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Leveraged Loans Issuance Fell Last Week

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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 $2.5 billion in dollar-denominated senior loans in the week ended January 22. The issuance was down from $4.6 billion in the previous week.

However, the deal flow remained unchanged at four transactions being priced last week. Senior loans are tracked by mutual funds such as the Oppenheimer Senior Floating Rate Fund – A (OOSAX) and the Fidelity Advisor Floating Rate High Income Fund – Class A (FFRAX).

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Like leveraged loans, the primary high yield bond market saw slow activity last week with just two deals by Treehouse Foods, Inc. (THS) and GCP Applied Technologies, which is a wholly owned subsidiary of W.R. Grace & Co. (GRA). Meanwhile, in the previous two weeks, Pinnacle Foods Inc (PF), Microsemi Corporation (MSCC), and Kraton Performance Polymers (KRA) were some of the issuers of junk bonds.

Noteworthy transactions

MedAssets Inc. (MDAS) is a healthcare performance improvement company that focuses on enhancing financial and operational systems for healthcare providers. It issued leveraged loans worth $1.73 billion in three tranches on January 22:

  • $100 million B2/B rated revolving credit facility (or RCF)
  • $1.13 billion B2/B rated 6.5-year first-lien term loan, issued at LIBOR + 475 basis points with a LIBOR floor of 1.0% and an OID (original issue discount) of 99
  • $500 million Caa2/CCC+ seven-year second-lien term loan, issued at LIBOR + 950 basis points with a LIBOR floor of 1.0% and an OID (original issue discount) of 97

MedAssets intends to use the proceeds of the loan to back its leveraged buyout by Pamplona Capital Management LLP.

Gray Television, Inc. (GTN) is a television broadcast company headquartered in Atlanta, Georgia. Gray Television owns and operates television stations and leading digital assets in markets throughout the US. It issued a covenant-lite add-on term loan worth $425 million on January 21. The Ba3/BB rated loan was issued for five years at LIBOR + 350 basis points with a LIBOR floor of 0.75% and an OID (original-issue discount) of 99.

Gray Television intends to use the proceeds of the loan for the acquisition of Schurz Communications’ broadcast stations, including KWCH-TV Channel 12.

GCP Applied Technologies is engaged in the production and sale of specialty construction chemicals, specialty building materials, and packaging sealants and coatings products. It separated from W.R. Grace & Co. (GRA) into an independent publicly traded company.

It issued a covenant-lite add-on term loan worth $275 million on January 22. The Ba2/BB+ rated loan was issued for six years at LIBOR + 450 basis points with a LIBOR floor of 0.75% and an OID (original-issue discount) of 99.

GCP Applied Technologies plans to use the proceeds of the loan for its spin-off from W.R. Grace & Co. (GRA).

In the final article in this series, we will look at leveraged loan funds flows.

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