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Leveraged Loans Issuance Fell in 3Q15

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Deals analysis in the leveraged loans markets for 3Q15

According to data from S&P Capital IQ/LCD, the US leveraged loans market saw an allocation of $68.1 billion worth of senior loans in 3Q15. This was 59.9% lower than the ~$170 billion priced in 2Q15. However, this was still higher than issuance in 1Q15. Senior loans are tracked by the PowerShares Senior Loan Portfolio (BKLN) and the Highland/iBoxx Senior Loan ETF (SNLN).

The graph below shows the quarterly percentage distribution of leveraged loan issuance year-to-date in 2015.

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Deal highlight of the quarter

Cablevision Systems (CVC) through CSC Holdings was the highest issuer of leveraged loans in 3Q15. It issued Ba1/BB- rated leveraged loans worth $5.8 billion through the following two tranches:

  • a $2.0 billion five-year RCF (Revolving Credit Facility)
  • a $3.8 billion seven-year Term Loan B, issued at LIBOR + 400 basis points with a LIBOR floor of 1.0% and an OID (original issue discount) of 98.5

The proceeds of the sale will be used to back the $17.7 billion acquisition of CVC by Altice N.V.

Issuance by Charter Communications

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

  • a $1.0 billion six-year Term Loan B, issued at LIBOR + 250 basis points with a LIBOR floor of 0.75% and an OID (original issue discount) of 99.8
  • 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 (original issue discount) of 99.8

Charter used the proceeds to partially finance its acquisition of Time Warner Cable (TWC) and Bright House Networks.

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Issuance by Ascena Retail Group

Ascena Retail Group (ASNA) is an apparel retailer. It issued Ba2/BB+ rated leveraged loans worth $2.4 billion in July through the following two tranches:

  • a $600 million five-year ABL (Asset-Based Loan)
  • a $1.8 billion seven-year covenant-lite Term Loan B, issued at LIBOR + 450 basis points with a LIBOR floor of 0.75% and an OID (original issue discount) of 98

Ascena used the proceeds of the sale for its acquisition of Ann (ANN).

Issuance by Hill-Rom Holdings

Medical technology company Hill-Rom Holdings (HRC) issued leveraged loans worth $2.3 billion in July. The Ba2/BBB rated loan was issued through the following three tranches:

  • a $500 million RCF (Revolving Credit Facility)
  • a $1.0 billion Term Loan A
  • a $800 million seven-year Term Loan B, issued at LIBOR + 275 basis points with a LIBOR floor of 0.75% and an OID (original issue discount) of 99.8.
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