The sellside’s steady messaging that there’s a lack of a meaningful calendar behind current loan activity is resonating with investors, although LFI continues to track $38.2 billion of volume that’s still to come, including $25.5 billion of new money. The big early M&A deals, Refinitiv, AkzoNobel Specialty Chemicals and Web.com, have indeed set the tone for the market moving forward; investor appetite seems practically endless for all but the most challenging credit stories.

Hot market conditions are readily on display in last week’s flex ratio, which favored issuers by a margin of nine to one. Moreover, launched volume last week remained relatively light, reinforcing the impression of a slowdown in deal flow. Thirteen issuers launched $8.7 billion last week, for net new money of $6 billion. M&A again was the emphasis with $7 billion launching. However, last week’s string of successful executions and tight prints likely means the mix will soon shift back toward opportunistic transactions—including repricings.

Indeed, even with last week's burst of allocations—LFI tallied up $16.8 billion of gross volume for a whopping $15.1 billion of net new money, which is just shy of the $15.2 billion of net priced volume recorded during the final week of June and well above the YTD average of $5.7 billion—the loan secondary retained a firm tone throughout the week.

Download: LFI BDC Portfolio News 9-25-18

Portfolios in brief: Holds reflect most recent reporting period available

BDVC, Flat Rock, Audax: Bomgar Corp. (B3/B-) — add-on, M&A
A Jefferies-led arranger set talk of L+400 with a 0% floor and a 99.5 offer price on the first-lien add-on term loan for Bomgar that will fund its acquisition of BeyondTrust Software, while a second-lien add-on has been placed privately, sources said. The deal will include $40 million upsized revolver; a $315 million incremental first-lien term loan with the same April 2025 maturity as the existing loan; and a $124 million incremental second-lien term loan, also with the same April 2026 maturity as the existing $95 million second-lien tranche. The first-lien loan will have 101 soft call through Oct. 19, 2018, and like the existing loan the second-lien tranche will be callable at 102 through April 19, 2019, stepping to 101 for the following year. Commitments are due Oct. 1, although there is a separate amendment with consents due Sept. 27, sources noted. Arrangers are Jefferies, RBC Capital Markets, Golub, Antares Capital, ING, and Barings, sources said. Bomgar in July tapped the market for a $115 million add-on to its first-lien term loan (L+400), which backed the acquisition of security software concern Avecto and increased that loan to $355 million. The financing will also include $43 million of incremental second-lien term debt (the second-lien term loan is placed privately), leveraging the issuer at 4.7x first-lien and 6.4x total. Holders of the existing 1L debt include Business Development Corp. of America with $6.3M, Flat Rock Capital Corp. with $500,000 and Audax Credit BDC with $1.8M.

CGBD, OHAI: Ensono (B2/B) — add-on, refi
Investors received allocations of the $32.5 million add-on first-lien term loan for Ensono (L+525, 0% floor), which was issued at 99.75, according to sources. Morgan Stanley arranged the execution, which priced in line with talk with a $7.5 million upsize. Proceeds will be used to refinance revolver borrowings. Charlesbank- and M/C Partners-controlled Ensono is a provider of information technology services in North America and Europe. TCG BDC holds $8.7M of the existing 1L debt, and OHA Investment Corp. has $1.7M of 2L debt (L+925, 0% floor) due April 2026.

Audax, Flat Rock, BBDC, NMFC: Idera (B3/B-) — add-on, repay
Jefferies was seeking recommitments this afternoon on the add-on to Idera’s first-lien term loan after tightening the OID to 99.75, from 99.5, and upsizing the deal by $30 million, to $95 million, according to sources. The additional proceeds will be used to repay a portion of the issuer’s second-lien term loan due 2025 (L+900), which is currently callable at 101. The original $65 million is earmarked to fund acquisitions and general corporate purposes. The add-on will be fungible with the issuer’s existing covenant-lite first-lien term loan due June 2024, which is priced at L+450, with a 1% floor. Idera, which develops systems management software, was last in market in February with a repricing of its then $522.4 million first-lien term loan due June 2024, lowering the margin on the loan to L+450, from L+500. The loan includes a 1% floor. Holders of the existing 1L debt include Audax Credit BDC with $1.7M and Flat Rock Capital Corp. with $837,000 in principal amount, while Triangle Capital Corp. and New Mountain Finance each hold $10M of the 2L.

NMFC: Peraton (B3/B) — add-on, M&A
Investors received allocations of the $130 million add-on term for Peraton (L+525, 1% floor), which broke to a 99.5–99.75 market, versus issuance at 99.5, according to sources. Macquarie arranged the deal, which cleared in line with talk, albeit with the addition of six months of 101 soft call protection after Moody’s revised its outlook on the B3-rated issuer to negative. Proceeds back the company’s acquisition of Strategic Resources. The capital structure also includes $180 million of second-lien notes, which were placed privately and increased by $55 million to fund the SRI purchase. Peraton, which is controlled by Veritas Capital, is a provider of technology-focused services and solutions to federal agencies. New Mountain Finance holds $14M in existing 1L debt. – Thomas Dunford

Download LFI BDC Portfolio News 9-25-18 for BDC investment details provided by Advantage Data; click through links to view stories by LFI.

thomas.dunford@levfininsights.com