European credit markets are testing the waters for sales of risky debt after the collapse of Silicon Valley Bank [RIC:RIC:SIVBV.UL] and the rescue merger between Credit Suisse (CSGN.S) and UBS (UBSG.S) sparked contagion fears across the financial system.
On Wednesday, building materials distributor Stark Group started selling a new 400 million euros ($431.56 million) loan, according to a memo seen by Reuters.
The sale is a test of investor appetite amid fresh ructions across markets triggered by banking sector turmoil, pushing up the cost of borrowing for lower-rated issuers.
The iTraxx Europe Crossover, which measures the cost of insuring exposure to a basket of European junk bonds, was at 471 basis points (bps) on Wednesday, after hitting a four-month peak a week ago at 515 bps, according to data from S&P Global Market Intelligence.
One loan portfolio manager, who declined to be named, said pricing in the secondary market had recovered, as had the Crossover index.
But he added that loan deals currently in the market were largely extensions or additions to existing loans and there was no new deal activity yet.
Stark Group’s new loan will mature in May 2028 and will be used to refinance existing debt and repay amounts used under the revolving credit facility, the memo said.
It will pay 500 bps over Euribor and is offered at a price of 95 cents on the euro.
The debt sale is led by BNP Paribas and JP Morgan.
($1 = 0.9269 euros)
Source: www.reuters.com
