By Jonathan Schwarzberg
NEW YORK, April 1 (Reuters) - The improving tone in the US leveraged loan market is helping banks to relaunch some deals that were stuck in the market at the end of last year, including a US$550m buyout loan for web conferencing provider Premiere Global Services, although investors remain wary of highly-leveraged deals.
Banks were unable to sell some loans in December as low oil prices, worries over China and fears of corporate earnings and rising defaults created turbulent market conditions. Banks chose to fund some of the acquisitions and hold the paper on their books instead of discounting the deals to sell in the hope that market conditions would improve.
The reappearance of Premiere Global Services' loan and a US$60m add-on from dialysis services provider American Renal Holdings that was postponed last year and scheduled to launch Friday is raising hopes that banks will be able to sell more hung deals from late 2015.
These deals include a US$5.6bn loan and bond package backing the buyout of software provider Veritas. The deal was originally pulled in November due to difficult market conditions and banks funded the loan when the acquisition closed in January.
Three prior weeks of inflows into the US leveraged loan market by retail investors is helping to stabilize the market, the issuance of US Collateralized Loan Obligation (CLO) funds, which are the biggest buyers of leveraged loans, has resumed and equity values have improved, offering banks a window of opportunity to offload risk.
"Things have certainly opened up a bit," a banker said.
Refinancing activity has resumed in the last two to three weeks and deals, including a US$1.045bn term loan backing payment processing company Global Payments' purchase of rival Heartland Payment Systems, have been oversubscribed.
The fact that deals are now getting done boosted confidence sufficiently for Barclays, SunTrust and Macquarie to relaunch Premier Global Services' loans Thursday, which include a US$550m six-year term loan and a US$50m five-year revolving credit facility for the company.
The financing included a US$150m second-lien term loan when it was first launched last November that was cut when private equity firm Siris Capital agreed to add US$100m of preferred equity to reduce leverage and make the deal more attractive. However, the financing was postponed altogether in December.
STILL RISKY
Although the tone is improving, the US leveraged loan market is still wary of highly leveraged loans, particularly those with credit stories. A US$4.75bn term loan B for hard-disk drive maker Western Digital had to widen pricing on the dual currency term loans backing its US$19bn of flash storage provider SanDisk this week to clear the market.