European Chart of the Week: Recent limited leveraged loan activity sees shift in use of proceeds
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Europe Chart of the Week: 29th May 2020
Deals for general corporate purposes have accounted for 79% of the limited leveraged loan issuance in 2Q20 to date. Despite the harsh climate in the market, the coronavirus pandemic has forced borrowers to focus on financing for normal day-to-day activity. Surviving difficult economic conditions has been the focus for the quarter thus far as the market begins to recover.
Refinancings, which often dominate the pipeline during a low M&A activity environment have dropped to 15% of issuance, versus 55% in 1Q20 when it made up EUR 29.7bn of the EUR 54.3bn total for the period.
Whilst April saw no institutional loan deal flow, green shoots have appeared in the month of May with EUR 1.6bn of volume. Market sentiment seems to be improving as social distancing eases, and June could turn things around for the quarter.
The largest borrower in the current quarter and for 2020 thus far is Fiat Chrysler with their EUR 3.5bn bridge loan facility. Synlab’s EUR 468m term loan B extension due in 2022 was the first deal go through general syndication this quarter, pricing on 12 May.