RLPC: New money deals lead healthy loan pipeline

Fri Dec 7, 2012 9:22am EST
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By Natalie Wright

NEW YORK Dec 7 (Reuters) - The leveraged loan pipeline through year-end is rife with new-money deals, providing some good news for asset-starved investors. The institutional pipeline stands at $36 billion as of December 6, with about $17.8 billion, or about 50 percent of total deals, representing leveraged buyout (LBO) or M&A transactions.

From October through the end of November, approximately $55 billion of institutional new-money deals were completed or in market. This is about double the $28 billion of new-money deals in the full third quarter.

A low-rate environment for growth-enhancing transactions, today's strong demand from loan investors, and a push of deals that need to close before year-end are all driving a barrage of M&A and LBO deals in the pipeline.

Only about 25 percent of deals in the institutional calendar are pure refinancings/repricing transactions. By contrast, refinancing comprised 47 percent of institutional volume in 3Q12, 59 percent in 2Q12, and 63 percent in 1Q12.

"For traditional refinancing, a lot of deals have already taken place," said one buyside investor. "That's why you're seeing the 2014 maturities erode."

In the place of refinancing, M&A, LBO and dividend recap deals are the major contributors to expected issuance through year-end.

"We're expecting heavy volumes the first two weeks of December," said a buyside investor.

PVH Corp is marketing a $1.875 billion term loan B to back the acquisition of Warnaco. On December 6, USI Insurance Services launched a $1.025 billion covenant-lite term loan B to back Onex Corp's buyout of USI.   Continued...