Bankers from European leveraged finance expects to launch the underwritten deals due to the Ukrainian crisis. Morrisons from UK supermarket group buyout also joined. Before the war, banks were forced to delay around €25bn M&A risk equivalence. The underwritten is unable to syndicate as leveraged market shut down.
The majority concentration of underwritten financing is across six larger deals.
It covers €2.1bn-equivalent term loan B. It is backing Unilever’s tea business sale to CVC. The loan also backs a $2.85bn from CSC’s $2bn takeover of Intertrust. Then, a $2.1bn loan backs 888 Holdings acquisitions of William Hill. It is a high-yield bond that will support CVC’s €2bn fund investment into Spanish football LaLiga. £3.3bn left from €25bn is for Morrisons’ buyout and a €3.4bn of first-lien term loan backs KKR’s purchase of stake in Refresco.
In four weeks the majority of risk would either be the market or will have worked its way to go through the market, said a senior leveraged finance banker. Many of the aforementioned deals have been idling in the bank’s books for months. The postponement was majorly due to the volatile market. Covid-19 is also one of the reasons. Lastly, the delay happens due to the Ukraine crisis.
The £2.1bn was underwritten loan financing the William Hill/888 Holding deal. Morrisons deal has faced postponement nearly half a year. Bankers pre-sounded investors. When the market is more conductive in pricing risk of terms loan, it backs the Element Materials buyout deal. Investors, without hardship, have taken down Veonet, German eyecare provider.
The market prioritized the further bouts of volatility. It means that bankers are not losing the way yet in terms of getting underwriters off the books. Challenges ahead might be the potential spillover of the Ukraine crisis. Additionally, when inflation surges, the central banks would follow aggressive policy.
