The leveraged loan market is not known for its swift pace. But a lack of new supply, along with market volatility and risk aversion, have been speeding up the rate at which some loans get syndicated.
Two types of drive-by loan deals are popping up: opportunistic refinancings from repeat issuers that leap into the market when the price is right; and acquisition loans that move quickly, because risk-averse banks have done preliminary marketing to ensure a quick turnaround.
"There's been just so much volatility in the market of late, both underwriters and issuers have been reluctant to expose themselves to the gyrations in the market any more than they need to," says Bill Hughes, head of leveraged loan syndications at Citigroup Inc. "Why leave yourself exposed to something going bump in the night in Europe if you can pre-market and close the syndication down quickly, have a very well-distributed book, allocate the paper and effectively de-risk?"
Since late October, a number of syndications have breezed through from the official start of marketing to funding commitments, a process that typically takes at least a week or two in the leveraged loan market.
Examples include loans to Health Management Associates, Level 3 Communications, Boyd Gaming and UPC Financing Partnership (all refinancings), as well as PolyOne Corp. and Pharmaceutical Product Development (both acquisition deals).
In the case of PPD, the commitment period was officially still open late last week, but the loan was well oversubscribed ahead of the formal launch the week before.
The largest of these deals and probably the most striking is Health Management. On Wednesday, the lead banks Wells Fargo & Co. and Deutsche Bank accelerated the commitment deadline for the $1.4 billion term loan by a week — to 5 p.m. that day — after receiving $3 billion in commitments. The loan was increased in size from an original $1.2 billion.