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European Chart of the Week: High yield bonds backing M&A/LBO financings increase in September

EMEA Chart of the Week: 16th September 2020

High yield bond issuance has picked back up after a quiet month of August in which only a single deal worth roughly EUR 96m priced for Norwegian investment company Kistefos. At EUR 5.6bn, high yield bond issuance is off to a strong start in September, with an additional EUR 400m deal for Maxeda currently working its way through the market. The outlook for further deal flow is positive, and the recent wave of transactions pushes year-to-date issuance to EUR 61.6bn, up 5% from the year-ago figure of EUR 58.8bn.

Another positive note has been the uptick in M&A-related financing activity, though this is thanks entirely to the EUR 2.7bn-equivalent multi-currency senior secured notes backing Virgin Media and O2’s recent joint venture. The financing, comprised of a GBP 600m 8.3-year tranche paying 4%, a EUR 950m 10.3-year tranche paying 3.25% and a USD 1.35bn 10.3-year tranche paying 4.25%, pushed 2020 M&A/LBO volume to EUR 13.7bn, up 34% from last year’s EUR 10.2bn.

Aside from the jumbo joint venture, eight additional deals totaling EUR 2.8bn have priced so far this month, largely for refinancing purposes. Some notable examples include Altice France’s multi-currency senior secured note offering and SNF Floerger’s dual-tranche unsecured note to refinance existing debt.

Also expected to price this week is a EUR 400m six-year senior secured note offering from Maxeda, the Benelux focused DIY retailer, with proceeds set to redeem existing notes. 

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By Vincent Daigger 

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