Europe’s booming leveraged loan market just had a reality check with the first halted transaction since a global banking crisis upended markets back in March, according to Bloomberg.
Restaurant Brands Iberia has withdrawn a planned repricing of an existing euro-denominated loan, citing the “current challenging market backdrop,” according to a person with knowledge of the matter, who asked not to be identified as the information is private.
It’s the first European leveraged loan deal to be scrapped since Ineos Enterprises halted an €820 million offering in March during widespread market turbulence, according to data compiled by Bloomberg. Ineos has returned to the market several times since then.
Now volatility has surged again after a selloff in US Treasuries and conflict in the Middle East, with global corporate bonds suffering their worst week since March. Measures of European corporate credit risk eased slightly on Tuesday but remain near the highest since May, according to the Markit iTraxx Crossover index.
Activity across the market for riskier firms’ loans had been enjoying a revival, with offerings in recent days from borrowers such as Palex Medical SA, Ineos and Circet, data compiled by Bloomberg show. However, there have also been signs of softness emerging, with secondary prices on existing loan tranches dropping in recent days.
The canceled deal stands out since just a handful of leveraged loans globally have been postponed this year, including most recently a $665 million term loan offered by SeaWorld Parks & Entertainment in August. A far higher number of corporate bond deals have fallen by the wayside, including a €300 million offering for FNAC Darty SA last month, with unfavorable market conditions also cited then.
ING Groep NV and Banco Santander SA were physical bookrunners on Restaurant Brands Iberia’s planned offering.