Banks Clear Junk Debt from Balance Sheets as Europe Reopens – Bloomberg2021-05-04
Banks Clear Junk Debt from Balance Sheets as Europe Reopens
2021-05-04 10:41:22.310 GMT
By Laura Benitez
(Bloomberg) — Banks are finally selling on some of the 9
billion euros ($10.8 billion) in corporate junk-rated debt taken
on before the coronavirus hit as European countries start to
reopen and the bond market picks up steam.
Italian luxury shoemaker Golden Goose is the latest deal to
launch this week after banks managed to clear their books of
some of the acquisition debt weighing down their balance sheets,
in some cases for well over a year.
The gradual reopening of European economies has allowed
credits in the retail and leisure industries — including
fashion houses, gyms and pubcos — to refinance, following
increased investor optimism about declining case numbers of
Covid-19 in parts of the continent.
The Golden Goose deal “confirmed that retail and consumer
goods will be the hottest sector this year, in line with our
expectations of several bond refinancing and fresh LBOs,”
analysts at Spread Research wrote in a note to clients Tuesday.
Investor meetings will take place this week for a 470
million-euro floating rate high-yield bond to fund buyout firm
Permira’s acquisition of Golden Goose, and should clear one of
the last transactions underwritten before the pandemic.
The financing was originally slated to launch in early 2020
but banks left holding billions of high-risk loans and bonds had
to wait for credit markets to reopen and for company
performances to improve before they could start to sell some of
the debt they were holding.
Previous reopenings facilitated deals elsewhere in the
Banks holding the debt which financed TDR Capital’s
purchase of U.K. pub company EI Group capitalized on an
opportunity to syndicate last summer when restrictions about
restaurants and pubs were eased.
Similarly, the 445 million-euro bond for U.K. fitness chain
PureGym Group Plc’s purchase of Fitness World was sold in
November when investors started betting on the reopening trade,
and the return to normal life.
Now Italian luxury footwear maker Golden Goose is hoping
that investors will begin betting on a retail revival. The
company which makes high-end sneakers relies to some extent by
the endorsement of celebrities and influencers, to whom it
occasionally gift its products to, according to a bond
prospectus sent to investors on Monday.
Golden Goose’s reported Ebitda was 69.3 million euros for
the year ending 2020 compared with 91.4 million in the same
period in 2019, according to the prospectus.