Another $14.7 billion of amend-and-extend activity in October boosted the record-breaking total for 2023 to $144.9 billion — the highest level recorded since LCD began tracking this data in 2009. The monthly total was down from $16.1 billion in September.
Amend-and-extend transactions allow issuers to push out their loan maturities through an amendment, without refinancing into a new credit, which would require marking the entire loan to market, entailing higher spreads, a new original-issue discount, and other changes. In return, lenders typically receive a higher applicable margin on their extended loans, and may receive additional compensation, including extension or amendment fees. This record pace of A-and-E deals is particularly noteworthy in the current market climate, as the average yield-to-maturity for refinancing institutional term loans via syndication this year stands at 9.7%, which is an eye-watering 23-year high.
Breaking the data down further, this surge in A&E deals has been driven by institutional transactions, which have accounted for $65.1 billion of the $144.9 billion year-to-date total. By comparison, institutional deals only accounted for $16.3 billion of the $108.9 billion total in all of 2022.
October’s amend-and-extend activity came courtesy of 14 transactions. Notable deals on the institutional side include the extension of a Amneal Pharmaceuticals’ $2.35 billion term loan B to May 2028, from May 2025; an extension of Hilton Worldwide’s $1 billion term loan B-3 by two years, to June 2028; and a repricing and partial extension of APi Group’s $1.407 billion incremental term loan B to January 2029, from October 2026. On the pro rata side, Vistra Operations entered into an amendment to extend by one year the maturity of its $1.575 billion revolver (upsized from $1.35 billion) to October 2024. Equitrans Midstream, meanwhile, extended its $2.16 billion revolver to April 2026, from April 2025. Neiman Marcus Group extended its $900 million asset-based revolver to October 2028, from September 2024. And Royal Caribbean extended several tranches of its multi-billion unsecured revolving credit facility.
Pro rata debt typically entails amortizing TLAs and/or revolving credit facilities and is traditionally syndicated to finance companies and banks. Institutional debt consists of term loans structured specifically for institutional investors, including CLOs.
While there is a heightened urgency to address near-term maturities, LCD’s data show companies that are being given extra breathing room are, by and large, not immediate default candidates. In fact, nearly 83% of amendments in 2023 from this analysis are rated B-minus or higher at the issuer level. This compares to 77% in 2022.