CLO Market Round-Up: Virgin Media and O2 Merger Approved; More Ratings Assignments

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. Last week, we covered new rating assignments, downgrades, refinancings, merger approvals, and more...

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.

Roar Bidco AB, Recipharm AB, Newly Rated by Fitch

Fitch Ratings assigned private equity company EQT's acquisition subsidiary Roar Bidco AB a Long-Term Issuer Default Rating of ‘B’ with a positive outlook.

The rating agency has also assigned a ‘B+ rating with a recovery rating of ‘RR3’ to the €1115 million term loan of Recipharm AB, Roar Bidco’s recently acquired pharmaceutical company. Based in Sweden, Recipharm AB is one of the largest pharmaceutical contract developers and manufacturers in the world. 

Roar Bidco is represented in the CLO Universe with the €1115 million Roar Bidco AB – Term Loan (E+350; due 2028). The loan was originated in March and initially held across 24 European CLO Vehicles – approximately 9% of all EU deals in the Trepp CLO database. The facility was initially offered and purchased at par, the same range IHS marked quoted the price at last week.

Apro's Upsized Term Loan Assigned 'B2' Rating by Moody's

Apro LLC (aka “United Pacific”) announced that the firm will be issuing a $105 million add-on to its term loan B to partially fund its dividend. The $105 million add-on along with $45 million in cash on hand will be used to pay a $150 million dividend to shareholders (and pay fees/expenses).  Moody’s has assigned the upsized loan a 'B2' rating while holding its other ratings unchanged.

Apro is represented in the CLO universe with the $449 million Apro – Term Loan B (L+400; due 2026). The term loan was held by over 120 CLO vehicles in February, or approximately 12% of all US deals in the Trepp CLO database. The facility saw little activity after the price rose in April 2020, when it was purchased in the mid $90s range. After that, the facility was not sold again until September, when it was sold at slightly below par. Most recently, the facility was sold in January at slightly above par, the same range IHS Markit quoted its price last week.

Encino Faces Further Ratings Downgrades from Moody's

Moody’s downgraded and rated new issuance of Encino Acquisition Partners Holdings last week. The company initially downgraded Encino’s Corporate Family Rating (CFR) to 'B2' from 'B1' and Probability of Default Rating (PDR) to 'B2-PD' from 'B1-PD.' Additionally, Moody’s has rated Encino's proposed $700 million in senior unsecured notes issuance at ‘B3.’ We last wrote about Encino in September, when it was reported that their Long Term IDR has also been downgraded.

Encino is represented in the CLO universe with the $550 million Encino Acquisition Partners holdings – Second Lien Initial Term Loan (L+675; due 2025). The term loan was held by over 60 CLO vehicles in February, or approximately 6% of all US deals in Trepp's CLO database.

Encino’s facility had muted trading activity for most of 2020 until late September when it was bought in a series of trades that coincided with a rebound in price. During that time, it was purchased in the low-mid $80s range. Around the new year, the facility once again experienced a flurry of activity, with more buy trades taking place in the low $90s range. The price has continued to rise since then, with IHS Markit quoting it recently at a touch below par.

Total Produce Secures $1.44 Billion Refi Following Dole Merger News

Total Produce plc announced that it has obtained a $1.44 billion refinancing with Coöperatieve Rabobank U.A. The credit agreement includes a $500 million five-year senior secured revolving credit facility and a $940 million seven-year US senior secured term loan that will be used to close the previously announced merger between Total Produce and Dole Food Company Inc. Proceeds from the facilities will be used to refinance the existing Total Produce and Dole debt facilities, excluding the Dole vessel financing and other bilateral facilities that will remain following the acquisition. 

Dole is represented in the CLO Universe with the $950 million Dole Foods Company – Tranche B Term Loan (L+275; due 2024). In February, the facility was held by over 135 CLO vehicles or approximately 13% of all US deals in the Trepp CLO database.

Dole’s term loan has been actively traded since recovering from the pandemic-induced drop in March 2020. The facility was actively traded from May to December in the high $90s range, with a fair amount of both “buy” and “sell” trades taking place. The facility continued to be actively traded this year but mostly saw “sell” transactions as the price reached a touch above par. The facility was most recently sold at the end of March at par. IHS Markit quoted the price in that range last week.

Virgin/O2 Merger Provisionally Approved

Marketwatch reported that the €31 billion ($43.2 billion) merger between Virgin Media and O2 has been provisionally approved by the U.K’s competition watchdog. The investigation found that the merger was unlikely to lead to “reduced competition or higher prices for wholesale mobile servicers." Virgin Media and O2’s parent companies Liberty Global and Telefonica agreed to merge the companies in May 2020, turning the company into a joint 50-50 venture.

Virgin Media is represented in the CLO Universe with the 3.3 billion Virgin Media – Virgin Media T/L N (09/19) (L+250; due 2028), the $1.3 billion Virgin Media – Virgin Media Bristol T/L Q (L+325; due 2029), the €750 million Virgin Media SFA Finance Limited – Virgin Media SFA Finance T/L O (E+250; due 2029), and the €750 million Virgin Media – VMED 02 UK Holdco T/L (EUR) (E+325; due 2029).

When Trepp last covered Virgin Media and O2, the merger was just announced and the facilities were actively traded. This remained true for the $3.3 billion facilities, which were actively traded throughout the rest of the year and into 2021, all priced at right below par. IHS Markit quoted its price in the same range recently. The €750 Virgin Media SFA also had an active trading cycle last year, with most of its transactions taking place in the high $90s range. Recently, the facility has been mostly sold at par. IHS Markit quoted its price slightly below par recently.

The $1.3 billion Virgin Media Bristol facility and the €750 million VMED 02 UK Holdco facility were both originated in September 2020 and have shared a similar deal cycle throughout their existence. Both were purchased at slightly below par initially and have since seen their prices climb, leading to mostly sell trades for both facilities at above par. Both were priced in that range by IHS Markit recently.

General Pricing Data

Issuance in the CLO market rose as 23 deals priced last week, up from 15 the week prior. There were eight new, six refi, and nine reset deals. 17 deals were sourced in the US market while the rest were sourced from the EU.

The best new execution in the US market was the $552.67 million Palmer Square 2021-2, which featured a AAA class at L+115. The deal was managed by Palmer Square and arranged by Wells Fargo.

The best new execution in the EU market was the €405.95 million Arbour CLO IX, which featured a AAA class at E+80. The deal was managed by Oak Tree and arranged by Credit Suisse. Request a Free Trial of TreppCLO

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


CLO Market Round-Up: Virgin Media and O2 Merger Approved; More Ratings Assignments