LBO debt under pressure

Secondary debt markets continue to punish LBOs that display any hint of trading uncertainty or technical disadvantage, with the corresponding lack of liquidity causing spreads to widen.

Debenhams continued to trade below its issue price this week, changing hands at around the 97 mark. Sanitec’s B and C term loans are trading wide in a 97.75/98.75 context. Grohe is also trading wide, having settled at around 97.5/98.5 despite positive commentary on the back of its successful waiver request. Focus, currently in a 94.5/96.5 context, has been hit the hardest by the market tone.

Amadeus remains active, meanwhile, with the company’s US dollar B/C tranches at 100.5 and the corresponding euro B/Cs at 100.625. UPC has also seen some movement in its euro-denominated debt, with the term loan G pitched at 99.375 and the H term at 99.625.

At the market’s upper fringe, Basell’s B/Cs are at 101/101.5 on the institutional piece and about half a point lower elsewhere. Moeller’s B/Cs trade in a 100.75/101.25 context, with the pro rata paper around par. Pirelli’s euro B/Cs remain stable at 101, Ruhrgas is about 101.75/102 and Molnlycke euros are offer-only at around 102. Kloeckner secured an acquisition-linked waiver from banks, pushing its B/C paper into a 100.5/101 context on the follow.

Additionally, Morgan Stanley and Dresdner have closed a CDS referencing Wind. The deal is probably an isolated occurrence at this stage and the impact on Wind’s overall position has been minimal, but this is the first leveraged loan CDS in Europe. Wind’s second lien is around 101.5/102 and the B/C is in the mid-99s. In both cases trading has been in small tickets, with some trading away from the leads.