Primary market activity in leveraged loans
According to data from S&P Capital IQ/LCD, the US leveraged loans market saw an allocation of $1.025 billion worth of senior loans in the week ended August 28. This was 84.6% lower than the $6.7 billion priced in the week ended August 21. The deal flow was also lower, with two transactions being priced in the week compared to nine in the previous week. Senior loans are tracked by the PowerShares Senior Loan Portfolio (BKLN) and the Highland/iBoxx Senior Loan ETF (SNLN).
KIK Custom Products manufactures household cleaners and over-the-counter pharma products. It issued leveraged loans worth $850 million last week. The B3/B- rated covenant-lite Term Loan B was issued for seven years. The loan was issued at LIBOR + 500 basis points with a LIBOR floor of 1.0% and an OID (original-issue discount) of 97.5%. KIK will use proceeds of the sale for its leveraged buyout by Centerbridge Partners, a private equity firm.
Jet Support Services provides aircraft engine and airframe maintenance services. It issued unrated leveraged loans worth $175 million last week. The Term Loan B was issued for six years. The loan was issued at LIBOR + 650 basis points with a LIBOR floor of 1.0% and an OID (original-issue discount) of 98.0%. Jet Support will use proceeds of the sale for dividends and recapitalization.
Pharmaceutical Product Development, Delta Air Lines (DAL), Party City Holdco (PRTY), DTZ Holdings, Navistar International Corporation (NAV), Owens-Illinois (OI), and HD Supply Holdings (HDS) were among the biggest issuers of leveraged loans in August.