Europe's Leveraged Finance Supply Picks Up Ahead of Brexit Vote

(Bloomberg) -- Leveraged finance issuance in Europe has picked up pace this week, undaunted by elevated volatility in other markets as Prime Minister Theresa May faces a make-or-break vote on her Brexit deal later in the day.

At least seven new bond and loan transactions have launched in just two days, suggesting limited concern about the vote. This compares with five deals that hit the market in the whole of last week.

High-yield bond supply is reawakening after a slow start to the year. Sappi Papier Holding GmbH, Cemex SAB de CV and Faurecia SA are among the companies that have announced sales of notes this week as the earnings season begins to wind down. All three bonds are double-B rated, a segment that’s dominated issuance this year.

Once the deals are completed, new issuance will total 2.7 billion euros ($3 billion) in March, which would be more than half of the supply seen in January and February put together, according to Bloomberg data.

Fresh deals also emerged in the leveraged loan market, and there is a focus on opportunistic add-on facilities. The companies that launched this week include Hotelbeds UK Ltd., which is raising money for a dividend payment, plus Azelis Holding SA, Openlink and Colisee. Cerba Healthcare SAS is also adding debt to pay down drawings under its revolver.

EU LEVFIN DAILY: Busier in Loans and CLOs, More BB in Bonds

The new supply comes as loan and bond investors work through the jumbo financing package for the acquisition of Johnson Controls International’s power solutions unit. The transaction includes a $750 million-equivalent of euro-denominated bonds and a $2.25 billion-equivalent term loan in euros, and commitments are due this week.

The issuance will also provide assets to the region’s managers of collateralized loan obligations, who have brought a steady stream of new deals since late January. Three more vehicles are due to price this week, adding another 1.2 billion euros of supply to the just under 5 billion euros that has printed already this year.

--With assistance from Ruth McGavin.

To contact the reporters on this story: Sarah Husband in London at shusband@bloomberg.net;Marianna Aragao in London at mduartedeara@bloomberg.net

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, V. Ramakrishnan

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