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Leveraged Loans Issuance Tanked in September

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Deals analysis in the leveraged loans markets for September

According to data from S&P Capital IQ/LCD, the US leveraged loans market saw an allocation of $12.1 billion worth of senior loans in September 2015. This was 55.7% lower than the $27.4 billion priced in August 2015. Senior loans are tracked by the PowerShares Senior Loan Portfolio (BKLN) and the Highland/iBoxx Senior Loan ETF (SNLN).

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Deal highlight of September

Cablevision Systems (CVC) through CSC Holdings was the highest issuer of leveraged loans on September 25. 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 Berry Plastics Group

Berry Plastics Group (BERY) manufactures and sells plastic packaging and engineered materials. It issued Ba3/BB- rated leveraged loans worth $2.1 billion on September 17 through the following two tranches:

  • an RCF (Revolving Credit Facility) worth an undisclosed amount
  • a $2.1 billion seven-year covenant-lite Term Loan B, issued at LIBOR + 300 basis points with a LIBOR floor of 1.0% and an OID (original issue discount) of 99.5

Berry Plastics will use proceeds of the sale to acquire Avintiv from the Blackstone Group (BX).

Issuance by Ellucian

Business services provider Ellucian issued leveraged loans worth $1.71 billion on September 18 through the following two tranches:

  • a $150 million five-year RCF (Revolving Credit Facility)
  • a B2/B+ rated $1.56 billion seven-year Term Loan B, issued at LIBOR + 375 basis points with a LIBOR floor of 1.0% and an OID (original issue discount) of 99.5

Ellucian raised this loan to finance its leveraged buyout by TPG Capital and Leonard Green & Partners.

In the next article, we’l look at leveraged loans issuance in 3Q15.

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