(Changes soft call period in para 7 to 3 months from one year)
By Claire Ruckin
LONDON, March 8 Strong investor demand for
European leveraged loans has allowed Swedish home alarm company
Verisure to increase the size of a leveraged loan refinancing to
€425m, banking sources said on Wednesday.
The company has also been able to tightened the interest
margin to 300bp as single B rated companies start to enjoy lower
pricing that higher rated BB companies have been able to access
for the last six months.
The loan, which allocated on Wednesday afternoon, was
increased by €75m from an original target of €350m, after a
positive response from investors. Pricing tightened to 300bp,
with a 0% Libor floor at par.
Pricing guidance of 325bp-350bp was issued on March 6 and
was cut to 300bp-325bp on March 7, before settling at a final
price of 300bp on March 8.
The rapid decline in pricing guidance highlights the erosion
of yield in the European leveraged loan market, which mirrors
similar trends in the US, as borrowers take advantage of deep
liquidity to obtain the best terms.
Pricing has fallen heavily since the start of 2017 with
little resistance from investors, who have few alternatives and
need to put money to work.
Investors also took a hit on 101 soft-call protection which
was reduced to three months to 12 June 2017, from original
guidance of six months.
Soft call offers some protection to investors as it prevents
a borrower from being able to refinance or reprice loans without
paying a hefty fee.
The €425m term loan B1-D, which matures in October 2022,
will be used to repay a €280m-equivalent B2 tranche, denominated
in Swedish krona as well as drawings under a €300m revolving
credit facility. It will also be used for general corporate
The Swedish krona term loan is currently priced at 425bp
over Stibor with a 1% floor.
Along with the krona term loan and revolver, the company’s
senior facilities also include a €1.265bn term loan B1-C.
Hellman and Friedman bought Bain Capital's stake in Verisure
in October 2015, which was financed with a €1.02bn term loan B
that priced at 425bp over Euribor, with a 1% floor and an OID of
That deal was repriced in June 2016 to 350bp over Euribor
with a 1% floor and a 25bp consent fee, along with a €135m
incremental add-on tranche priced at par.
Verisure then repriced the margin again in December 2016 to
325bp over Euribor with a 0.5% floor at par and raised a €110m
term loan to pay a dividend.
All three loans were then rolled into the €1.265bn term
(Editing by Tessa Walsh)