Debut success
In spite of choppy market conditions throughout much of last year, first-time issuers could still rely on access to Europe’s high-yield capital market to raise funds, as proven by Benteler, a debt-laden, family-owned car parts maker based in Salzburg, Austria.
Having survived a bank debt restructuring in the past, the longstanding company, founded in 1876, was facing another existential threat as it had €1.9bn in debt facilities which needed to be repaid by December 2024.
The existing capital structure was a patchwork across 60 creditors. Key to its access to the high-yield bond market was securing an €810m 4.5-year term loan A from a number of its bank lenders, which leveraged their existing relationship with the issuer. Equally crucial was obtaining inaugural credit ratings from the agencies. In the end, Moody’s and S&P assigned issuer ratings of Ba3/BB–.
In late April, more than a month after the syndication of the new TLA and a €250m 4.5-year revolving credit facility, which was undrawn at issue, Benteler priced a €975m-equivalent five-year non-call two senior secured notes issuance across euros and US dollars.
The company’s steel and tube product manufacturing business opened a door into the US dollar market, which allowed banks to tap more sources of liquidity and create price tension.
The transaction, which was extensively pre-marketed, marked the first debut for a European auto parts deal since 2021, becoming the largest debut cross-border high-yield deal since June 2020.
Final terms on the euro tranche, a €525m bond, were set at 9.375%, tighter than revised price talk of the 9.5% area and initial price thoughts in the mid-to-high 9s. The US dollar note, for US$500m, priced at 10.5%, the tight end of price talk of 10.5%–10.75% and inside IPTs of high 10s.
While IPTs were deemed wide for a Double B credit, oversubscribed books for both tranches enabled bankers to tighten the price. Investors told IFR at the time that they perceived the transaction as “risky” and had expected final pricing to tighten only marginally from IPTs, if at all.
JP Morgan (B&D), Goldman Sachs and Morgan Stanley were the global coordinators and bookrunners. The three of them were physical bookrunners for the euro tranche, while JP Morgan was the sole physical bookrunner on the US dollar part. Commerzbank and UniCredit were bookrunners, while Erste Group was a co-manager.
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