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On offer to the market is €3.05bn of senior secured loans, and €4bn of bonds, split between secured and unsecured, with tranches in dollars, euros, fixed and floating rate format. The package also includes €650m of pre-placed private unsecured bonds, a $500m term loan ‘A’, a €1bn revolver, a €1bn guarantee facility and a €2bn payment-in-kind (PIK) note.
Advent and Cinven’s €17.2bn buyout of the unit was signed on February 27, shortly before leveraged finance markets shut as the Covid-19 crisis took hold. Banks have been sat on the large bridge facility ever since, having agreed terms to win a role on a marquee corporate auction when markets were booming.
The deal was extensively pre-sounded over the previous weeks, with markets open for pre-Covid bridge takeouts since Financere CEP, a French mortgage insurance broker, successfully raised €725m with a margin of 475bp and a price of 97 at the beginning of May.
“Derisking is dependent on credit,” said a head of leveraged capital markets. “If it’s something well known that everyone likes you can go ahead and announce. If it’s something larger you’d be wise to get a directional sense on pricing, likely order sizes and how investors think about a particular sector or credit given the Covid backdrop.”
Secondary loan markets have rallied sharply since then, along with broader credit products. Leveraged loans are up more than 4% in the last month, with the Crossover index, often used as a proxy for the cost of high yield credit, more than 100bp tighter.
Banks have gradually worked through their hung bridges and pre-Covid projects since then, with a €1.6bn deal for Boels sold down at a higher price and in larger size than first expected. This still came at a substantial discount to pre-Covid levels though...