RPT-LeasePlan brings spectre of hung LBOs back to Europe
(Repeats story published Friday with no changes to reach additional subscribers)
By Robert Smith
LONDON, Feb 12 (IFR) - LeasePlan's shock decision to pull a 1.55bn-equivalent LBO bond has made the prospect of hung bridges very real in Europe, although banks are not yet burdened with a massive backlog of stuck paper akin to that in the US high-yield market.
Bankers at several of the deal's underwriters told IFR that they yanked the holding company bond from the market even though they had a covered order book, as the yields investors demanded were unacceptable to the consortium buying the Dutch vehicle-leasing firm.
Sources described it as one of the biggest pulled LBO bonds ever in Europe, but bankers and investors alike stressed that the deal's failure had little to do with the quality of the business and everything to do with the savage sell-off in financial debt.
"It's like putting a meal in front of someone who has stomach flu," said a high-yield portfolio manager. "Even if it were prepared by a Michelin-starred chef, your appetite would be lacking."
LeasePlan's deal was especially sensitive to this week's extreme volatility, as it is a holdco bond that sits above an operating company with a banking licence.
The Additional Tier 1 market has suffered its worst sell-off since opening in 2013 and both the iTraxx Crossover and Sub Financials indices blew out to multi-year wides yesterday, when the deal was set to price.
One banker on the deal described it as "literally the worst conceivable day" for the company to issue high-yield debt. Continuación...