The S&P European Leveraged Loan Index was reasonably stable on Wednesday at around 98.5, having hit its highest level for the year so far on November 1 of 98.68, while the Markit iTraxx crossover was also firm at 325.6.
The head of leveraged loan syndicate for EMEA at a bank in London said that there was no change to the firm's plans in the market at the moment.
“The loan market doesn’t move anywhere near as fast to macro events as all other markets and it also remains demand-heavy,” he said. “However, there is some new supply coming so the opportunistic refinancing deals will probably wait for them to come through.”
Deals go wide
Genesys Telecommunications held bank meetings in London on Tuesday for its $2.25bn-equivalent loan package backing its $1.4bn acquisition of cloud software firm Interactive Intelligence.
The debt includes a $550m equivalent euro term loan ‘B’, with guidance at 475bp-500bp over Euribor/Libor, offered at 99-99.5 with a 1% floor.
Leverage at Permira and Hellman & Friedman-owned Genesys is set to rise to 12.7 times following the deal, according to S&P GR, which subsequently downgraded it to B- on Monday. It expects Genesys’ leverage to fall to around eight times by 2018, after cost synergies have been fully realised — still very high for the B- category.
Elsewhere, US inorganic chemicals producer PQ Corp. widened its amendment request on its $1.2bn-equivalent loan package signed in May from original guidance, a move seldom seen in the market since the summer break.
PQ Corp's amendment increased the $900m dollar term loan to $930m and the €265m euro term loan to €284m. The margin on both widened to 425bp and 400bp respectively, from guidance at 375bp, offered at par with a 1% floor.
“Bankers may decide to wait a few weeks with new deals so that they have more of an idea on pricing. It’ll be very hard to price anything at the moment,” said an investor in London.
Nordic fluting manufacturer Powerflute meanwhile allocated its €240 term loan ‘B’ on Tuesday, backing its €400m leveraged buyout by Madison Dearborn Partners.
The loan allocated at the wide of 475bp-500bp guidance, offered at 98.5 with a 0% floor.
New paper poised
The head of leveraged finance EMEA at a bank in London said the effect on the repricing trend would largely be sector by sector, not widespread.
"We didn't expect an impact for the loan market really," he said. "In high yield we thought new issuance could shut down but we're not expecting that now."
The investor was hopeful however that the election result would temper the broader repricing trend, at least modestly.
“The repricing trend should pause,” the investor added, echoing the banker's sentiment. “Investors will just look at them if they come now and say 'are you kidding me?’.”
With respect to new paper, leveraged buyout deals scheduled to come to market in the coming weeks include Allegro’s $3.25bn acquisition by a Cinven-led investor group, Morpho’s €2.43bn acquisition by Advent and Bridgepoint’s €460m buyout of Sapec’s agribusiness.
It is unclear yet whether the political machinations in Washington DC will affect these deals. The first banker said there may be only a slight pause in syndication to reflect on US markets data.
Another head of leveraged finance EMEA at a bank in London echoed this, saying he didn't see much rationale for postponing activity past next week.
"There's been a very measured reaction," he said. "I can't see why deals would stay on the sidelines, certainly by next week."