Loans and High Yield

Loans bankers and borrowers are increasingly spending weeks, if not months, negotiating over pricing, as the gap between their expectations grows wider amid Covid-19 disruptions.

Direct lending funds are likely to be the best choice for sponsors looking to fund buyouts this summer, with investment banks still sitting on substantial bridge books, and simplicity and certainty of execution being the top priorities.

Pharmaceutical company Stada announced a €200m bond on Tuesday, a "mirror" of its existing 3.5% 2024s. The new issue is rated B2 at Moody’s, making it one of the lowest rated issues to have surfaced in euro high yield since the coronavirus crisis hit, but Stada is one of the least affected issuers in the market, and said that March 2020 saw its highest ever monthly production.

BNP Paribas blamed European authorities’ restrictions on 2019 dividend payments for losing it €184m in its equities business, when it released its first quarter results on Tuesday. However, in debt capital markets and fixed income, currencies and commodities (FICC) it was a more positive picture, as the bank took advantage of a surge in debt origination and electronic trading.

Robert Bosch launched Schuldscheine with tenors varying between two and 20 years on Tuesday. The German car parts supplier is looking to raise at least €500m in a market all but shut since the coronavirus pandemic reached Europe. Participants hope this launch will prompt other borrowers to follow suit.

Prospects are rising of a return to normal merger and acquisition activity, despite the continued grip of the Covid-19 pandemic. Telefónica, the Spanish telecoms group, has confirmed it is in talks about combining its UK mobile business O2 with Virgin Media, the quad play telecoms firm owned by Liberty Global.

Jacques Callaghan, formerly of Macquarie Capital, has joined HSBC as head of UK mid-market M&A, concentrating on a wedge of companies that are important to the bank’s new strategy.

Luxshare Precision, a Chinese designer of cable assemblies, has launched a $500m loan into syndication, hiking up the margin on offer due to changing market conditions caused by Covid-19.

Some banks in the eurozone tightened their lending standards in the first quarter of 2020 as the coronavirus pandemic spread across the globe, even as loan demand surged, according to a European Central Bank survey that provides the first systematic evidence on the subject.

Three out of four bondholder groups have voted in favour of Norwegian Air Shuttle’s rescue package, but the deal is stuck on the plans for the issuer's euro secured notes, which only won a 62% approval rate — below the two-thirds majority needed.

Norwegian Air Shuttle improved the terms of an offer to bondholders for a second time this week, just hours before the deadline for its creditors to agree on a restructuring plan that it hopes will eventually unlock a state rescue.

Lloyds Bank and Royal Bank of Scotland have decided not to charge clients an arranging fee when lending via the UK’s Coronavirus Large Business Interruption Loan Scheme (CLBILS), while HSBC will not charge any early repayment fees.