- Amid an uptick in new-issue activity, Jefferies has been the most active investment bank in underwriting new LBOs. We are an arranger on 6 of the 7 LBOs expected to come in September / October, and are Left Lead on 3 of these transactions.
- Market conditions for broadly syndicated loans began improving over the summer, creating an incredibly receptive environment for new LBO financings.
- As of September 20, the loan index was at 95.91 bid, the highest level since May 2022, indicating the strength of the new market and demand for new volume.
- New LBO and M&A launches for the first half of September totaled $10.1 billion, which was the most for any month since June 2022 ($13.1 billion).
- Private equity firms should look to the syndicated market to finance new LBOs.
- The strength of the syndicated loan market will allow issuers to achieve improved pricing and a more flexible covenant package compared to offerings in the private credit market.
- According to KBRA data, the broadly syndicated market also offers pricing ~200 bps tighter than the private credit market, offering significant cash interest savings for companies.
- Jefferies is Left Lead Arranger on Simon & Schuster’s $1.62 billion LBO by KKR.
- Pricing on the $1.1 billion First Lien Term Loan is S+400, with a 0.00% floor issued at 99.0 OID.
- The Margin was tightened from S+425 to S+400 and OID was tightened from 98.5 to 99.0.
- Jefferies was Joint Lead Arranger on Syneos Health’s LBO by Elliot, Patient Square, and Veritas.
- Syneos Health is a leading global contract research organization providing clinical development and commercial services to biopharmaceutical and medical device companies across the product development lifecycle.
- Pricing on the $2.7 billion First Lien Term Loan is S+400 with a 0.00% floor issued at 98.5, while the $1.0 billion Senior Secured Notes priced at 9.000%.
- The syndication was a blowout with the term loan pricing tightening 50 bps from the S+450 price talk and the OID tightening from 97.0 to 98.5.
- Due to strong demand and oversubscription, $700 million was shifted from the Bond to the Term Loan.
October 2023 Quarterly Insights
Jefferies Is Open for New LBO Underwrites
The new universal proxy card (“UPC”) rules took effect last year, making the 2023 proxy season the first in which both company and dissident nominees were listed on the same ballot, allowing shareholders to choose among the different candidates in a contested election.
October 2023 Quarterly Insights
Graying of America Explains Labor Market Tightness; Recession Likely On Tap for Early ‘24
David Zervos is skeptical the Fed will be able to quickly declare victory over inflation and expects that a solid economic outlook should translate to a more restrictive Fed, for a longer duration.
It is common for highly levered sponsor-backed companies with liquidity needs and/or upcoming maturities to engage in liability management exercises, which often includes creating a new priming tranche of secured debt (an “Uptier”) or transferring assets out of the secured collateral package (a “Drop Down”).