Please put in grey box
The mood in the European leveraged loan market took something of a knock in the second half of last week as the secondary indices swung significantly wider. The weaker market was enough to take the top off what had been a rapid rise in sentiment, though arrangers dismissed the idea that the move constituted a real reversal for the market as a whole.
“The last two days have seen a sell-off, but the indices were overbought; this doesn’t move the needle on where people will buy cash paper,” said one underwriter. “It shows the secondary market is still wobbly,” added another observer. “People need to see more sustained stability before launching big deals.”
Observers say that when deals do launch it will be because arrangers have already won substantial commitments privately before launching publicly. “An arranger would want to have tucked away commitments of €300m–€400m of a €600m deal before announcing a formal ‘launch’,” said one.
And while the market tone was more downbeat than a week earlier the consensus was that there were still deals finding liquidity, both from the bank market and from some institutional investors, and there was even the suggestion that some new CLOs might be opening, though that remains a negligible source of liquidity. The lasting fall-out from the credit squeeze is likely to be seen in the terms available to potential CLO issuers.
“They will not be able to do deals on a covenant-loose basis; they will need at least two covenants to even look at a deal,” said a banker familiar with investor appetite on both sides of the Atlantic.
Despite the note of caution the continued success of large-scale deals in the US is giving arrangers real comfort. Nevertheless, the more muted tone will have given pause to arrangers who had hoped to rush back into formal syndication with a wave of larger overhanging deals.
As the earlier comments indicate, the informal process of selling down has continued apace, with deals mentioned as finding some market momentum said to include €1.6bn of debt supporting the buyout of the
Last week even saw a suggestion that a piece of
Smaller and regional deals do continue to go out in syndication, including the €100m loan for
The facility has an out of the box margin of 200bp, and comprises a seven-year €50m term loan, a seven-year €40m capex line and a five-year €10m revolver.
The monies will refinance existing debt and also fund working capital and future investments. Acces Industrie is a French leasing company of construction equipment, specialising in aerial lifts and lift trucks. It is majority owned by Butler Capital Partners.