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LevFin Insights BDC Portfolio News 1/10/22

Posted on January 11, 2022

LevFin Insights

Several BDC-held credits shifting to SOFR-based pricing

The new year dawned with a decided shift to SOFR-based loans as arrangers got back to work pushing out a moderate slate of M&A and recap business, though a few LIBOR-based loans peppered deal flow as arrangers took advantage of loopholes to continue issuing such debt. High-yield was back to business but was relatively quietly ahead of Friday’s jobs data and after a blowout 2021. Volume was modest at $6.6 billion, the lowest total for the first week of a year in five years.

The first week of 2022 offered a broad mix of new loan transactions, ranging from the obvious M&A-driven business, repricings, refinancing and even recap deals. A reasonably robust $13.8 billion of launches via 17 issuers yielded only $5.1 billion of net new money thanks to opportunistic activity.

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Portfolios in brief: Holds reflect most recent reporting period available

NMFC, PFLT, FCRD: Cano Health (B3/B) — Refinancing

Credit Suisse rolled out a repricing of Cano Health’s $644 million first-lien term that will shift the base rate to SOFR from LIBOR. Talk is S+400 with a 0.5% floor at par. The issuer would reset 101 soft call protection for six months. As before, the loan would include a 25 bps step-down at B2/B corporate ratings with stable/stable outlooks. The CSA is set at 10 bps for one month, 15 bps for three months and 25 bps for six months. The covenant-lite term loan due November 2027 is currently priced at L+450 with a 0.75% floor. Holders of the existing debt include NMF SLF I Inc. with a combined $7.1M in principal amount, PennantPark Floating Rate Capital with $2.7M, First Eagle Logan JV LLC with $2M and NMF Senior Loan Program III LLC with $5.8M.

Steele Creek: Hudson River Trading (Ba1/BB-/BB) — GCP

Goldman Sachs, BofA Securities and J.P. Morgan set price talk of S+300 with a 0% floor and a 98.56 offer price on the $100 million fungible add-on term loan for Hudson River Trading. In connection with the transaction, the issuer is migrating its existing term loan due March 2028—currently priced at L+300, with a 0% floor—to SOFR pricing subject to a negative consent amendment via the “early opt in” mechanism. The loan would include a CSA of about 11.4 bps/26.2 bps/42.8 bps for the one-month, three-month and six-month SOFR, which is the CSA recommended by the Alternative Reference Rates Committee (ARRC). For reference, one-month term SOFR is 5 bps, three-month is 9 bps and six-month is 20 bps. Proceeds will be available for general corporate purposes, including trading capital. Commitments are due by 5 p.m. ET Wednesday, Jan. 12. In addition, the issuer is seeking an amendment to its revolver to allow it to secure a pari passu revolver under existing general liens basket. Steele Creek Capital Corp. holds $884K in principal amount of the existing term debt.

BCRED, BCPL, Audax, Palmer Square, BKCC, Morgan Stanley, NMFC, SL, PTMN: Idera (B3/B-) — M&A

Jefferies launched a $64 million add-on term loan for Idera, proceeds of which would be used to fund an acquisition. A lender call is set for 4:30 p.m. ET today. The incremental loan is talked at 99.25-99.5. It would be fungible with the borrower’s existing term loan due March 2028 (L+375, 0.75% floor), increasing the tranche to about $1.516 billion. Commitments are due by 5 p.m. ET Wednesday, Jan. 12. Holders of the existing 1L debt include Blackstone Private Credit Fund with $30.3M in principal amount, Audax Credit BDC with $2.6M, Palmer Square Capital BDC with $6.4M and NMFC Senior Loan Program III LLC with $9.3M. Holders of the company’s 2L debt due February 2029 (L+675, 0.75% floor) include BC Partners Lending Corp. with $4M in principal amount, BlackRock Capital Investment Corp. with $2.9M, BlackRock Direct Lending Corp. with $1.1M, Blackstone Private Credit Fund with $41.9M, Morgan Stanley Direct Lending Fund with $3.9M, New Mountain Finance Corp. with a combined $25.5M, New Mountain Guardian II BDC with $26.3M, SL Investment Corp. with $530K and Portman Ridge Finance Corp. with $6M.

GBDC, GSBD: PowerStop (TBD/TBD) — Refinancing, dividend

Jefferies and Antares Capital set price talk of L+475 with a 0.50% floor and a 99 OID on the $395 million first-lien term loan for PowerStop. The transaction marks the issuer’s debt in the syndicated institutional loan market. Proceeds of the facility, along with a new five-year $40 million revolver, will refinance the debut borrower’s debt and fund a distribution to shareholders. The seven-year loan will carry six months of 101 soft call protection. Commitments are due by 4 p.m. ET Thursday, Jan. 20. Holders of the company’s 1L debt due October 2025 (L+450, 0% floor) include Golub Capital BDC with $2.8M in principal amount, Golub Capital BDC 3 with $662K, Goldman Sachs BDC with $18M and Goldman Sachs Private Middle Market Credit Corp. with $11.2M.

ORCIC, BCRED, ORCC: SRS Distribution (B3/B-) — M&A

BofA Securities and Barclays set price talk of S+375 with a 0.50% floor and a 99-99.5 OID on a $700 million incremental term loan for SRS Distribution. The loan includes a CSA of 10 bps. Commitments are due by noon ET Thursday, Jan. 13. Proceeds help support the already completed acquisition of AquaCentral, a wholesale distributor of pool and spa products. The new loan is coterminous, but not fungible, with the issuer’s existing term loan due June 2028 and will carry six months of 101 soft call protection. Holders of the existing 1L debt due June 2028 (L+375, 0.5% floor) include Owl Rock Core Income Corp. with $5M, Blackstone Private Credit Fund with $28.2M and ORCC Senior Loan Fund LLC with $10M.

Audax, BCRED: TricorBraun (B3/B-) — Refinancing

A Credit Suisse-led arranger group has bumped the commitment deadline for TricorBraun Holdings’ $180 million incremental first-lien term loan to noon ET Tuesday, Jan. 11, from the original Jan. 12 deadline. The group set price talk of 98.65 OID on the covenant-lite loan, which will be fungible with the issuer’s existing $150 million add-on term loan due March 2028 (L+325, 0.50% floor). The deal was underwritten last year. The facility will not include call protection. Proceeds will repay the company’s ABL borrowings. Holders of the existing 1L debt include Audax Credit BDC with $1.6M and Blackstone Private Credit Fund with $10.6M.

Download LFI BDC Portfolio News 1-10-22 for BDC investment details provided by Advantage Data; click through links to view stories by LFI.

thomas.dunford@levfininsights.com

212.205.8552

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