European leveraged loan pipeline running dry

22 September, 2019 12:00 AM printer

LONDON: Europe’s leveraged loan market is digesting around €18b (S$27.2 billion) of new paper, providing a fillip to what has been a quiet year, but once those deals have passed the pipeline looks sparse, prompting concern among bankers that are coming in 40 per cent-50 per cent under budget.

A number of public-to-private deals has kept the market busy, including £972m of leveraged loans backing the buyout of UK car auctioneer BCA Marketplace and €963m of loans for Madrid-based theme park operator Parques Reunidos, report agencies.

Some £3.8b-equivalent of debt backing the take-private of UK theme park and attraction operator Merlin Entertainments is also due to hit the market shortly.

Investors are anticipating US$3b-equivalent of debt backing advertising and public relations company WPP’s data analytics unit Kantar and £2.517b of loans for Advent’s buyout of UK defence and aerospace group Cobham.

The acquisition of French call centre business Webhelp by Groupe Bruxelles Lambert and founding shareholders is also expected to come to market, totalling around €1.4b of debt financing. “The market is okay at the moment as deals are being done but the fear is that the cupboard is bare,” a capital markets head said. The M&A pipeline is sparse. The market had anticipated some jumbo financings for companies including Bayer’s animal health division, but that fell out of sponsors’ hands and the European leveraged loan market when US animal health and food-animal production company Elanco agreed to acquire the business.