Jefferies

Actionable Ideas for Companies and Sponsors

Use of Partial Paydowns to Reprice Loans to Record Low Speeds

As companies look to take advantage of the record leveraged loan market, we have seen repricings try to break new boundaries below L+200. As with any repricing action, lenders have the option to be paid down at par, and when issuers are pursuing record breaking pricing levels, this possibility is significantly heightened. To mitigate this potential outcome, we have seen companies offer partial paydown of the term loan from either cash on hand or newly raised bonds to improve the likelihood of success and to cover these potential drops.