(Bloomberg) — Thoma Bravo is a fan of multibillion-dollar private loans to fund buyouts — the kind that bypass Wall Street’s syndicated-lending desks altogether. But it’s not turning its back on banks for good.
The private equity firm has tapped a group of lenders led by Bank of America Corp. to refinance a unitranche loan for software company ConnectWise LLC. It’s a win for a leveraged loan market that’s lost out on a slew of debt deals this year for big acquisitions that were funded by the private credit market — including some inked by Thoma Bravo itself.
The sponsor skipped banks when getting $2.6 billion of debt financing for its buyout of Stamps.com in July, and for a $2.3 billion loan for the buyout of Calypso Technology Inc. in April. When it turned to direct lenders for its acquisition of ConnectWise in 2019, these loans rarely exceeded $500 million.
Buyout firms are increasingly looking to private credit to fund larger and larger transactions, lured by greater expediency and generous terms. Direct lenders are sitting on a record $364 billion of cash ready to put to work, allowing firms like Owl Rock and Ares Management — often teamed up in small groups — to fund multibillion-dollar deals that just a few years ago were exclusively the territory of the world’s biggest investment banks.
A representative for Thoma Bravo didn’t immediately respond to a request seeking comment.
Why Unitranche Loans Grew From Niche to Billions: QuickTake
The red hot syndicated loan market, however, also has benefits — lower borrowing costs being one of them in certain cases. ConnectWise meets with investors on Monday for the new $1.05 billion leveraged loan sale.
Elsewhere in credit markets:
U.S.
Blackstone Private Credit Fund and real estate investment trust Broadstone Net Lease are offering bonds Friday in the U.S. Investment-grade market. The two deals follow an avalanche of 52 companies that sold $76 billion worth of debt in the past three days
This week’s issuance onslaught didn’t make U.S. corporate bonds any cheaper. In fact, spreads tightened, highlighting the strength of global demand for the only quality yield game in townThe U.S. junk-bond primary market got off to a slow start following the Labor Day holiday with a little more than $3 billion sold so far this week, but the new issues have been received well with each rallying in secondary trading, according to TraceBuyout firm Sycamore Partners poached a senior Deutsche Bank AG trading executive for its credit business. Shawn Faurot, who ran U.S. credit trading for the German lender, resigned to join the private equity firm, according to people with knowledge of the matter
Europe
Two issuers added 2 billion euros to the 43.28 billion euros already sold since Monday, making this the busiest week for sales since June, according to data compiled by Bloomberg.
Dutch lender ABN AMRO Bank NV sold 1.5 billion euros of covered bonds maturing in 20-years, while public sector issuer European Investment Bank increased its climate awareness bond due in 2030 by 500 million eurosSpain’s debut green bond was the most-subscribed offering in Europe’s primary market this week, according to data analyzed by BloombergThe nation attracted an order book that covered the deal by 12 timesInvestors have a responsibility to direct the ethical bond market as new issuers join, structures develop and sales break records, said Salima Lamdouar, portfolio manager for sustainable strategies at AllianceBernstein in LondonNOTE: European Issuers Rush to the Market in Busiest Week Since JuneNOTE: Czech Green Bond Deals Herald More Supply From Europe’s East
Asia
New dollar bond sales in Asia excluding Japan reached its highest in seven weeks, with deal pace increasing amid intensifying signals that central banks across the globe are moving toward tapering monetary support.
Issuance rose to $6.3 billion from $6.2 billion the previous week, according to Bloomberg-compiled dataChina Evergrande Group’s wild local bond swings show just how risky it can be to trade stressed assets in the nation’s domestic marketA plunge in the price of the developer’s yuan bond due 2023 triggered trading halts on Thursday before it closed down a record 32%. The note fell a further 5.2% FridayJapan Airlines Co. plans to raise about 300 billion yen ($2.7 billion) via subordinated bonds and loans to shore up its capital in case the coronavirus pandemic hurts travel demand longer than it expects
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