Luke Millar

Barings becomes the first manager to issue a European mid-market CLO, via BNPP. Static deal with a 1Y NC period. €380mn deal. Rated by Fitch and S&P.

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5 companies launched/priced new HY this month & all €2.85bn is new-money. Not bad for a market that has been shrinking. 3 of the 5 are debutantes, while 4 are refinancing bank debt/TLs/dollar HY with €HY. Innmotics set to be another debutante next wk, after launching TL this AM

MasOrange with a privately placed bond is unusual given strength of public market. 5.75% seems generous for Double B too, as does the dollar term loan margin of 350. European telco paper, unsurprisingly, needs a premium it seems.

Avis new issue shines light on euro HY 2ndry inertia. New 2029 bonds likely price 7%. 2030s were 6.6% pre-announce = 40bps pick-up for 1Y less tenor. Big for a BB. But then its euro bonds barely moved after Q4 earnings while 5Y CDS shot up, equity tumbled, dollar bonds fell 3pts

As for HY companies waiting for cheaper market, I have all-in yields obviously still much higher than 2020/21 but average spread over govvies came down sharply in Jan to near the lows of last 5yrs. Implies any fall in cost of debt will come pretty much from rates alone. Risky

Iliad new Feb 29s guided 5.5% area. Convexity vs higher cpn. Feb 28s yield 4.5% so ~100bps pick-up for 1Y extension seems v attractive. But 28s trade at ~90 so a new par bond will need more yield to counter convexity. Feb 2030s at 100.7/5.5% so no convexity. Is FV then really ~5%

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The 4/6-year deal from Paprec an interesting structure. Allows company to spread out maturities and keep NC2 flexibility. 4Y appeals to strong short-duration bid. 6Y gives accts yield pick-up without taking on much more rates risk. Downside is a single 5Y would be more liquid

A welcome return of HY primary activity with €3.3bn-equiv in market. Very little new money though. Ineos Quattro with a loan-to-bond element is about it. The choice is thus - roll into new higher coupon, longer tenor bond, or cash out and seek pull-to-par deals in illiquid 2ndry

Guala shows that a quality credit (top line up, margins improved, solid deleveraging) can print even in these choppy markets. Helped it went FRN. Pre-marketed fxd and FRN but CLO bid too strong to ignore. If it had gone fxd, likely would have widened px talk. FRN came tight-end