The leveraged buyouts were hot; refinancing deals saw withdrawals



The leveraged loan market

A total of 18 issuers came to the market with an average ticket size of $911 million. This compares to the 29 deals that hit the leveraged loan (BKLN) market the previous week with an average ticket size of $603 million. Despite investors’ concern on the aggressive deal pricing, a number of deals were oversubscribed particularly in the mergers and acquisition and LBO space, while some headwinds were noticed in the refinancing and dividend recapitalization space.

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Among the major deals of the week was Catalina Marketing Corporation, which issued a $460 million, eight-year second-lien loan at LIBOR+675 basis point to yield 8.12% versus 8.43-8.7% yield at the original price talk. When deals are closed at lower yields than the initial talks, it reflects a strong demand for the issue, which allows bankers to tighten the pricing terms.

Another major deal came from Caesars Growth Properties Holdings, a part of Caesars Acquisition Company (CACQ), who expects to raise $1.3 billion first-lien financing. The final deal is currently under talks at 7.12% yield to maturity, which expects a good reception considering attractive yields.

Other than that, Avago Technologies Limited (AVGO) tapped the leveraged loan (SNLN) market to raise a $4.6 billion, seven-year loan for financing its $6.6 billion acquisition of LSI Corporation. The financing also includes a $500 million, five-year revolver. Issuer ratings have firmed at BB+/Ba2, and the term loan is rated BBB-/Ba1. At the current talk, the term loan would yield 4.24% to maturity.

Minerals Technologies, Inc. (MTX) issued roughly a $1.7 billion seven-year term loan to back the acquisition of AMCOL International.

Read the next part of the series to know more on why leveraged loan demand remains high for a straight 94th week in a row.


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