Featured Articles

CLO Investors Flocking to AAA Paper

While the Volcker Rule gets blamed for the sudden lull in CLO issuance in January and February, it’s now getting some credit for helping one aspect of the roaring comeback of collateralized loan obligations: the infusion of new primary investors in AAA tranches.

Zebra to Swallow $3.45B Elephant

Zebra Technologies agreed to purchase the enterprise business of Motorola Solutions, which had sales of $2.5 billion in 2013, for $3.45 billion in an all-cash transaction. Motorola's enterprise sales are more than twice those of Zebra.

S&P: Long-Range Risk in Deluge of New ‘B’ Issuers

A record rise in the number of first-time, single “B”-rated issuers has Standard & Poor’s concerned that a greater number of companies will be at risk of default in the event of a slowdown in the U.S. economy

Investors Stand Firm on Non-Call Periods

Just when you thought that risky corporate borrowers were getting away with everything, investors are demonstrating that have at least a little fight left in them. High yield bonds are in such high demand that investors have been willing to give up all kinds of protection in order to put their money to work. But non-call periods are a line in the sand.

Moody’s Turns Negative on Gaming

Moody’s Investors Service downgraded its outlook on regional casino operators, to negative from stable after 15 of 18 states reported declining year-over-year gaming revenues for consecutive months. The weaker-than-expected results were surprising.

Verso Sweetens Exchange Offer

Verso Paper is making another go of an exchange offer it needs to complete before it can close its acquisition of NewPage Holdings. A similar exchange offer earlier this year failed to get enough support from bondholders.

Sprint May Be Phoning the Debt Markets Soon

Analysts believe the former junk bond record-holder is getting ready to put a lot more debt on the market in its efforts to secure a $32 billion merger with T-Mobile.

Precedent Set Quickly in Hot M&A Market

Corporations are flush with cash and debt markets are eager to provide additional capital for acquisitions. That makes it increasingly easy for borrowers to negotiate favorable terms, according to William Schwitter and Michael Chernick, both partners with the law firm of Paul Hastings.

Monroe Capital Suing Former Partner

Monroe Capital is suing a former managing director and fund partner, alleging he is tried to take clients for a new firm while he was still employed by Monroe. Monroe said in a complaint that Warren Woo accessed information at Monroe that was beyond his authorization and transferred this data to his new firm via emails.

Leveraged Finance Markets a ‘Macro Game’

Corporate borrowers were still in the driver’s seat in the first half, even if they didn’t raise as much money in the high yield bond and leveraged loan markets as they did a year earlier. With demand strong and defaults low, participants expect to see the same pace in the second half, driven by a similar mix of refinancing, strategic acquisitions and leveraged buyouts.

Interpreter Service Treads Thin Line

Language Line, which recently pulled its $785 million loan proposal from the market, faces a round of near-term debt obstacles that have raised red flags and downgrades from ratings agencies. Of primary concern are a series of upcoming leverage ratio step-down covenants on its existing debt the agencies believe will be problematic without refinancing or term changes from lenders.

In Hot Euro HY Market, Non-European Issuers Rare

Europe’s junk bond market may be red hot, but it has not been attracting many non-Europeans lately. And this pace is being sustained despite a slowdown in buyouts of multinational companies by private equity firms, an important driver of 2013 volume. Still, issuance of European high yield bonds is on pace to reach an all-time high this year.

Mega Deals Up Defaults for LBO Firms

When it comes to buyouts, bigger is not necessarily better. Moody’s Investors Service posits that, while companies taken private before the credit crisis are no more likely to default than other below-investment grade companies, the biggest buyouts have fared much worse.

Chesapeake Oilfield Goes It Alone

Chesapeake Energy’s spinoff of its oilfield operations will streamline the Oklahoma City-based natural gas provider and relieve it of $1 billion in debt. But investors had better hope that the new company continues to do the same amount of business with its former parent or quickly diversifies its customer base.

Investors Embrace Gates Buyout

Regulators might have a problem with highly leveraged buyouts, but investors don’t. They are embracing the Blackstone Group’s buyout of industrial products maker Gates Global despite the fact that the deal’s leverage exceeds lending guidance.

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Matthew Natcharian

Head of Structured Credit

Firm: Babson Capital Management

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