Reorg on the Record:Good news for investors, double-digit high yield is back…
Fri Dec 16, 2022 5:39 pm High Yield Bonds

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In these last few weeks of 2022 some European companies are taking advantage of a window in the primary market to issue debt to refi 2024, 2025 maturities or finance acquisitions. In the most telegraphed recession ever, management teams have the benefit of operating with some level of visibility and want to avoid surprises, hence dealing with maturities is key.

The good news for investors is that double-digit high yield is back, House of HR will likely raise its senior secured bonds at over 10% yield, Parques Reunidos is pricing its TLB3 at Euribor+525 bps with 96.5 OID. Funds across the pond seeking double-digit returns are becoming increasingly interested in EMEA senior secured paper in safe names like telecoms/cable.

Other issuers are being forced to look at alternative ways of dealing with maturities. Pronovias and Takko creditors have started negotiations again as 2023, 2024, and 2025 maturities loom. Food Delivery Brands, the old Telepizza, is also back negotiating with creditors.

In this last 2022 iteration of Reorg on the Record, looking back at the past 11 months in the distressed market, we have seen an increase in activity for legal and financial advisors pitching and getting mandates but overall still not many full-blown workouts as many companies dealt with their maturities in the past years leaving only a few stragglers out in the cold. In the loan market, covenant-lite docs combined with whitelists mean trading activity is frustrated with less pressure on management to act when companies underperform. With recession biting European economies, more opportunities for putting money to work and/or advising are expected in 2023 especially among small to medium-sized companies with less access to public capital markets.

Mario Oliviero

Our European editorial teams are delivering the most in-depth data, analysis and reporting on thousands of credits that are either performing, stressed, distressed, going through restructuring or post-reorg. Check out these recent articles.

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