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Leveraged Loan Issuance Was Stable Last Week

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Primary market activity in leveraged loans

Leveraged loan issuance remained almost steady last week, but the pipeline has been growing. According to data from S&P Capital IQ/LCD, the US leveraged loans market saw an allocation of $3.3 billion worth of dollar-denominated senior loans in the week to July 15. In the previous week, issuance stood at $3.4 billion. The deal flow remained unchanged. Seven transactions were priced in the week ending July 15.

Senior loans are tracked by mutual funds and ETFs such as the Hartford Floating Rate Fund – Class A (HFLAX), 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).

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Noteworthy transactions

Realogy Group (RLGY) provides real estate brokerage services. It issued Ba2/BB+ rated Term Loan B worth $1.1 billion on July 14. The loan was issued for six years at LIBOR + 300 basis points with a LIBOR floor of 0.75% and an OID (original-issue discount) of 100. The company intends to use the proceeds of the loan for refinancing purposes.

Arbor Pharmaceuticals is a specialty pharmaceutical company. It issued B1/BB- rated leveraged loans worth $575 million in two tranches on July 12:

  • a $75 million RCF (Revolving Credit Facility)
  • a $500 million seven-year covenant-lite Term Loan B, issued at LIBOR + 500 basis points with a LIBOR floor of 1.0% an OID of 94

The proceeds from the offering will be used for the acquisition of XenoPort (XNPT).

Give and Go Prepared Foods is a Canadian baked goods manufacturer. It supplies retailers and the foodservice industry. It issued leveraged loans worth $535 million in three tranches on July 12:

  • a $55 million B1/B rated RCF
  • a $375 million B1/B rated seven-year first-lien Term Loan, issued at LIBOR + 550 basis points with a LIBOR floor of 1.0% an OID of 99
  • a $105 million second-lien Term Loan

The company will use the proceeds from the offering to back its leveraged buyout by Thomas H. Lee Partners from OMERS Private Equity.

Pomeroy Group provides IT infrastructure services. It issued leveraged loans worth $355 million in three tranches on July 13:

  • a $40 million B2/B rated RCF
  • a $240 million B2/B rated five-year first lien Term Loan issued at LIBOR + 600 basis points with a LIBOR floor of 1.0% an OID of 99
  • a $75 million Caa2/CCC+ rated second-lien Term Loan issued at LIBOR + 950 basis points with a LIBOR floor of 1.0%

The company intends to use the proceeds of the loan for its merger with Tolt Solutions.

In the next part, we’ll look at leveraged loan funds flows.

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