uploads///US Leveraged Loan Market Volumes

Issuers Return to the Leveraged Loan Primary Market

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Primary market activity in leveraged loans

According to data from S&P Capital IQ’s Leveraged Commentary and Data, the US leveraged loan market saw $9.3 billion worth of senior loans allocated in the week ended July 24. This was significantly higher than the $575 million priced in the week ended July 17.

Last week also marked the first week in four to see a rise in leveraged loan issuance. The deal flow was also higher, with seven transactions being priced in the week compared to just one in the previous week. Senior loans are tracked by the PowerShares Senior Loan Portfolio (BKLN) and the Highland/iBoxx Senior Loan ETF (SNLN).

Unlike leveraged loans, the high yield bond (JNK) (HYG) primary market saw deals worth just $3.355 billion pricing last week. WPX Energy (WPX), Solera Holdings (SLH), Genesis Energy (GEL), and Sunoco (SUN) were among those with large issuances of high yield bonds in the previous week.

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Noteworthy transactions

Charter Communications (CHTR) is a communications company. It was the top issuer of leveraged loans in the week ended July 24. It issued Ba1/BBB rated leveraged loans worth $3.8 billion through the following two tranches:

  • a $1 billion six-year Term Loan B, issued at LIBOR (IntercontinentalExchange London Interbank Offered Rate) + 250 basis points with a LIBOR floor of 0.75% and an OID (original issue discount) of 99.75
  • a $2.8 billion seven-year Term Loan B, issued at LIBOR + 275 basis points with a LIBOR floor of 0.75% and an OID of 99.75

Charter will use the proceeds to partially finance its acquisitions of Time Warner Cable (TWC) and Bright House Networks.

Builders FirstSource (BLDR) manufactures and sells building products for home construction in the southern and eastern US. It issued B3/BB- rated leveraged loans worth $1.4 billion through the following two tranches:

  • an $800 million ABL (asset-based loan)
  • a $600 million seven-year covenant-lite Term Loan B, issued at LIBOR + 500 basis points with a LIBOR floor of 1% and an OID of 99

Builders FirstSource intends to use the proceeds from the sale for its acquisition of ProBuild Holdings.

AlixPartners provides financial advisory and business services. It issued leveraged loans worth $1.1 billion last week. The B2/B+ rated covenant-lite Term Loan B was issued for seven years. The loan was issued at LIBOR + 350 basis points with a LIBOR floor of 1% and an original issue discount of 99.75%. AlixPartners will use the proceeds from the sale to refinance older debt.

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