Loans and High Yield

Banks have launched the buyout funding for Lone Star’s purchase of BASF Construction Chemicals into market, as the storming execution of ThyssenKrupp Elevator shows the discount banks must take to exit pre-Covid positions is rapidly shrinking.

UK discount chain B&M Value Retail has launched a £350m senior secured bond and a £300m term loan to refinance its whole capital structure — with help from the Arora brothers, the largest shareholders in the company, who will subscribe for £100m of the bond through their vehicle SSA Investments.

Fiat Chrysler Automobiles, the Italian-American crossover-rated car company, launched €3.5bn of bonds into the market on Tuesday, days after its Italian arm had agreed €6.3bn of bailout funds guaranteed by Italy.

BP’s announcement that it was selling $5bn of assets to Ineos — a sale the already leveraged group will fund largely through new debt — put selling pressure on existing Ineos debt on Monday; particularly that issued by its Styrolution unit, which will be the acquirer in the BP deal.

Chinese property companies Times China Holdings and Golden Wheel Tiandi Holdings Co took a combined $470m from the bond market on Monday.

Agile Group Holdings, a Chinese property company, is planning to launch a HK$3.242bn ($418m) refinancing loan into general syndication in early July.

Zhejiang Changxing Financial Holdings Group Co opted for a club-style execution for its $160m maiden international bond on Monday.

Chinese property developer Country Garden is in the process of finalising the bookrunner group for a $1.5bn loan, with bankers already confident the deal will see strong interest from lenders.

ThyssenKrupp Elevator (TKE) is a deal of superlatives: the largest European high yield debut, the largest European LBO in over a decade, the last LBO before coronavirus, the most levered debut industrial, and the worst-ever covenant package — or at least, it was at first. Three days after launching the bond leg of the deal, the sponsors and leads capitulated, erasing almost every controversial term in the docs — perhaps the largest ever retreat and the biggest investor victory in the long-running war over bond covenants. But it’s too soon for investors to celebrate, as the episode only highlights how damaging this conflict has become.

Morgan Stanley has hired Alessandro Mazza as a managing director in its leveraged finance business in Europe.

The UK’s new insolvency law came into force on Friday, and lawyers have been spending the weekend picking through its 250 pages to understand the implications. While some have welcomed it, others pointed out that in its haste to push it through Parliament, the government has introduced several changes that skew the balance between various kinds of lenders which hitherto had been treated equally.

Lead banks on ThyssenKrupp Elevator’s landmark financing announced a sweeping set of amendments to a covenant package initially described as the "worst ever" seen in European high yield, rowing back in almost every sponsor-friendly area. The move is a major victory for bondholders that hoped the coronavirus crisis would reset the balance of power themselves and sponsors.