Taking charge
While hopes of an M&A revival in 2023 never materialised, there was still huge financing work to be undertaken. For its expertise in complex refinancing transactions and bringing fresh money to the table, BNP Paribas is IFR's EMEA Loan House and EMEA Leveraged Finance House of the Year.
Leveraged buyout volumes across European leveraged loans and high-yield bonds in 2023 were the lowest this century, with M&A activity derailed by a huge disparity between buyer and seller valuations. Yet despite meagre offerings, the year ended on a high as BNP Paribas was one of three banks to drive the €1.45bn transaction funding private equity firm Cinven's take-private of Germany laboratory operator Synlab.
Nor was it a plain vanilla offering. The trade had to be structured to take into account that Cinven, which had secured around 85% of Synlab shares by the time it was launched, might not achieve 100% ownership. Although some of that added complexity had a knock-on effect for pricing, Synlab was still able to grind pricing in its favour on both the €1bn term loan B and €450m bond.
The ability to extract a size of €1bn or more from the syndicated market had already been demonstrated by the €1.105bn TLB for drug manufacturer and distributor Cooper in November. The offering, with BNPP as one of the physical bookrunners, was to cover the acquisition of the European over-the-counter business from Viatris. It marked the largest underwritten transaction in the European leveraged loan market since the war between Russia and Ukraine began.
In the absence of LBOs, volumes in the leveraged loan and high-yield markets were dominated by amend-and-extend transactions and refinancings. While BNPP led multiple such deals in bonds, the bank also guided debut issuers in the format, such as with equipment rental specialist Boels’ €400m bond. A notable example of a bold deal at a time of softer market conditions was Italian IT outsourcing-services company Cedacri’s €275m FRN which included a €150m dividend recap.
In addition, a number of issuers had to engage in hefty exercises to roll debt and those matters were only complicated when there was a difficult story to sell.
“We've really done a lot of Single B risk this year that's been pushing the boundaries of what can or can't get done in that kind of market environment,” said Stanford Hartman, BNPP's head of high-yield and leveraged finance and loan syndicate for EMEA.
One of the thornier names was Altice France, part of the Altice complex which is struggling with combined debt of US$60bn.
At the beginning of 2023, with BNPP as one of the active bookrunners on the euro part, Altice France managed to push out 75% of its 2025 and 2026 maturities to August 2028 in a US$6.4bn-equivalent amend-and-extend deal with creditors. Even though the result was a material increase in the cost of capital, it meant Altice France has no major maturities before 2027, while the average maturity for its debt capital structure increased to 5.3 years, up from 4.7 years.
Sister entity Altice International then opportunistically appeared later in the year. BNPP was one of the physical bookrunners again for an upsized €800m mirror TLB due October 2027.
Divi recaps
As an alternative to selling an asset, some sponsors turned to dividend recaps to extract money. Silver Lake-backed French software company Cegid timed its €700m dividend recap trade to near perfection in September, with BNPP one of the banks helping to price the non-fungible covenant-lite loan at 375bp over Euribor with a 99.5 OID.
On the investment-grade side, BNPP retained its position as the top-ranking bank in EMEA in 2023 with a commanding 9.65% share of the market in the role of bookrunner, up from 8.93% in 2022, despite low market volumes as the bank leveraged its unrivalled experience across market segments to accelerate ahead of its competitors.
The bank remained the clear leader of the EMEA corporate loan market in 2023 leading refinancings and event-driven loans across the board, including prime positions on many headline sustainability-linked loans.
Landmark corporate transactions included an €8bn refinancing of BMW’s core relationship-defining revolving credit facility and a debut €2.5bn RCF for Porsche. BNPP won coordinator and active bookrunner mandates on both of these prestigious deals, further establishing itself as a leading player in the German syndicated loan market.
On the event-driven side, BNPP was able to show its balance sheet support for its clients, playing a pivotal role on German automotive supplier Schaeffler’s €3.45bn financing backing its acquisition of Vitesco, acting as joint underwriter and bookrunner on the loans as well as financial adviser to Schaeffler.
The bank also showed its credentials advising clients on strategic transactions.
BNPP was capital structure adviser and sole underwriter on an €8bn 2.5-year term loan for Dutch power transmission company TenneT to backstop one year of capex and strengthen its liquidity as it evaluated strategic options for its German operations.
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