Europe continues to weight on secondary loans market, says ECM’s Torben Ronberg

Torben Ronberg, head of Loans at ECM, says political events in Europe continue to weigh on the secondary loans market although the primary market remains steady.

Political paralysis in Europe has continued to keep the secondary market subdued this week. As was the case last week the majority of trading has taken place around single names that have particular stories relating to them currently, rather than a groundswell of buying or selling from the market as a whole.

One name that has caught a bid towards the end of the week has been Kion, following reports suggesting that a majority portion of the syndicate has accepted to extend the maturity of their holdings. The waiver also asks that the second lien loans be repayable one for one with senior from the proceeds of future capital market issuance so this part of the structure has traded up more significantly than the senior – approximately five points this week. Bid interest across the capital structure in Selecta also increased this week on the news that four potential buyers had been admitted to the second round of the auction that Allianz Capital Partners is conducting.

Away from secondary, the primary market continues to operate at a steady pace, though investors have been picky about the names that they choose. Whilst some names have been well received – the initial feedback on BSN Medical has been positive – others have not been so popular. This week both Global Blue and Alain Afflelou have flexed the margins on offer on their loans upwards by 25 bps taking both of their institutional term loans to L+575. As yet there is no OID talk on Global Blue but Alain Afflelou has increased its OID talk from 98.5 to “mid 90s”.

Aside from the cross-border meetings for BSN Medical there was another cross-border launch this week from Kloeckner Pentaplast. This packaging company has been a perennial struggler in the loan market and the new transaction comes about as the result of a restructuring and takeover by junior lenders. Leverage on the new transaction opens at low 2.2x EBITDA but some investors are likely to decline to participate given the borrower’s chequered history.

As had been hinted last week when it was submitted, the €2.5bn bid from Blackstone and BC Partners for Iglo Birds Eye was rejected this week by Permira who had been looking for several hundred million euros more. Whilst the bidders are thinking about whether or not they will increase the amount that they are willing to pay, Permira is understood to be considering a full refinancing of the capital structure which would almost certainly see them take out a dividend. Other bidding situations continue to progress with varying levels of publicity but arrangers are now keen to get transactions out to market before a summer lull, that this year is compounded by the Olympics, and the continued uncertainty across parts of Europe.

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