4 de marzo de 2016 / 16:52 / hace un año

LBOs back from the dead

LONDON, March 4 (IFR) - The high-yield LBO market is reopening on both sides of the Atlantic, with Solera selling US$1.73bn of Triple C bonds and LeasePlan on the verge of relaunching its 1.55bn hung deal.

Solera's US$3.9bn bond and loan deal was an important test for the market, as it was the largest LBO since the November collapse of data storage firm Veritas's US$5.6bn bond and loan package.

Solera is also in the under-pressure tech sector and many investors pegged its leverage at well above the already high 6.8x official figure.

A banker on the deal said that while leverage was high, the underlying business was "one of the best" within the high-yield software space.

"If we hadn't got this done, the read across to the hung deals in the US would have been terrible," he said.

That is not to say underwriters, led by Goldman Sachs, had an easy time placing the paper, which took nearly a month to sell.

Leads had to hike yields and change the deal's structure several times, while also rewriting documents on both the bonds and loans to appease wary investors.

Increased demand for the secured loans allowed those involved to reduce the size of the more difficult to place bonds by US$300m to US$1.73bn. And while leads briefly entertained the idea of placing a planned euro tranche privately with a handful of investors, they eventually ditched that piece entirely.

The banker said that he could not remember a deal where underwriters "had to juggle so many balls".

The bonds were sold at a five point discount to yield a whopping 11.47%, although the banker said underwriters were not left holding any paper.

LEASEPLAN B

Euro bond investors may have been less than receptive to Solera, but appear ready to welcome back a deal they rejected less than a month ago.

LeasePlan is aiming to relaunch a 1.55bn-equivalent buyout bond as early as next week, according to sources close to the deal.

Last month, the transaction became one of the largest ever hung high-yield trades.

The Dutch vehicle-leasing company originally attempted to price the three-tranche bond on February 11, but pulled it after deteriorating credit markets saw investors demand higher than expected yields.

LeasePlan expects to have its full-year 2015 numbers ready by Tuesday, which bankers said could allow them to price the deal by the end of the week if the market's recovery holds.

The bankers added that they were also aiming to price the deal tighter than where the book was covered last time.

"I think they'll be able to do it, which is unfortunate as it means the sponsor wins," said one portfolio manager.

"It's not a bad business, just a funky structure that came at the wrong time."

LeasePlan's holding company bonds sit above an operating company with a banking licence, and the week it originally tried to price saw the Additional Tier 1 market suffer its worst sell-off since opening in 2013.

A second investor also said he expected the deal to be priced tighter given the renewed "hunger for primary issuance".

"There is quite a lot of subordination, but people will take comfort from the fact the engine providing dividends to service the debt is a highly regulated entity," he said.

But not everyone was so convinced.

"It's a levered bet on the net equity of a financial institution," said a third investor. "Maybe everyone else has forgotten what happened in AT1s a few weeks ago, but just because it comes in an improved market doesn't mean I'll change my view." (Reporting by Robert Smith, editing by Matthew Davies.)

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