October 2023 Quarterly InsightsCategory

Jefferies Is Open for New LBO Underwrites

By Leveraged Finance Team
2 min read

  • Amid an uptick in new-issue activity, Jefferies has been the most active investment bank in underwriting new LBOs. We are an arranger on 6 of the 7 LBOs expected to come in September / October, and are Left Lead on 3 of these transactions.
  • Market conditions for broadly syndicated loans began improving over the summer, creating an incredibly receptive environment for new LBO financings.
    • As of September 20, the loan index was at 95.91 bid, the highest level since May 2022, indicating the strength of the new market and demand for new volume.
    • New LBO and M&A launches for the first half of September totaled $10.1 billion, which was the most for any month since June 2022 ($13.1 billion).
  • Private equity firms should look to the syndicated market to finance new LBOs.
    • The strength of the syndicated loan market will allow issuers to achieve improved pricing and a more flexible covenant package compared to offerings in the private credit market.
    • According to KBRA data, the broadly syndicated market also offers pricing ~200 bps tighter than the private credit market, offering significant cash interest savings for companies.
  • Jefferies is Left Lead Arranger on Simon & Schuster’s $1.62 billion LBO by KKR.
    • Pricing on the $1.1 billion First Lien Term Loan is S+400, with a 0.00% floor issued at 99.0 OID.
    • The Margin was tightened from S+425 to S+400 and OID was tightened from 98.5 to 99.0.
  • Jefferies was Joint Lead Arranger on Syneos Health’s LBO by Elliot, Patient Square, and Veritas.
    • Syneos Health is a leading global contract research organization providing clinical development and commercial services to biopharmaceutical and medical device companies across the product development lifecycle.
    • Pricing on the $2.7 billion First Lien Term Loan is S+400 with a 0.00% floor issued at 98.5, while the $1.0 billion Senior Secured Notes priced at 9.000%.
    • The syndication was a blowout with the term loan pricing tightening 50 bps from the S+450 price talk and the OID tightening from 97.0 to 98.5.
    • Due to strong demand and oversubscription, $700 million was shifted from the Bond to the Term Loan.