CLO Market Round-Up: Hertz to ‘Re-IPO’; Corporate Upgrades, Sales, and New Pricings
Recent headlines surrounding companies in the Corporate CLO space included business sales, new term loans, several issuer default ratings (IDRs), and more. In Trepp's weekly CLO market round-up, we recap daily TreppWire stories that highlighted the latest headlines impacting the leveraged loan and corporate CLO markets. If you are interested in seeing the coverage of the CLO headlines in your inbox every morning, click here.
Read below for the overview and see how these developments might impact leveraged loan prices.
Here, see a preview of the loans that faced the largest movement in prices last week. Find Trepp's full list, along with the managers who hold the largest exposure to each loan in the TreppCLO product.
Hertz to ‘Re-IPO’ with Share Offering Terms Set
Hertz Global Holdings, a firm that in June 2021 came out of bankruptcy, announced on Wednesday the terms for the share offering of what it calls its “re-IPO”. According to a recent filing, the firm is planning to offer 37.1 million commons around 87% of the total common shares available. Pricing is predicted to fall between $25 to $29 a share down from the $35.06 that the company traded at in November 2021.
Hertz’ Term Loan B was held by 205 CLO vehicles in October, though it saw minimal trading activity, currently, Markit data has it priced just above par. Term Loan C on the other hand was held by 185 CLO vehicles in October and also saw minimal trading activity it too is priced just above par.
Fitch Upgrades Dell Technologies and Affirms First-lien Rating Both at ‘BBB’, with Outlook Positive
Fitch Ratings has upgraded Dell Technologies from ‘BBB-‘ to ‘BBB’ at the same time it has affirmed the first-lien secured ratings at ‘BBB’. Dell is an American multinational computer technology company that develops, sells, repairs, and supports computers and related products and services.
Currently the company is represented through several loans in the CLO world, these being, $4,750 MM Dell International LLC - Term Loan B (L+200; Floor: 75; Due Sep 2025), $3,143 MM Dell International - Term Loan B-2 (L+175; Floor: 25; Due Sep 2025, and $3,664 MM Dell International - Term Loan A6 (L+175; Floor: 0; Due Mar 2024).
Dell’s Term Loan B was held by 250 CLO vehicles in August, it was priced just over par but had limited transactions within the month. Term Loan B-2, on the other hand, was held by 395 CLO vehicles in August and had a higher trading frequency at 108 transactions though all of these were sold, the loan traded around par. Finally, Term Loan A6 was held by 30 CLO vehicles with only 2 transactions in august these both being sold. The loan is currently just below par.
Scientific Games Corp Announces Sale of Lottery Business to Brookfield for $6 Billion
Recently, Scientific Games Corp, announced it would be selling its global lottery business to Brookfield Business Partners LP, an affiliate of Canadian Investment firm Brookfield Asset Management for $6 billion. Bloomberg reported that the deal will be financed by at least $2.6 billion in equity.
Scientific Games also sold its sports betting division in June 2021 to Endeavor Holdings Inc, according to Reuters this was for $1.2 billion in cash and stocks, both events have been part of the company’s strategy to trim down its business after ratcheting up debt.
Currently, the company is represented in the CLO world through a $4,175 MM term loan Scientific Games International - TERM LOAN B5 (L+275; Floor 0; Due 2024), this was held by 461 CLO vehicles in September. Throughout September we saw trading volumes of 83 with a strong trend of sells at 78 vs 5 buys. Current data from Markit showed the loan trading just below par.
AppLovin Announces Pricing of New $1.5 Billion Term Loan
AppLovin Corporation (APP), as of today, completed a $1.5 billion term loan B due October 2028. The loan was priced at L+300, with a LIBOR floor of 0.5%, and an issue price of 99.75. According to S&P, the loan broke for trading at 100/100.375.
The company is a leading marketing software platform for mobile app developers. Currently, they are represented in the CLO universe through 2 loans, a $1.784 Billion Applovin Corporation - Term Loan B (L+325; Floor 0; Due Aug 2025) and a $300 million Applovin Corporation – Applovin T/L B (L+400; Floor 0; Due Aug 2025).
APP’s term loan B ($1.784 billion ) was held by 264 CLO vehicles in September with 23 transactions occurring in the month. The majority of transactions were sales at a volume of 18 and 5 buys, this trend follows on from August which saw 36 sells and 3 buys, currently, it is being priced at below par.
App’s other loan ($300 million) has had low trading volumes in recent months and has been held by 93 CLO vehicles as of February 2021, pricing of this loan was slightly above par at the time.
Polygon Receives ‘B’ Final Long Term IDR Following Acquisition
Fitch Ratings has assigned PolyStorm Bidco AB (Polygon) a final Long-Term Issuer Default Rating (IDR) of 'B' with a Stable Outlook, following the finalization of its acquisition by AEA Investors. Fitch has also assigned the group's first-lien term loan B (TLB, including an up to EUR55 million of delayed draw TLB2 for acquisition and EUR90 million revolving credit facility (RCF) final ratings of 'B' with Recovery Ratings of 'RR4'.
The company is a leading property damage control service provider in Europe with a one-stop-shop solution approach. They are currently represented in the CLO world through a EUR430 million Polygon - Term Loan B (L+400; Due 2028), with EUR55 million of delayed raw. This loan was held by 9 CLO vehicles in September and had moderate trading activity at or slight over par.
General Pricing Data
21 deals were priced in the CLO market last week. There were 12 new, three refi, and six reset deals. 15 deals were priced in the US market, the rest were priced in the EU.
The best new execution in the US Market was the $508.40 million Apidos XXXVIII. It featured a AAA class at L+113, was managed by CVC, and was arranged by Bank of America.
The best new execution in the EU market was the €505.40 million Sound Point CLO VII. It featured a AAA class at L+96, was managed by Sound Point, and was arranged by Barclays.The information provided is based on information generally available to the public from sources believed to be reliable.
Originally published in TreppWire, which is distributed every morning as a client-only email newsletter. TreppWire enables readers to stay up-to-date on market activity while providing a competitive advantage over others. TreppWire leverages Trepp’s market expertise and proprietary data sets to provide daily market commentary, trend analysis, research, and breaking news to its clients