August 25, 2014
Funds flee high-yield and market flex moves overwhelmingly favor buyers.
You might have missed your chance. The high yield markets – leveraged loans and junk bonds – have seen significant outflows in recent weeks, and now investors are demanding better terms. This is reflected in the fact that investor-friendly market flex moves are far outpacing those that are borrower friendly.
In August 83 percent of loan flexes favored the investor, rather than the borrower, according to S&P Capital IQ. This is a sharp change from years. Last month, 60 percent of flexes favored borrowers, and only 40 percent favored investors. On August 21, five of six high yield offerings were re-gigged to attract investors. Among them, according to S&P Capital IQ:
- Bioplan increased the interest rate and sweetened the discount on a $520 million loan backing a merger with Arcade Marketing.
- Oil & Gas company Expro International trimmed pricing on a $1.3 billion credit by a hefty 75 bps (it also sweetened the discount).
- Medley Capital MCC, an asset management firm, cut the interest rate on a $100 million loan backing a recap/dividend.
- Home furnishings concern Nielsen & Bainbridge cut pricing and increased the discount on a $290 million loan backing the acquisition of The Home Décor Companies.
- Safe-Guard Products, an insurance/finance company in the motor vehicle space, trimmed pricing on a $210 million loan refinancing.