025 noteholders in opposition to Intrum’s proposed restructuring in attendance. The 2025 group filed two motions against Intrum’s US bankruptcy and have also requested declaratory relief from the Stockholm District Court in regards to an amendment made to Intrum’s MTN notes designed to support its US restructuring.

Northvolt — Sweden-based electric vehicle battery manufacturer filed for Chapter 11 in the Southern District of Texas on Thursday, 21 November. Swedish automotive manufacturer Scania is providing a $100m DIP financing facility, according to Northvolt’s voluntary petition filing.

Peach Property Group — The DACH real estate landlord signed a deal to sell 19% (in units) of its portfolio to Polish real estate investor, Globe Trade Centre. The sale will fund Peach with roughly €120m net cash, the company says, which is a welcome liquidity boost to help deal with a €55m Schuldschein maturity in March 2025 and a €300m SUN maturity in November 2025. More recently, the company launched its fully backstopped ~CHF 114m capital increase which will be open to all existing shareholders to subscribe between 29 November and 9 December.

Southern Water — The guaranteed financing subsidiary of the South England utilities company was downgraded by Moody’s to BBB- from BBB, on Tuesday, 19 November. The ratings agency singled out Southern’s recent £300m seven-year bond issue, at a total cost of nearly 10%, as symptomatic of the “challenging funding environment” UK water companies face.

Standard Profil — A group of bondholders have appointed Houlihan Lokey as financial advisor to run refinancing discussions and address the company’s upcoming maturities, while the company has mandated Linklaters as legal counsel. Last week, 9fin reported that the ad hoc group had hired Milbank as legal counsel while the company had appointed Herter & Co (part of the Teneo group) as financial advisor.

Thames Water — A bridge financing proposal from a group of Class A whole business securitisation noteholders has received more than 90% support from senior Thames Water creditors. Class B creditors have sought to renegotiate key provisions of the deal, but sources familiar rebuffed their efforts. Thames’ also secured noteholder permission to release £400m of cash held in reserve accounts.