EMEA Covenants Weekly: Two Issuers Pull Offerings As European Bond Market Hit Hard by Unfavorable Conditions

Last week the European primary market saw just €11 billion-equivalent of new debt, half the issuance of the previous week.

Unfavorable conditions hit the bond market hard, with Prax Group and AnaCap Financial pulling their bond offerings. Only Italian credit management solutions provider Cerved prevailed, pricing €1.05 billion floating-rate senior secured notes and €350 million senior secured fixed rate notes last week.

Israeli resin-based homeware company Keter successfully placed a €100 million add-on to its existing term loan with a small group of existing lenders, after having postponed the issuance of a €1.175 billion seven-year term loan B due to unfavorable market conditions.

Pushback from the buyside led to a number of lender-friendly changes to the documentation for Hunter Douglas’ $3.5 billion dollar-denominated term loan B tranche and €1 billion euro-denominated portion. As Reorg reported, the changes included an available starter amount set at 50% of EBITDA, down from 75% at launch, and a reduction in the general debt basket to 50% of EBITDA from 100%. The margin ratchet has also changed to one step down from two previously, and the ratio at which the ratchet reduction kicks in was lowered to 3.75x first lien net leverage from 4.25x. The ratio debt test tightened to 1.75x (from 2x) for incurrence of junior or unsecured debt, while the most-favored-nation protection also improved, now featuring a 12-month sunset period.