Europe’s Loan Borrowers Rush to Refinance Before Brexit Vote

June has been busiest month for new leveraged loans in Europe.

June is already the year’s busiest month for leveraged loan sales in Europe as borrowers from Altice to Verallia got deals done before the Brexit referendum.

About 7.1 billion euros of leveraged loans have allocated so far this month, nearly a third of the year’s 22.5 billion-euro total, data compiled by Bloomberg show. Triggered by a 1 billion-euro repricing deal from Sweden-based security firm Verisure at the start of June, borrowers took advantage of demand from investors to refinance debt at a lower cost.

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Further repricings of outstanding debt are possible given the number of callable loans quoted at prices higher than face value. At least nine term loans totaling more than 7 billion euros from Europe-based borrowers are quoted above 101, data compiled by Bloomberg show. This includes debt issued by Jacobs Douwe Egberts, ConvaTec and Schaeffler.

Demand has been strong among investors including banks and new CLOs, where fresh issuance has been prompted by falling yields on investment-grade debt. Reflecting the increased demand, Standard & Poor’s European Leveraged Loan Index climbed to a year-to-date high of 97.50 last week.

Some credits have tightened pricing through syndication given the level of demand. Norwegian IT company Evry raised a 275 million-euro equivalent term loan to refinance debt and to pay shareholders a dividend. That deal allocated to lenders after a 50 basis-point cut to the margin as well as a 50 basis-point increase to the initially proposed issue price.

Looking ahead, new debt to back buyouts include about 275 million euros of financing for the take-private of Tessi and 1.2 billion euros linked to EQT’s acquisition of Bilfinger’s building and facility business. Other active leveraged buyout debt financings include Linpac, AR Parking and Artsana.

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