content

Better, but not Good: US 2Q CLO Issuance Jumps to $18B

 

quarterly CLO issuance

U.S. CLO issuance totaled $17.99 billion via 42 vehicles in the second quarter.

While that’s more than a two-fold increase from the $8.2 billion of issuance in the first quarter, it’s at the very low end of the recent range over the past three years, according to LCD, an offering of S&P Global Market Intelligence.

Year to date, U.S. CLO issuance totals $26.23 billion via 62 vehicles.

As was the case in the broader leveraged loan market, sentiment improved in CLOs in the second quarter, but the market was still far from robust. Issuance remained heavily biased towards seasoned managers, with a few exceptions.

Keeping the market in check: The upcoming Dec. 24 deadline to comply with risk retention, challenging arbitrage, and difficulty sourcing collateral, loan managers say. And, of course, macroeconomic risk surrounding Brexit presents a new challenge. – Kerry Kantin

You can read more about how CLOs work here.

Follow Andrew Park for CLO news and LCD News on Twitter

This story is part of analysis which first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

content

Leveraged Loans: Lions Gate Eyes $4.6B Of Financing Backing Starz Acquisition

J.P. Morgan, Bank of America Merrill Lynch, and Deutsche Bank have committed debt financing in connection with Lions Gate’s planned $4.4 billion acquisition of Starz, which is expected to close by the end of the year.

starzThe total committed financing package totals $4.6 billion and includes $3.6 billion of secured and unsecured financing and a $1 billion revolver. Lions Gate also plans to refinance roughly $1.7–1.9 billion of debt at Lions Gate and at Starz and fund the cash portion of the deal with bank and bond financing. Pro forma leverage, excluding synergies, is expected to be roughly 5–5.5x as of Dec. 31, 2016. Lions Gate’s existing convertible notes and Starz capital leases will remain in place.

In the secondary market, the Lions Gate 5% fixed-rate second-lien term loan due 2022 popped up to a 101/102 market, from 99/99.5 yesterday, sources said. There is $400 million outstanding under the loan, which is currently callable at 102. J.P. Morgan is administrative agent.

Starz, meanwhile, has a $1 billion revolver due April 2020 that, as of March 31, had a borrowing capacity of $609 million. Pricing on the revolver is tied to a leverage-based grid, at L+150–225. Bank of Nova Scotia is administrative agent.

Santa Monica, Calif.–based Lions Gate is rated BB–/Ba3 and trades on the New York Stock Exchange under the ticker LGF. Englewood, Colo.–based Starz is rated BB/Ba2 and trades on the Nasdaq under the symbol STRZA. — Richard Kellerhals/Kerry Kantin

Follow LCD News on Twitter

This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

content

CVC Credit Partners Raises €650M for Stressed/Distressed Fund

CVC Credit Partners today announced the final close of its Global Special Situations Fund, which focuses on stressed and distressed corporate credit, predominantly across Europe.

cvc credit partners logoRoughly €650 million was raised, which exceeds the €600 million target. The fund received commitments from investors in North America, Latin America, Asia, Europe, and the Middle East.

With more than €1.86 billion already committed to the strategy via separately managed accounts and its credit opportunities vehicles, CVC Credit Partners’ credit opportunities and special situations strategies now have total commitments of more than €2.5 billion.

CVC Credit Partners is the credit management business of CVC. — Luke Millar

Follow Luke and LCD News on Twitter

This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

content

After Brexit Slide, European Leveraged Loans Gain 0.09%; YTD Return: 1.82%

The European Leveraged Loan Index (ELLI) gained 0.09% yesterday (excluding currency).

The ELLI has returned -0.66% thus far in June. The total return for the ELLI in the year to date is 1.82%. — Staff reports


Follow LCD News on Twitter

This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

content

US Leveraged Loans Rebound, Gain Hefty 0.15% Today; YTD Return: 4.39%

Loans gained 0.15% today after gaining 0.01% yesterday, according to the LCD Daily Loan Index.

The S&P/LSTA US Leveraged Loan 100, which tracks the 100 largest loans in the broader Index, gained 0.26% today.

In the year to date, loans overall have gained 4.39%.

Follow LCD News on Twitter

This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

content

Diamond Resorts Nets Financing for $2.2B Purchase by Apollo

Apollo Management has agreed to purchase Diamond Resorts International for $30.25 per share, or roughly $2.2 billion, backed by financing commitments from Barclays, Royal Bank of Canada, and Jefferies. PSP Investments Credit USA LLC is also providing debt financing commitments, sources said.

diamond resorts logoThe all-cash offer represents a premium of approximately 26% over Diamond Resorts’ closing share price on June 28, 2016, and a premium of roughly 58% over the closing share price in February

The transaction is conditioned upon satisfaction of the minimum tender condition which requires that shares representing more than 50% of the company’s common shares be tendered and the receipt of certain regulatory approvals and other customary closing conditions.

Diamond Resorts last approached the loan market in late 2015 with a $150 million add-on to its $455 million covenant-lite first-lien term loan due May 2021 (L+450, 1% LIBOR floor). There was roughly $574.6 million outstanding under the loan at March 31, 2016. The issuer also has roughly $601 million of other debt via securitization notes and funding facilities.

Diamond Resorts International operates a network of more than 420 vacation destinations located in 35 countries throughout the continental U.S., Hawaii, Canada, Mexico, the Caribbean, South America, Central America, Europe, Asia, Australasia and Africa. — Chris Donnelly

Follow LCD News on Twitter

This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

content

Brexit: 5 Biggest Daily Declines in European Leveraged Loan Index

European loan index declines

The S&P European Leveraged Loan Index (ELLI) has taken a hit in the two trading days since the U.K.’s vote to leave the European Union.

Total return, excluding currency, for the ELLI fell 0.35% on Friday and dropped 0.38% on Monday, according to LCD.

Trailing only the Greek debt crisis of last summer, these movements mark the second- and third largest single-day declines since LCD started tracking daily returns three years ago. – Ruth Yang/Ruth McGavin

Follow LCD News on Twitter

This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

content

US Leveraged Loan, High Yield Bond Issuance Just Saw Smallest Issuance of 2016

US leveraged finance issuance

The combined $4.6 billion of U.S. leveraged loan and high yield bond issuance was the least recorded during a week in all of 2016, according to LCD, an offering of S&P Global Market Intelligence.

To be fair, both segments spent much of the week with their eye on Thursday’s Brexit vote, so launching deals to generally wary markets was not the order of the day, to be sure. Leveraged loans totaled $3.2 billion last week while high yield bond issuance totaled a paltry $1.4 billion.

Year-to-date loan issuance is $209 billion, down some 10% from 2015. U.S. high yield bond issuance totals $120 billion, down 36% from last year. – Tim Cross

Follow LCD News on Twitter

This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

content

Market Survey (Pre-Brexit Vote): US Leveraged Loan Default Rate to Hit 2.70% in June 2017

leveraged loan default rate and projection

Market participants expect the U. S. leveraged loan default rate to continue to grind higher over the next 12 months as the credit cycle ages and commodity-related credits struggle.

According to LCD’s latest quarterly buyside survey conducted in early June – before the Brexit vote, of course – managers, on average, expect the default rate by principal amount to climb from May’s reading of 1.96% to 2.70% by the end of June 2017 and to 3.09% by the end of next year. The views ranged from 1.65–3.50% by June 30, 2017 and 1.80–4.00% by the end of 2017.

When asked when the default rate is likely to push beyond the historical average of 3.1%, managers were mostly split between 2017 and 2018, with a small percentage (11%) forecasting 2019. – Kerry Kantin

You can read more on defaults here, in LCD’s Loan Market Primer/Almanac (it’s free).

Follow LCD News on Twitter

This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.