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European Chart of the Week: 22nd July 2019
Year-on-year refinancing activity decreased by 28% from EUR 50.9bn in 1H18, to EUR 36.5bn in 1H19. However, refinancings as a percentage share of overall issuance has increased from 40.3% in 2H18 to 41.2% in the first half on this year–although it is still nowhere near the levels in 1H17, when refinancing activity represented 62.5% of the market.
The combination of a lower M&A environment and falling loan margins has concentrated sponsors’ efforts to refinance. Average institutional margins fell to 404bps in 2Q19, down from 424bps in 1Q19. To date,July’s average loan margin is continuing the trend at 399bps.
The majority of current loans in syndication - 59% - are non-new money transactions,with the largest not able deal being Techem, a German metering business.
The issuer had secured final pricing of Euribor +350bps on its EUR2.34bn repricing, as well as removing its OID. Dutch beverage manufacturer Refresco’s refinancing priced at E+ 325bps while French laboratory operator Biogroup’s amend-and-extend priced at E+375bps continues the sub E+400bps trend.
by Diana Apedu
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