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Leveraged Loans Issuance Volume Falls in Week Ended July 10

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Primary market activity in leveraged loans

According to data from S&P Capital IQ/LCD, the US leveraged loans market saw an allocation of $1.6 billion worth of senior loans in the week ended July 10. This was 76.7% lower than the $6.8 billion priced in the week ended July 2.

The deal flow was also lower, with six transactions priced in the week compared to 11 in the previous week. Senior loans are tracked by the PowerShares Senior Loan ETF (BKLN) and the Highland/iBoxx Senior Loan ETF (SNLN).

This trend is very different from the one set in June, when issuers like Endo International plc (ENDP), Tribune Media Company (TRCO), SS&C Technologies Holdings (SSNC), Univar (UNVR), and Spectrum Brands Holdings (SPB) raised loans above $1.0 billion each.

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Issuance of leveraged loans has fallen in July on concerns of Greece and the volatility of Chinese stocks. The issuance volume last week was the lowest since the week ended January 23, 2015, which saw loans worth just $0.5 billion allocated. There was no issuance in the junk bond space (JNK) (HYG) last week.

Noteworthy transactions

AgroFresh, a former unit of the Dow Chemical Company (DOW) that was sold to Boulevard Acquisition (BLVD), was the highest issuer of leveraged loans in the week to July 10. It issued B2/BB- rated leveraged loans worth $450 million through the following two tranches:

  • $25 million five-year RCF (revolving credit facility)
  • $425 million six-year covenant-lite Term Loan B, issued at LIBOR + 475 basis points with a LIBOR floor of 1.0% and an OID (original issue discount) of 99.5

Beauty and personal care company PDC Brands issued B2/B rated leveraged loans worth $280 million through the following two tranches:

  • $30 million five-year RCF issued at LIBOR + 400 basis points with a LIBOR floor of 1.0%
  • $250 million first-lien Term Loan, issued at LIBOR + 450 basis points with a LIBOR floor of 1.0% and an OID of 99

PDC Brands raised this loan to finance its acquisition of Bodycology and Cantu brands from Advanced Beauty.

In the next article, we’ll look at leveraged loans issuance in June and 2Q15.

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