Trend Report: Debtwire Par and Mergermarket Overview of Western Europe Buyout and Financing Trends 1H20

27 July 2020

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Debtwire Par has partnered with its sister product Mergermarket to produce a comprehensive overview of Western European Buyout and LBO financing trends, including extensive advisory league tables.

 

Key Trends in 1H20:

  • As Europe went into almost full lockdown, April saw its the lowest buyout activity since 2013 with 33 transactions announced and EUR 1.6bn worth of deals with value disclosed, with a modest recovery in volumes in the following months – 57 deals both in May and in June.
  • In H1, buyouts value held up at EUR 65bn in disclosed deals while volume dropped to 384, 20.2% less than the first half of last year (481 deals, EUR 61.3bn).
  • Western European leveraged loan issuance backing LBOs fell to EUR 6.3bn in 2Q20, down from a busy first quarter when deal flow totalled EUR 13.5bn. Still, the 1H20 figure was up 11% compared to the same period last year.
  • Companies had to pay up relative to pre-COVID-19 benchmarks for accessing the leveraged debt markets. Margins on first-lien institutional loans increased to an average of Euribor+ 441bps in 2Q20, up from E+ 379bps in the first quarter.
  • The biggest financing was for Thyssenkrupp Elevator, comprised of EUR 5.8bn-equivalent worth of loans and EUR 6.0bn-equivalent in high yield bonds.
  • The top sectors in terms of LBO leveraged loan issuance in 1H20 were Industrial & Chemicals (EUR 6.5bn), Technology (EUR 3.2bn), Consumer (EUR 2.7bn) and Business Services (EUR 2.1bn), with these four sectors accounting for nearly three-quarters of deal flow.
  • After a tumultuous period in March when prices on sponsored credits dropped by 19 points, the secondary markets recouped a large chunk of their losses in the subsequent time period, rebounding by 13.5 points through the end of June.