US Loan House: Bank of America Merrill Lynch
Brains and brawn
Whether it was for capital to back a mammoth acquisition, a refinancing for an old-time client, market knowledge of the buyside or financing advice, Bank of America Merrill Lynch could be relied on in 2013. For its creativity, lending firepower, market clout, depth of wallet and smart transactions, BofA Merrill is IFR’s US Loan House of the Year.
If 2013 disappointed in terms of the number of M&A deals, it still produced several hallmark transactions that redefined the market. Bank of America Merrill Lynch participated in many, if not all, of these transactions, furthering its role as market leader and lending powerhouse in North America.
“There is no doubt you’ve got to have a little luck, a little smarts, good timing, good execution. All of these things are important,” said Peter Hall, global head of investment-grade loans at BofA Merrill.
The bank dominated the loans business in the US, ranking number two in the league tables in investment-grade loans with a 19% market share from November 16 2012 to November 15 2013, as well as leading the leveraged bookrunner charts with a 15% market share, according to Thomson Reuters data.
Where there has been acquisition financing in the North American market, BofA Merrill’s performance has been particularly strong, leading or acting as joint lead arranger on 13 M&A transactions in the same 12-month period.
“We believe we are the top, strongest investment bank as far as acquisition finance goes in the investment-grade space,” Hall said.
BofA Merrill was one of the four underwriters of the historic US$61bn 364-day bridge loan for Verizon Communications, winner of IFR’s US Loan Award. The bank also underwrote US$5.5bn in term loans for Amgen, which raised over US$8bn despite pricing being considered on the tight end and no immediate bond economics, not to mention that a US$12bn loan for Verizon was launching the following week.
The bank was also sole lead arranger on a C$3.5bn term loan backing Loblaw Companies’ acquisition of Shoppers Drug Mart, the largest Canadian dollar-denominated term loan ever underwritten.
On the leveraged side, BofA Merrill led many of the most eagerly awaited acquisition financing deals of the year such as computer maker Dell, software firm Activision Blizzard, gaming and lottery technology company Scientific Games and department store chain Saks.
BofA Merrill’s syndication strategy on the highly coveted US$9.1bn loan financing for Dell’s buyout by Michael Dell and Silver Lake Partners – winner of IFR’s US Leveraged Loan Award – illustrated the bank’s creativity and knowledge of the buyside market.
Anticipating that the institutional demand could run out given heavy supply in September – an US$8.6bn new-money transaction from Hilton Worldwide launched less than one week after Dell’s bank meeting – BofA Merrill proposed the inclusion of a US$1.5bn three-year tranche to meet the demand from CLO investors.
“It has definitely become a hallmark product of ours, the CLO tranche,” said AJ Murphy, co-head of global leveraged finance at BofA Merrill. “It’s a very technical hole we are filling because of its particularly low cost – if you have a company that can handle the amortisation. And it’s interesting because it is not that different from an A loan but it does tap into a very specific pocket of demand.”
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Shortly after Dell priced, BofA Merrill launched a US$2.3bn loan backing Toronto-headquartered retailer Hudson’s Bay Company’s purchase of Saks. During syndication in October, Saks increased the bank debt portion by US$400m in place of an initially proposed US$400m senior unsecured note offering.
BofA Merrill broke out Activision Blizzard’s US$2.75bn following a pre-Labor Day lull. That closely watched transaction, which backed the company’s plan to spin itself off from Vivendi, reverse flexed during syndication in September.
BofA Merrill continued its relationships with frequent issuers, such as telecoms names Level 3 Communications and Cincinnati Bell, and healthcare company HCA. The bank was also heavily involved in the repricing waves ripping through markets in 2013, pushing through spread cuts on names such as MGM Resorts International, IMS Health, Royalty Pharma and education software company Blackboard.