Against the backdrop of a secondary that’s finally clawed its way back to pre-“Liberation Day” levels, new issuance is normalizing, with a spurt of opportunistic deals in the mix alongside more pressing M&A-related transactions.
- The BSL market scored a big win bringing Alera back from private credit with a syndicate first- and second-lien solution to mitigate 7.2x total leverage.
- Heavily oversubscribed loan transactions such as Herc and Herschend underscore how much cash investors have to put to work after an extended stretch of lite volume weeks.
- High-yield valuations recaptured pre-tariff levels, and YTD return inked a new 2025 high of 2.5%.
- High-yield primary inked 10 deals for $11.31bn, most in three months and second-biggest week this year.
- New Fortress Energy debt sank on another set of disappointing earnings. OldCastle Building Envelope and Hertz followed suit with worse-than-expected results.
Indeed, the return of opportunistic activity was the headliner this week, accounting for $9.1bn of the $12.8bn/$8.9bn net of launched volume this week via 13 issuers. Also worth highlighting was the $8bn of B3 volume hitting the market, some of which may prove to be challenging. Still, demand is running strong, spurring an issuer-friendly 6:1 flex ratio.
Among this week’s loan market highlights:
- Improved market conditions prompted Brookfield Property to revive the refinancing it shelved a few weeks earlier amid tariff-driven volatility.
- Insurance broker Howden Group executed a rare cross-border drive by loan execution to repay debt and the upsized $685mn-equivalent deal priced tight to talk.
- The BSL market scored a big win bringing Alera back from private credit with a syndicate first- and second-lien solution to mitigate 7.2x total leverage.
- Herc Holdings’ successful M&A loan landed S+200, the tightest non-add-on TLB spread since early April.
- Heavily oversubscribed transactions such as Herc and Herschend underscore how much cash investors have to put to work after an extended stretch of lite volume weeks.
- Credit-driven scrutiny remains a fact of life given the laundry list of doc change to Antylia’s LBO deal this week.
On the run
A temporary pause in trade hostilities gave the loan secondary a big lift out of the gates this week, punctuating two prior weeks of positive momentum. While the rise was significant—the JPM Leveraged Loan Index had climbed nearly half a point this week through Thursday’s close, to 96.6 from 96.19, reclaiming its pre-“Liberation Day” levels—it didn’t follow a straight line. The 90-day tariff rollback deal with China caught some investors off guard, according to sources, and at least early in the week some were hesitant to bid at the pointedly higher prices. Later, with the markets continuing to move higher on inflation data, some buyer fatigue was said to have set in among those who did move quickly. Note that while the week’s gains were more or less across the board, lower-rated and heavily discounted issuers saw larger moves on balance. For example, split B/CCC names that were hardest hit in the April downdraft rose an average 1.48% over the prior five days, while BB names increased 0.60%. Factoring this week’s increase, the JPM index year-to-date return stands at 1.31%.
With the demand boost, the par-plus segment of the market more than doubled week over week— to 25% from 10.9% by number of issuers and to 26.5% from 10.1% by volume, according to the JP Morgan Leveraged Loan Index—fueling chatter that repricings for select issuers could emerge as long as market conditions remain constructive. Generally, players expect to see more business ahead of the long holiday weekend, with a potentially busier week coming after Memorial Day. Furthermore, with secondary prices pulling closer to, or atop, par for a lot of regular-way names, fungible add-ons are back in the mix for many credits, as evidenced by recent deals for Karman and Azuria. Others could be on the way.
Notably, US loan fund retail cash flows turned positive this week, and in a big way with $891mn of inflows, ending a 10-week outflow streak that had seen $11.17bn of redemptions over the span, according to LSEG Risk Intelligence. The week prior had seen $267mn of outflows—low compared with the massive weekly redemptions seen in early and mid-April. The influence of non-CLO ETFs this go-round was 77%, up from 40% the week prior for the previous net-outflow observation.
The BSL CLO new-issue market meanwhile had produced three deals for $1.3bn as of Friday afternoon, compared with eight deals for $3.4bn the previous week, according to LFI data. Weighted-average Triple A execution ranged between S+136 and S+147.
Arrangers on the whole had another moderately busy week, clearing nine deals for $6.78bn, or $3.53bn net. Last week by contrast saw only six deals price, but they were larger on average and involved more new money, together comprising $6.88bn of gross issuance and $6.07bn net. The last time the loan market cleared as many deals was the last week of March, when 14 transactions priced.
Powered up
It was a busy week on the M&A front, including a pair of deals in the power sector. NRG Energy netted a commitment from Citi and Goldman Sachs for $4.4bn senior secured 364-day bridge loan support the planned acquisition of a portfolio of 18 assets from LS Power, including the Lightning Power portfolio and certain assets from Thunder Generation, in a transaction valued at $12bn. The company indicated in a presentation the transaction would be financed with secured and unsecured debt. Note NRG in recent years has tapped the IG bond market for its secured notes, though the term debt placed in the TLB market, so it’s plausible that at least some of the secured debt is placed in the IG market. The ~$3.2bn of debt at Lightning Power, including the ~$1.75bn TLB, is being assumed by NRG in connection with the transaction (loans in the power space are typically portable). “While Lightning will not be guaranteeing NRG’s debt or vice versa and we do not expect any cross-default provisions between the entities, we expect NRG will likely opportunistically refinancing Lightning’s debt over time at the NRG level,” S&P said in a May 12 research note. Closing is expected in Q1 2026.
Separately, Vistra Energy late Thursday agreed to purchase seven modern natural gas generation facilities with a combined ~2,600 MW of capacity from Lotus Infrastructure Partners. Three of the assets—the Fairless, Manchester and Garrison assets, with over 2,100MW of combined capacity—are in the Edgewater Generation portfolio. Vistra noted that it expects to fund the transaction with the assumption of an existing term loan from Lotus and cash on hand, though it was unclear at publication time what term debt is referenced in the press release. Closing is expected in late 2025 or early 2026.
Thoma Bravo-controlled Proofpoint also joined the forward calendar with a $444mn first-lien term loan to help support its acquisition of Hornetsecurity. Incumbent administrative agent Goldman Sachs is underwriting the first-lien portion for the BSL market, while a planned $1.2bn second-lien will be led by the bank’s private credit arm and placed with additional direct lenders. Closing is expected in H2. The proposed transaction reintroduces debt into the capital structure, which was levered at 6x all senior per a dividend deal syndicated earlier this year, though the 2021 LBO included a syndicated first-lien and a privately placed second-lien.
And Jefferies committed to provide an $850mn incremental term loan to support Acuren’s planned $1.7bn acquisition of NV5, a provider of tech-enabled engineering, testing, inspection and consulting solutions. Closing is expected in H2.
The Charter Communications/Cox tie up (see secondary section for details) does entail $4bn of debt financing to fund the cash consideration to Cox; however, an investor presentation notes there will be $4bn of IG debt raised at close, so there appears to be nothing new here for the leveraged loan or high-yield markets.
Joining the pending repayments calendar was PowerGrid following news Monday that Apollo Hybrid Funds agreed to acquire the business from the Sterling Group; the transaction is rumored to be financed in the private credit market. The borrower’s existing loan was an unrated club-style deal stemming from the 2021 LBO; BNP Paribas arranged a $254mn TLB in 2021 to back the LBO and subsequently placed a $55mn incremental loan to fund an acquisition.
Meanwhile, lenders to Consumer Cellular’s ~$2.4bn TLB were repaid this week, which was expected after the out-of-the-blue paydown notice late last week; the issuer is rumored to have decamped to the private credit market. Regardless, it was a meaningful amount of cash returned to investors alongside the first inflow into loan funds since late February.
Overall, the “net net” calendar grew to $8.8bn from $1.8bn at the end of last week.
Opportunity knocks
With new-issue loan market conditions continuing to strengthen, intraweek opportunistic business came to the fore led by the revival of Brookfield Properties Retail Holding’s refinancing.
A Wells Fargo-led arranger group rolled out an $800mn term loan B for Brookfield Properties Retail Holding LLC, the successor entity to retail property owner GGP. Proceeds of the five-year TLB would refinance in full the existing term loan B due 2025. The launch comes roughly a month after a proposed $885mn refinancing deal for the issuer was shelved due to market volatility surrounding the administration’s “Liberation Day” tariff rollout. Talk was outlined at S+325-350 with a 98-98.5 OID, in line with sweetened guidance on the earlier effort that was initially offered at S+275-300 at 99.5. The deal ultimately cleared within that sweetened range at S+350/98.5, with a $50mn upsize to repay RC borrowings. Still, given the commercial real estate sector, demand was less effusive than some of the week’s more popular executions.
In a rare loan drive-by, Howden Group placed a $575mn add-on term loan (S+350) tight to guidance at 99.5. The Morgan Stanley-led deal was upsized midsyndication to $685mn-equivalent from $585mn-equivalent. Proceeds, along with those from the €100mn leg (E+350/99.5), repay revolver drawings, with the additional funds from the upsize going toward GCP.
As well, a Goldman Sachs- and BMO Capital Markets-led arranger group launched a $4.06bn first- and second-lien loan financing for insurance broker Alera in the issuer’s return to the BSL market from private credit. The financing is split between a $3.06bn seven-year first-lien term loan (S+300/99-99.5and a $1bn eight-year second-lien loan (S+500/99-99.5), with Goldman as left lead on the first-lien and BMO as left lead on the second-lien tranche. The extant private credit financing, which stems from a 2021 refinancing, includes debt priced at S+525 and S+575. For PC lenders, it’s a huge paydown: the issuer is repaying $3.85bn of private credit term loans and $80mm of revolver borrowings. Leverage is 5.4x/7.2x and 5.2x/6.9x net of $142mm of cash. Another $535mn of preferred shares sit beneath the debt stack.
In a third new opportunistic deal, a Jefferies-led arranger group launched an all-first-lien refinancing for B3/B- American Auto Auction that will include a $100m RC and an $885mn TLB that is talked at S+450 at 99. The deal takes out the issuer’s 2027 TLB (S+450) and its 2028 second-lien term loan (S+875).
As well, Citi and BofA Securities came to market with a $500mn nonfungible incremental TLB for Clarivate that will refinance its 4.5% senior secured notes due 2026. The loan, which is coterminous with Clarivate’s TLB due January 2031 (S+275), is talked at S+325 at 99-99.5 The issuer is currently rated B2/BB-/BB-.
Of course, there was more M&A in the mix this week, too.
Jefferies moved ahead with the $630mn TLB backing Cleanova’s acquisition of Micronics Engineered Filtration Group that also refinances the extant capital structure setting a lender call this morning. Guidance is S+475 at 96.5. Expected ratings at the corporate level are TBD/B/B and TBD/B/B+ at the facility level. S&P won’t rate the spinoff deal initially.
A Barclays- and KKR Capital Markets-led arranger group outlined guidance of S+400 and S+600 on OSTTRA‘s respective first- and second-lien term loans, with both loans including a 0% floor and offered at 98.5-99. The $1.6bn first- and second-lien financing backs KKR’s $3.1bn acquisition of OSTTRA and includes a $1.3bn seven-year first-lien term loan and a $300mn eight-year second-lien loan. Leverage here is 5.1x/6.3x. Equity of $1.694bn comprises roughly 51% of total capitalization
Surging demand
With few exceptions, new-issue loan deals are racking up strong oversubscription; that’s not much of a surprise given how light the calendar has been in recent weeks. With the secondary recovering, five issuers took the opportunity to tighten attachment points this week as investors were less focused on substantial discounts to par.
For example, investors are said to have committed roughly $4.5bn against Herschend Entertainment’s $1.108bn TLB, and leads Goldman Sachs and Citizens tightened guidance to S+325 at 99.75 from initial talk of S+350 at 99. Proceeds will be used to finance the acquisition of the US entertainment properties of Palace Entertainment from Parques Reunidos and refinance the issuer’s existing TLB due 2028 (S+300). Pro forma leverage runs 4.2x/4.3x, or about 3.5x on a net basis.
A Wells Fargo-led arranger group finalized pricing on the $750mn TLB for Herc Holdings tight to original talk, at S+200 at 99.75, while also expediting timing on the intraweek execution. With accounts drawn to the solid Ba2/BB corporate ratings, it’s the tightest (non-add-on) TLB margin since Murphy landed an S+175 print in early April. Valvoline was the most recent S+200 (non addon) print in mid-March, per LFI data. On Friday morning accounts were being warned of a bruising allocation process as the leads sorted through a $4.8bn order book from more than 140 accounts, and the deal subsequently broke to a par bid. The loan, which was launched at S+225-250 at 99-99.5, $2.75bn of senior notes, a $919mn draw under its upsized and extended five-year ABL and equity, back the acquisition of H&E Equipment Services.
A UBS-led arranger group finalized Pregis‘ upsized and extended $1.2bn term loan tight to guidance at S+400 with a 0% floor at 99.75 while firming a 25bps step-down at 4.35x first-lien net leverage. The deal extends the maturity by 2.5 years while layering in a roughly $56.9mn add-on to repay RC borrowings and fund fees and expenses. Guidance was initially S+400 at 99.27-99.5.
A Jefferies-led arranger group layered in a $50mn delayed-draw term loan alongside the $335mn funded add-on term loan (S+350) for Azuria Water Solutions that finances upfront consideration for an acquisition as well as other near-term acquisitions under letters of intent. The offer price has firmed at 99, the tight end of a 98.5-99 range. The DDTL will be available for 24 months with a 1% ticking fee that kicks in after 90 days. That differs from ticking fees on the funded loan of half the margin for days 46-90 and the full margin beginning on day 91.
Elsewhere, a Barclays-led bookrunner group tightened the margin to S+225 from S+250 at launch while firming the OID at the tight end of the original 99-99.5 guidance, on the $675mn TLB backing I Squared’s recapitalization of WhiteWater Matterhorn.
BofA revised the range on Wayne-Sanderson Farms’ $500mn TLB to 99-99.5 from 99, with no change to the S+225 margin, and priced the deal at the tight end of the revised range. The deal resets maturity on the issuer’s $500mn TLB to a fresh seven years. The S+225 price point technically a pricing reduction as current pricing on the 2028 TLB is S+225 with a CSA. Accounts are being told to expect Ba3/BB/BB corporate and Ba3/BB+/BBB- facility ratings.
Pushback at the margin
Despite investors’ push to put money to work, outliers continue to receive extra scrutiny. As expected, UBS offered investor-friendly changes to Antylia Scientific’s $740mn LBO loan amid earlier concerns over high leverage of 6x all senior, pricing relative to B3/B ratings and loose documentation. In addition to widening pricing to S+400/97.5 from S+375-400/98, arrangers offered a host of revisions to documentation to its $740mn LBO loan. Among the changes was the addition of J.Crew, Serta and Chewy protections to the loan. Revisions also entailed tightening numerous baskets and eliminating two proposed 25bps step-downs at 5.4x and 4.9x net first-lien net leverage. Covenant Review uptiered the issuer’s composite documentation score to a more protective 4- from 5-.The deal ultimately garnered $900mn of interest, but as of Friday morning the arranger working through final comments on documentation that might require further tweaks. The equity check here is $660mm, or roughly 47% of capitalization.
On the come
There was new business as well with international airline catering concern gategroup returning to the US market as part of its cross-border refinancing. The covenant-lite deal includes tranches of €625mn (SFr580mn equivalent) and $500mn (SFr420mn equivalent). The seven-year loans are talked at S/E+450 with a 0% floor. The euro tranche is offered at 99, while the dollars are offered at 98.5-99. BofA is left lead on the dollar tranche.
Meanwhile, GS posted a blind save the date notice for next week that appears to be cross-border in nature, while sellsiders relay that there’s a modest slate of new deal flow ahead next week ahead of the Memorial Day break.
Three-month high
High-yield activity, too, returned to a more normalized level this week.
- Valuations recaptured pre-tariff levels, and YTD return inks new 2025 high 2.5%.
- Primary inked 10 deals for $11.31bn as most in three months and second-biggest week this year.
- Kohl’s met significant oversubscription on $360mn high-yield new-issue debut.
The tariff turmoil’s impact on high-yield was a faded memory this week as valuations recovered to pre-“Liberation Day” levels and advanced further. A 0.75% market surge for total return Monday set the stage, taking average yield to 7.51% and spread to T+315, both inside of 7.62% and T+342 on April 2 ahead of the inflection that widened out metrics to 8.66% and T+461 before recoiling. Macro data was supportive, with so far no sign of inflation building since tariffs were announced and some de-escalation in trade talks with China, and technical influence was mixed. US Treasury yields were on the move higher, such as the 10-year note at nearly 4.5% late week, up from a 4.25% context last week, but retail cash was pouring into the non-investment-grade asset class, at $2.6bn this week.
Year-to-date return hit a high of 2.5% early in the week but slipped to 2.3% by late Thursday. It’s nonetheless quite a recovery from negative 1.9% on April 7 and above the 2% prior peak on Feb. 28.
Booming new-issue business turned out the biggest week in terms of US dollar volume in three months. Indeed, the 11 credits in 12 tranches amassed a $11.31bn weekly tally, with $567mn tied to upsize activity, or 5% of the total. It nearly doubled last week’s $6bn to be the most since the $9.52bn seen in the last week of March, and the second-highest all year, trailing only the $13.63bn in the last week of January, per LFI tallies.
It was setting up to be a week heavy on refinancing-related, what with the majority of business in the first half of the week being bond-for-bond rollover activity, but Herc Holdings/H&E Equipment Services juiced the pipeline with $2.75bn late in the week with the long-awaited M&A financing. The successful rollout Thursday intraday came to be 24% of the weekly supply backing M&A. The issuer was technically Herc Holdings Escrow, and terms for two series of senior notes included all most typical features but also a special mandatory redemption at par plus accrued if the acquisition does not close by Feb. 26. Meantime, proceeds sit in escrow.
Pricing was in favor of the five-year (non-call two) piece, with $1.65bn inked there at 7%, the middle of talk, but inside of whispers for the 7.25% area. The balance was $1.1bn, the same guidance for 25bps more, at 7.25% and par. Ratings are Ba3/BB- via leads Credit Agricole and JP Morgan.
Investors heard modest oversubscription (i.e., 3x-4x) for the big new-money deal from the established issuer. Gains were reserved on the break, to 100.5-101 and 100.75-101.25, but aftermarket interest was building thereafter on Friday. Trading midday was off of a 101.25-101.75 market, or 6.5% roughly, and 101.5-102 quotation, for 6.75% roughly. And existing Herc 6.625% paper caught the bid. The 2029s edged up to 100.5-101 by Friday from 100-100.5 pre-deal.
The other big outlier from refi-related was from overseas. Scotland-based modular power company Aggreko via issuer Albion placed a combined net-$2.265bn equivalent across dollars and euros to fund a dividend recapitalization via repayment of dollar and euro secured and unsecured notes, redemption of $177mn of preference shares under sponsors I Squared Capital and TDR Capital, and a separate straight dividend payment of $323mn. Pricing after global roadshows was $1.4bn of 7% first-lien notes due 2030 via lead bookrunner JP Morgan next to an €850 mirror issue with 5.375% coupon via lead bookrunner Barclays. Both terms inked were inside of talk and whispers, for net-tightening roughly three-quarters of a turn, and with a combined $180mn equivalent upsize. Gains were to 100.5-101 in the post-break trading on the dollars, for 6.75% roughly post-break.
The big-story credit this week was by all accounts department stores operator Kohl’s, with a debut in the primary since fallen-angel downgrades two years ago. The $360mn secured notes offering was a bit of a rescue deal, with proceeds from first-lien notes issuance to pay a July 17 maturity totaling $353mn. Early whisper talk was 11% for the Ba3/BB+/BB+ first-line notes due in five years, and lead bookrunner Morgan Stanley soon amassed significant oversubscription (i.e., 8x-10x) for the transaction, with yield chatter creeping tighter. Eventually guidance was out to 10.25%-10.5% and pricing was pulled in one day earlier than planned. Pricing was 10% coupon at 99.05, to yield 10.25%, and there was a surge to 103 in post-break action, for 9.125% roughly. There was little room for fresh capital aside from any rollover activity from targeted unsecureds, and investor concerns about covenant risks were assuaged with some revisions. The covenant changes included the addition of a $90mn cap on pari passu liens capacity available via collateral coverage ratio, exclusive of a $60mn general basket, and the timeline to repay bonds with asset sale proceeds to 90 days from 365 days prior, according to sources.
James Goldstein, head of retail at LFI partner publication CreditSights, earlier this week in research notes flagged the covenant risk and sectoral/tariffs risks, but recommended investor exposure at guidance. “Holders would be generating cash through clipping fairly fat coupons in the leadup to a liquidation or bankruptcy event that could still be some ways off, given very limited maturity obligations on the horizon. Prospective buyers should pass if they are certain KSS is entering a death spiral. We’re not certain, and think the story could limp along for some time with a chance of stabilizing free cash flow generation and getting back on track,” per the Goldstein report.
Notably, the deal came after just last week when the issuer was downgraded by on notch by Fitch Ratings. Fitch outlined the following: “The downgrade and Negative Outlook reflect the company’s ongoing operational challenges, raising concerns about the timing of business stabilization in the medium term. The company recently replaced its CEO and is adjusting its operating strategy, but its ability to stabilize market share, particularly in apparel, is unknown.” As for the positive credit aspects, “the rating recognizes the company’s resources for executing its turnaround, including a reasonable asset base and ability to invest $400 million in capex for topline initiatives.”
The rest of the pipeline was mostly a return to business as usual—opportunistic general corporate deals and bond-refinancing purposes. Much of the drive-by business was focused on Double B issues for market bellwethers Carnival Cruise Lines, along with hard drives giant Seagate Technology and metal cans manufacturer Crown Holdings. The latter was $700mn of 5.875% 2033 senior notes at par, the tight end of talk, to pay down 4.75% senior notes due early next year, and pricing was fairly steady on the break. It was via lead bookrunner BofA Securities and upsized $200mn amid modest oversubscription (i.e., 3x-4x) with Ba2/BB+ ratings.
BofA also was lead bookrunner on $1bn of six-year bullet notes rated B1/BB+/BB+ from Carnival Corp. to pay down pari passu 7.625% senior notes due in March. Pricing also was 5.875% and par, for inside the low-6% whisper talk, and pricing also was on either side of par on the break. Pricing came right after Fitch Ratings upgraded the issuer’s senior notes rating from BB, saying that the issuer “benefits from its scale, high operating margins, strong liquidity and our expectations of continued deleveraging,” and that the positive outlook reflects “belief that solid booking activity will continue and management’s commitment to debt reduction will lead to stronger credit metrics.” The upgrade followed an upgrade by S&P on the issuer’s senior notes to BB+ from BB in March.
Others were benchmark issuers Bombardier with $500mn of senior notes due 2033 completed at the middle of talk in the 6.75% area to address 7.875% 2027s and Avis Budget Car Rental with $500mn of seven-year senior notes inked at the tight end of talk in the 8.5% area, for 8.375% at par, to repay the same-size A term loan facility due at the end of the year that was opened just two months ago. RBC was at the helm on both. Leading in size was $2.65bn in a bond-rollover play for TransDigm as 6.375% subordinated notes due 2033 to pay down 5.5% 2027 subordinated notes. Goldman Sachs was leading the company’s return to market after six months. But it’s a return after fully four years at the subordinated level, at B3/B, which used to be more typical for the repeat issuer, and instead has been issuing first-lien secured with Ba3/BB- ratings. Valuations are not much different, such as 4.875% 2029 subs trading in the mid-96s next to 6% 2033 secureds just over par, for the same yield. New-issue pricing was 99.22, to yield 6.5%, and break was steady.
“TransDigm sub notes typically trade only very slightly back of their secured counterparts, despite a three-notch rating difference at Moody’s and two-notch difference at S&P. We believe this skinny basis is due to the company’s healthy equity market valuation at 22.9x EBITDA,” according to Matt Woodruff, head of aerospace and defense and transports at LFI partner CreditSights.
Looking ahead, the pipeline sits empty after the busy week. Prospects are bright per most market influences, including positive market bias and retail cash inflows, but the calendar is tight. Next week has just four viable sessions before the early close ahead of the long Memorial Day weekend. There not much on the economic calendar or corporate calendar, just a few names on the dwindling list, including Hovnanian Enterprises, Viasat and then Booze Allen Hamilton late week.
Encouraging outlook
Secondary markets opened the week on an upbeat note, which continued most of the week after the US and China agreed to lower tariffs for 90 days as the countries negotiate on trade. The agreement will see the US cut its total tariff rate of up to 145% to 30%, while China will ease its tariff rate of up to 125% to 10%, Issuers with significant exposure to China, particularly with imports, led the gains Monday.
- Issuers exposed to Chinese imports climbed throughout this week on agreement to temporarily cut tariff rate to 30% from 145%.
- M&A activity picked up with Charter Communications, Landsea Homes and Foot Locker debt higher on acquisition news.
- New Fortress Energy debt sank on another set of disappointing earnings. OldCastle Building Envelope and Hertz followed suit with worse-than-expected results.
Michaels debt was top-traded during the first session of the week, with its 7.875% senior notes due 2029 changing hands at 43 Monday, up from trades in the low 30s last week. Its term loan due April 2028 (S+ARRC CSA+425, 0.75% floor)—initially sized at $1.95bn—was quoted at 64-65 Monday, up from 58.5-60.5 going out last week. The retailer has been struggling with its tariff exposure. It retained FTI as an operational advisor, while lenders have been consulting with Davis Polk and Lazard. The senior notes wrapped up the week even higher, changing hands at 49, while the term loan was quoted at 68.5-70 this morning.
Conair, which has sought to diversify its supply chain away from China, also saw its debt jump, with the original $1.27bn S+375 first-lien term loan due 2028 climbing to a 60-65 market from 50-55 going out last week and closing this week quoted at 63-66. The issuer’s debt was cut last month by both Moody’s and S&P. Both rating agencies highlighted significant tariff risk. Harbor Freight Tools’ $2.85bn term loan B (S+250, 0% floor) due 2031 climbed to 97.25-97.75 market Monday, from 94.75-95.75 going out last week, and closed out this week at similar levels spotted Monday.
Oil names were also higher Monday, as the trade agreement boosts the expectations for economic growth and oil demand. Vital Energy’s 7.875% senior notes due 2032 changed hands at either side of 85, up almost five points, versus trades going out last week. Meanwhile, Transocean’s 8.5% senior notes due 2031 changed hands at 84, up from trades at either side of 78.5 going out last week. Moss Creek’s 8.25% senior notes due 2031 changed hands at 97, up over 2.5 points versus trades on Friday.
Earnings news still dominated headlines this week, but there were also notable outliers on the M&A front. Debt backing Charter Communications was higher after the announcement of a definitive agreement to combine its business with Cox Communications, a deal that values Cox at $34.5bn on Friday. Top traded early in the session were Charter’s 4.25% 2034s changing hands at and around 87.5, versus market quotes 84.5-85.5 prior to the news, followed by 4.75% 2032s wrapped around 94, from 91.25-92.25 prior and 90.5-91.5 opening the month, according to sources and trade reporting. The most recent issuance, 7.375% notes due 2031, was trading at 104.75, up from 103.5-104.5 prior to the news and par issuance early last year. Meanwhile, the company’s term loan B-4 (S+200) due 2030 and S+225 term loan B due 2031 climbed slightly to a 99.75-100 market, versus 99.5-99.75 prior.
Altice USA’s debt was down across the board Friday, with sources relaying that the Cox deal puts prior market rumors of Charter potentially acquiring the cable competitor on the back burner. Debt issued via CSC Holdings was the most active, with its most recent issue of 11.75% guaranteed notes due 2029 quoted at 92.75-93.75, down from 97-98 Thursday. Meanwhile, its 3.375% senior guaranteed notes due 2031 were four points lower, changing hands at either side of 65.5, data showed. Altice USA’s B-5 is quoted at 96.25-96.75 versus 96.75-97.5 Thursday, while the B-6 term loan is 97.5-98 versus 97.75-98.5 Thursday.
On Tuesday, debt backing Landsea Homes jumped after Apollo-backed New Home Co. announced the acquisition of the company for $11.30 per share in an all-cash transaction that represents an enterprise value of approximately $1.2bn. The company’s $300mn 8.875% senior notes due 2029 issued in April 2024 changed hands at either side of 104, well past the 101 put price, up from trades at either side of 95.25 Monday afternoon. The acquisition will likely trigger a change of control put of 101, as the widely held public company exception does not apply, per Covenant Review. However, holders of the series may not trigger the put and hold out for when the series becomes callable. The notes will be callable April 1, 2026, at 104.438, dropping to 102.219 after April 1, 2027, and then par after April 1, 2028. The series closed out the week at similar levels spotted on Tuesday at 104.
On Thursday, Foot Locker debt jumped over 10 points after Dick’s Sporting Goods announced that it will acquire the company for an enterprise value of approximately $2.5bn. The retailer’s $400mn of 4% senior notes due 2029 changed hands at either side of 95.25, up from trades of 83.5 Wednesday afternoon before news circulated that a potential acquisition was in play. The acquisition is considered a change of control under the existing covenants governing the notes, but a 101 put right will likely not be trigged unless there is also a ratings downgrade, Covenant Review said in a report. The series is currently redeemable at 102, with the call price stepping down to 101 on October 1.
Virgin Media‘s dollar-denominated notes wrapped up Wednesday’s session higher following a Bloomberg report that Telefonica is drawing up plans to take control of the UK telecoms joint venture. The company’s $925mn 5% senior notes due 2030 issued via Virgin Media Finance PLC were the most active, changing hands at 93.5 Wednesday afternoon, up from trades of 88.75 Tuesday. The most recent issue of 7.75% first-lien notes due 2032 issued via VMED 02 UK Financing changed hands at 103.5, up from trades wrapped around 102 Tuesday. Meanwhile, its other series of 4.75% first-lien notes due 2031 issued via VMED were up 2.5 points, changing hands at 92.5. A potential acquisition is unlikely to trigger the change-of-control covenant, especially if Telefonica acquires Liberty Global’s 50% stake in VMED O2, because the proposed acquisition occurs at a shareholder level “above” the covenant, Covenant Review previously said in a report.
On the earnings front, New Fortress Energy’s debt collapsed post-earnings Wednesday afternoon, with the company reporting a 75% year-over-year drop in adjusted EBITDA, which outshined positive sentiment around the liquified natural gas company’s windfall from its $1.055bn sale of Jamaican assets to Excelerate Energy. For Q1’25, adjusted EBITDA came in at $82mn, compared with $340mn during the same period last year. The issuer’s $2.7bn 12% first-lien notes due 2029 issued in November as part of backstop agreement to refinance were the most active Thursday, with over $275mn exchanged in volume, changing hands at either side of 37.5 Thursday afternoon, down from the mid-60s earlier Wednesday and trades in the low 40s Thursday morning. The issuer’s $506mn outstanding 6.5% first-lien notes due 2026 were quoted 79.5-80.5 ahead of report but fell into price discovery late Wednesday afternoon and were changing hands Thursday afternoon at either side of 60. The company’s $425mn incremental first-lien term loan (S+550) due 2028, which was issued at 92 in February, fell to a 56-59 market, down from 69-72 before the news. The debt had been quoted in the low-70s earlier this week before the company disclosed an amendment to its term loan, which among other things, waives the requirement that the company pay 75% of net proceeds from certain asset sales to repay debt, allowing the company to apply $270mn of the asset sale proceeds to the extended tranche of the existing revolving credit facility. The debt wrapped up the week even lower, with the 12% notes changed hands at 32, while its term loan was quoted at 57.5-62.5.
Debt backing Oldcastle Building Envelope has been falling since Tuesday after Q1 results showed significant year-over-year revenue and adjusted EBITDA declines. The company reported Q1 revenue of $410mn, down 14% from $478mn a year earlier, while adjusted EBITDA fell 57%, to $39mn from $90mn, sources added. Results dropped sharply in the Glass & Glazing division, with the segment’s adjusted EBITDA falling 78% to $13mn and revenue falling 16% to $296mn, sources said. Revenue within its Architectural Hardware & Supplies division was also down 10% to $126mn, while adjusted EBITDA was down 21% to $29mn. The company’s 9.5% senior notes due 2030 issued via Oscar AcquisitionCo. were quoted at 86.25-87 Wednesday, down from 91.5-92.25 on Monday. The debt started the week on an upward trajectory after the tariff news, which sent issuers across the building products and homebuilding sectors higher. The debt closed out last week quoted at 88-89, sources added. Meanwhile, the company’s S+425 TLB due April 2029 was at 91.75-92.75 Wednesday, after falling to 91-93 after the earnings report Tuesday, and is down from 96.25-97.25 prior to the news.
Prime Healthcare Services’ debt was higher this week after the company reported to debtholders that pro forma adjusted EBITDA was $166mn, up 95% from $85mn a year earlier. Meanwhile, pro forma net income was $290mn, versus $18mn a year earlier, with the company benefiting from asset sales. Prime Healthcare’s 9.375% first-lien notes due 2029 changed hands at 101 post-earnings Tuesday evening, up from trades at either side of 97 going out last week.
Mauser Packaging’s debt was also up after results Wednesday, which were mixed, but with the company saying that it has taken the necessary actions to “mitigate the vast majority” of tariffs that impact the company directly, shifting production sales and raw sourcing to a more regional footprint. The issuer’s $1.34bn 9.25% second-lien notes due 2027 were the most active, changing hands at 97 Wednesday afternoon, up from trades of 94 pre-earnings.
Debt backing iHeartMedia was higher Tuesday after the company reported mixed results for the recent quarter but boosted its Q2 earnings guidance. The 7.75% first-lien exchange notes due 2030 changed hands at 75, up from 74 Monday afternoon right after the report and up from market quotes 72.5–73.5 prior to the news. The $2.145bn S+577.5 term loan due 2029 climbed to an 80.5-81.5 market from 77-78 earlier this week, according to sources. Net revenue during Q1 was $807mn, up 1% year over year and nearly 3% atop analysts’ estimates for $787mn. Meanwhile, iHeart raised its forecast. Management put forth an estimate for Q2 consolidated adjusted EBITDA of $140mn to $160mn, an improvement upon the prior forecast just three months ago for $110mn to $100mn.
Hertz’s debt also drifted lower Tuesday after the company reported a larger-than-expected loss for Q1’25, as well as a tighter fleet as it continues to face pressure from a slowdown in customer bookings. Revenue for the quarter fell 13% to $1.8bn from $2.08bn in Q1’24, missing the Street estimate of $2bn. Hertz’s $500mn 4.625% senior notes due December 2026 were the most active opening the session, quoted at 87.5-88.5, down from 89.75-90.75 Monday and significantly improved from a low print 85.5 earlier, and nearly unchanged versus quotes going out last week. The company’s most recent series of $1.25bn 12.625% first-lien notes due 2029 were top traded by the end of that day, with $60mn having changed hands, and fell to a 100-101 market Tuesday morning from 100.75-101.75 Monday, but still a touch higher versus trades going out last week, according to sources. Meanwhile, its S+350 TLC and S+350 TLB both due in 2028 fell to an 82-83 market, down from 83.5-85 Monday afternoon, but still up from 78-79 a week ago, according to sources.
Echostar is lower this week after climbing late last week on the back of better-than-expected Q1 results as the FCC announced Tuesday that it is exploring the company’s use of cellular and satellite spectrum licenses. “FCC chairman Brendan Carr has fired a shot across the bow at DISH, stopping short of calling the company a ‘spectrum warehouser,’ but clearly calling into question whether the company has been effective at building out a 5G network,” Davis Herbert, head of telecom and media at CreditSights, said in a report. The CreditSights report noted the company’s spectrum-backed debt is likely to be the most impacted, which is indeed the case. Echostar’s 10.75% spectrum notes due 2029 changed hands at 101.25 Tuesday afternoon, down from trades of 106.5 Monday morning before the FCC statement was released. The other series of spectrum-backed notes, particularly, its 6.75% 2030 tranche, is now changing hands at 89, down from trades of 94 before the news, data showed. Meanwhile, debt issued via Hughes Satellite Systems Corp. in 2017, notably its 6.625% senior notes due 2026, were changing hands in the mid-70s, down from trades in the low 80s and from trades in the mid-80s after earnings last week.
Brightline East’s debt remained on a downward trajectory this week, with Kroll Bond Rating Agency (KBRA) cutting the company’s ratings to B+ from BB. The Fortress-backed issuer’s $1.325bn 11% senior secured notes due 2030 dropped to trades as low as 72 Thursday versus quotes of 79.25-80.25 Wednesday and 78-79 going out last week. “Under KBRA’s updated assumptions and, given that no distributions from OpCo are expected before 2027, the liquidity currently available will be sufficient to cover debt service through July 1, 2026, exposing the transaction to a potential default as early as January 1, 2027, should ridership and revenues not exceed KBRA’s forecast, or if higher operating expenses continue through the ramp-up phase,” the report said. Last week, Fitch cut the ratings on the series to CCC+ from B. The ratings agency noted the downgrade on the BLH debt was due to the likelihood of cash being trapped at the OpCo level due to slower-than-expected ramp-up, weaker revenue and higher operating expenses.
Chris Donnelly
chris.donnelly@levfininsights.com
Managing Director at LevFin Insights
