Primary market activity in leveraged loans
According to data from S&P Capital IQ/LCD, the US leveraged loans market saw an allocation of $3.2 billion worth of dollar-denominated senior loans in the week ended March 24. The issuance volume was down last week mainly due to the Easter holiday–shortened week.
In the previous week, issuance stood at $4.3 billion. The deal flow fell from four transactions being priced in the previous week to three last week. However, opportunistic issuers took advantage of the stable market tone as primary market sentiment continued to improve last week.
Senior loans are tracked by mutual funds and exchange-traded funds such as the Oppenheimer Senior Floating Rate Fund – A (OOSAX), the Fidelity Advisor Floating Rate High Income Fund – Class A (FFRAX), the Invesco PowerShares Senior Loan Portfolio ETF (BKLN), and the Highland/iBoxx Senior Loan ETF (SNLN).
Global Payments (GPN) provides payment technology services. It issued Ba2/BBB- rated dollar-denominated leveraged loans worth $2,505 million in three tranches on March 24:
- a $775 million revolving Credit Facility (or RCF)
- a $685 million four-year term loan A
- a $1.045 billion seven-year covenant-lite term loan B, issued at LIBOR +350 basis points with an OID (original issue discount) of 99.5
Global Payments intends to use the proceeds of the loan for the acquisition Heartland Payment Systems (HPY).
Huntsman Corporation (HUN) is a manufacturer and marketer of differentiated chemicals. It issued a covenant-lite term loan B worth $550 million on March 24. The Ba2/BB-rated loan was issued for seven years at LIBOR + 350 basis points with a LIBOR floor of 0.75% and an OID (original-issue discount) of 99.5. The company expects to use the net proceeds for refinancing purposes.
Transunion (TRU) provides credit information and information management services. It issued an add-on term loan B worth $150 million on March 23. The B1/BB- rated loan was issued for five years at LIBOR + 275 basis points with a LIBOR floor of 0.75% and an OID (original-issue discount) of 98.8. Transunion expects to use the proceeds from the loan to refinance the company’s revolver borrowings that was used to finance the acquisition of CIFIN.
In the next article, we will look at leveraged loan funds flows.