Flurry of leveraged buyout debt to hit the high yield market

(Bloomberg) – A deluge of leveraged buyout debt has been building up for months and is expected to finally hit the high yield bond market next week.

Private equity firms are expected to start selling bonds to help fund Medline Industries Inc.’s debt buyout, the biggest buyout since the financial crisis. The sale will potentially include $ 4 billion in unsecured notes and $ 3.8 billion in secured bonds, in addition to the $ 7 billion in leveraged loans that banks have already started selling.

Medline, a health products company, will hold a call to lenders for leveraged loans, one of the biggest debt deals of the past decade, at 11 a.m. in New York on Monday, according to a person with knowledge of the matter. . .

Specialty chemicals maker Solenis LLC is expected to sell $ 2.4 billion worth of bonds split between the dollar and euro denominated parties, which will help fund its buyout by Platinum Equity. The U.S. dollar portion of the deal is being discussed with a return of up to 7%, according to people with knowledge of the matter. It’s also in the leveraged loan market with a cross-border sale equivalent to $ 1.4 billion.

DexKo Global Inc. will launch investor outreach on Monday for a $ 665 million high yield note sale. The proceeds of the offering will finance the acquisition of the vehicle parts supplier by a unit of Brookfield Asset Management Inc. The company also offers leveraged loans as part of the financing.

SAVE THE DATE: Crescent Capital, Carlyle Group, KKR & Co and Pretium Partners will join reporters from Bloomberg News to discuss the risks and opportunities facing the $ 1.2 trillion leveraged loan market. Click here to register for the virtual event, which will take place on September 28 at 11:00 a.m. in New York City.

At least six leveraged loan agreements have meetings scheduled for next week, Medline by far the largest. Commitments are due for 32 loan agreements, the most a week since February.

Investors had expected an increase in acquisition finance this month. Up to $ 110 billion in sales of high yield bonds and leveraged loans are expected to hit the market in September, making it one of the months, according to a recent Bloomberg banker survey. most loaded for years. A hunt for higher yields amid lower rates elsewhere is helping to support demand for risky debt.

Struggling, lenders at Yak Access LLC are organizing after the carpet maker for construction projects saw sharply declining profits and low liquidity in the second quarter, according to people with knowledge of the situation.

Investment category

The supply of high-quality bonds is expected to moderate next week, with Wall Street calling for sales of $ 20 billion to $ 25 billion, according to an informal survey of underwriters. An extraordinary amount of $ 115 billion has been valued over the past two weeks. September’s supply will likely approach the monthly forecast of $ 140 billion next week.

“Credit markets have held up well to the pick-up in supply, with tighter spreads so far in September,” Barclays Plc strategists led by Bradley Rogoff wrote in a report on Friday. “The agreements continue to be oversubscribed and the concessions have been minimal.”

Yet Barclays considers further gains for high quality credit to be difficult to achieve.

“With spreads still close to multi-year strains, we believe that further tightening from current levels will be difficult and that spreads may widen slightly until the end of the year,” the strategists wrote.

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