Refinancings seen in several portfolios; Barings BDC’s holdings unaffected by Calpine refi
Download: LFI BDC Portfolio News 3-25-19
With the jumbo Power Solutions LBO financing out the door early last week after an over-the-weekend delay, the primary loan market assumed a more subdued tone as arrangers cobbled together a smattering of opportunistic business in the face of a dwindling pipeline. Arrangers continue to flock to the high-yield market for attractive rates—a trend that is likely to continue with the Fed’s dovish stance last week—with Allison Transmission the latest issuer to step forward with a bond-for-loan takeout exercise.
Medley Mania: This week brings the triple merger vote – postponed multiple times – by the Medley companies on March 29. However, chances are there will be much happening even before the digital ballot boxes are opened. Last week we had the sudden – and shocking – resignation of two of Medley Capital’s (MCC) “independent” directors. That’s caused problems for the BDC which needs a quota of disinterested directors to be publicly listed and to meet SEC regulations. We just don’t know by when MCC has to name replacements, and who they might be. Moreover, what role do “independent” directors play now that the votes are almost cast ? And – throwing one more question into the pot – what about the two remaining “independent” directors at MCC ? Are they happy to stay around or will further resignations be coming ?
Datto moves forward on refi; existing debtholders include TCPC, GSBD, OCSL, SUNS, CGBD, GBDC
Power Solutions’ cross-border loan-and-bond deal was the focal point of last week’s activity, with loan demand magnified by the lack of available product elsewhere and both the secured and unsecured bonds playing well amid a bull-market run. Indeed, several other issuers pushed ahead with secured bonds as last week’s high-yield volume raced north of $10 billion, further depressing loan activity.
Better Late Than Never: The most interesting news of the week will occur on Friday when the shareholders of the three Medley Group related companies finally vote on whether to merge together or not. Of course, the vote has now been twice suspended, apparently due to governmental delays relating to the Federal shut-down. Last week, after the vote was delayed at the last minute, very little was said by the parties involved, except confirmation of the date and times of the votes. Even the BDC Reporter did not have anything new to say, nor do we now. We’ll have much more to say once the votes have occurred, the last of which is scheduled for 11:00 a.m. EST. Then there will be fireworks of one kind or another.
SORENSON PLANS FULL REFI OF DEBT HELD BY FSK, MAIN, HMS, AINV
As the loan pipeline continues to ebb, opportunistic issuers are beginning to wade back in, spurred by bifurcated conditions that are allowing well-regarded repeat issuers to price tight to the broader market. Though the secondary rally stalled out last week, the appreciable improvement in the secondary market following the February rally eases the difficulty of layering in fungible new money at previous years’ more advantageous pricing levels.
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