Cheap Dollar Repricings Take Paper From Euro Investors

The repricing trend that has plagued U.S. loan managers has also been affecting European investors, as issuers look to pay down European loans in favor of new cheaper dollar-denominated tranches.

  • 16 Jan 2004
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The repricing trend that has plagued U.S. loan managers has also been affecting European investors, as issuers look to pay down European loans in favor of new cheaper dollar-denominated tranches. Del Monte Foods Co . approached the market last week for a new $885 million "B" loan that would replace the company's "A" loan, as well as dollar-denominated "B" and euro-denominated "B" pieces. Other U.S. issuers that have completed similar credit revamps include Dex Media East and The Scotts Company , according to market sources. "It's very annoying," noted one European buysider. "It's leaving me with the cash that I need to get reinvested."

When Del Monte's credit facility was originally completed in December 2002, the company's "B" loan was divided into a $705 million piece and a E 44 million piece. Del Monte is now looking for LIBOR plus 2 1Ž 2% pricing on its new "B" loan, one buysider noted. The credit amendment will also give the company the ability to complete subordinated debt and to potentially issue a dividend, he added. Melissa Plaisance , Del Monte's senior v.p., finance and corporate communications, declined to comment on the matter.

Dex Media East had about $580 million outstanding on its dollar-denominated loan and about $40.75 million on its euro-denominated loan as of Sept 30. But on Nov. 10, the company refinanced amounts outstanding with the proceeds of a new "B" loan. Brooke Martellaro , Dex Media East investor relations spokeswoman, said the company did reduce the interest rate on its loan, but did not disclose how the paper funded. The Scotts Company also recently tweaked its credit facility and only has term debt in dollar-denominated tranches, said Paul Desantis , treasurer of The Scotts Company. The company still maintains a multi-currency revolver, which is funded in the local currency of the operation that draws on the facility, he said.

The European loan market is more resistant to repricing and therefore investors there have been largely shielded from the glut of spread reductions that U.S. investors have been subjected to over the last two quarters, market players said. Despite some recent paydowns, due to the size of the euro tranches repaid, some note that the trend has not had too adverse of an impact. Still, others are not willing to wait to see if it does get bad. If the trend continues, it could get difficult for U.S. issuers who downsize their euro loans to look to the European market for deals, warned one investor.

  • 16 Jan 2004

GlobalCapital European securitization league table

Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Bank of America Merrill Lynch (BAML) 3,136 9 13.58
2 Citi 2,562 6 11.09
3 Goldman Sachs 2,150 3 9.31
4 Credit Suisse 1,822 6 7.89
5 Societe Generale 1,814 4 7.86

Bookrunners of Global Structured Finance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 22 May 2017
1 Citi 41,255.30 117 12.99%
2 Bank of America Merrill Lynch 37,631.92 109 11.85%
3 Wells Fargo Securities 32,082.26 89 10.11%
4 JPMorgan 20,969.41 64 6.60%
5 Credit Suisse 16,754.47 44 5.28%