Primary market activity in leveraged loans
According to data from S&P Capital IQ/LCD, the US leveraged loans market saw an allocation of $9.0 billion worth of dollar-denominated senior loans in the week to April 8. Last week’s issuance was the highest year-to-date (or YTD) issuance. In the previous week, issuance stood at $8.8 billion. The deal flow jumped from four transactions being priced in the previous week to nine last week.
Senior loans are tracked by mutual funds and exchange-traded funds such as the Oppenheimer Senior Floating Rate Fund – Class A (OOSAX), the Fidelity Advisor Floating Rate High Income Fund – Class A (FFRAX), the Invesco PowerShares Senior Loan Portfolio (BKLN), and the Highland/iBoxx Senior Loan ETF (SNLN).
MGM Growth Properties issued B1/BB rated dollar-denominated leveraged loans worth $2.8 billion in three tranches on April 7:
- a $600 million five-year revolving credit facility (or RCF), issued at LIBOR + 200 basis points
- a $300 million five-year Term Loan A, issued at LIBOR + 200 basis points
- a $1.9 billion seven-year Term Loan B, issued at LIBOR + 325 basis points with a LIBOR floor of 0.75% and an OID (original issue discount) of 99.8
The proceeds from the offerings will be used to back the spin-off of MGM Growth Properties, a newly formed real estate investment trust from MGM Resorts International (MGM).
Diebold (DBD) provides self-service delivery, services, and software primarily to the financial industry. It issued Ba2/BB- rated dollar-denominated leveraged loans worth $2.0 billion in four tranches on April 5:
- a $520 million RCF
- a $230 million Term Loan A
- a $250 million delayed-draw Term Loan A
- a $1.0 billion seven-year Term Loan B, issued at LIBOR + 450 basis points with a LIBOR floor of 0.75% and an OID (original issue discount) of 99
The company expects to use the net proceeds for the acquisition of Wincor Nixdorf.
Numericable SFR is a cable and telecommunications company based in Paris. It issued a dollar-denominated covenant-lite Term Loan B worth $1.4 billion on April 8. The B1/B+ rated loan was issued for eight years at LIBOR + 425 basis points with a LIBOR floor of 0.75% and an OID of 99. The company expects to use the net proceeds for refinancing purpose.
TruGreen is a lawn, tree, and shrub care company. It issued B1/B rated dollar-denominated leveraged loans worth $906 million in three tranches on April 8:
- a $146 million RCF
- a $560 million seven-year covenant-lite first-lien Term Loan, issued at LIBOR + 550 basis points with a LIBOR floor of 1.0% and an OID of 98.5
- a $200 million covenant-lite second-lien term loan
The company expects to use the net proceeds for the acquisition of Scotts Miracle-Gro’s (SMG) lawn care division.
In the next article, we’ll look at leveraged loan funds flows.