Tikehau clears a path through choppy market
Navigating a volatile issuance window as markets awaited the next salvo of US tariffs, alternative asset manager Tikehau Capital secured its largest order book to date with an attractively priced €500m six-year senior unsecured bond.
Tikehau announced on Friday that it had mandated Bank of America, BNP Paribas, Citigroup, Credit Agricole, Goldman Sachs, IMI-Intesa Sanpaolo, Mediobanca, Natixis and Societe Generale to arrange investor calls running through to Monday afternoon ahead of the April 2031 senior unsecured issue. The issuer also announced a capped tender offer for its €500m 2.25% October 2026 senior unsecured notes.
On Monday, when markets slumped due to the tariff worries, bankers said it was unclear whether several planned unsecured transactions lined up by financials and corporates, including Tikehau's offering, would be able to go ahead on schedule this week. While the risk-off tone was most evident in equity markets, credit did not escape the widening, with recent new issues marked wider across the board.
"[On Monday], we had up to three deals looking at the market but none even got to the stage of having go/no-go calls," said a syndicate banker.
In particular, some bankers away from the trade questioned whether the market would be sufficiently stable for a relatively rare, lesser-followed issuer such as Tikehau. "The sector and the name are relatively high beta, so I was a little bit surprised they picked this window," said the syndicate banker.
A European alternative asset manager with €49.6bn of assets under management as of the end of 2024, the company has sold senior debt several times since making its debut in 2017.
However, some of its previous trades were only thinly oversubscribed and the issuer has often struggled to gain much traction with investors, with some market participants describing it as being a relatively niche credit, also highlighting the difficulty of marketing asset manager paper to other asset managers.
Tikehau took its chance when an opening emerged on Tuesday morning. European equities had rebounded, following an improvement in the tone towards the end of the US session and through the Asian session. However, conditions remained choppy in a market of limited liquidity, as shown by the iTraxx Crossover index, which swung back and forth between the range of 323bp and 330bp on Tuesday morning.
In that context, the lead managers opened books with initial price thoughts at mid-swaps plus 210bp area for an expected size of €500m. They went on to set the spread at 190bp and confirmed the size at €500m on the back of more than €1.4bn of demand.
Bankers said the level of demand, limited order attrition and the degree of tightening represented an impressive outcome for Tikehau in a challenging market environment, especially given the reception of the issuer's previous transactions.
The final order book stood above €1.35bn, which is the largest Tikehau has built for any of its transactions to date, according to IFR data.
That level of demand reflected that the bond, which is expected to be rated BBB–/BBB– (S&P/Fitch), was offering an attractive outright spread for senior unsecured paper. For example, corporate issuer Fresenius Medical Care, rated Baa3/BBB–/BBB–, on Tuesday priced a €500m seven-year tranche at 170bp.
The deal was also deemed to offer an attractive premium versus fair value, which bankers close to the deal saw at around 165bp–170bp.
Tikehau's €500m 1.625% March 2029s were on Tuesday bid at 123bp, while its €300m 6.625% March 2030s – which, sold in September 2023, represent the company's most recent issue – were quoted at 140bp, according to Tradeweb figures. Bankers also cited comparables ranging from other asset managers to second and third-tier southern European banks.
Market participants said that while the success of the deal was positive, the specific nature of the credit and the spread on offer meant it offered limited takeaways for other issuers that may be monitoring the market.
"I don't think there is much that is directly easy to translate into other projects," said a banker close to the deal. "But, if anything, it shows the willingness from investors to still put money to work in this environment when the spread is interesting – and in this case, obviously, starting with a 200 handle at IPTs is very eye-catching."
The company said it was launching the transaction to extend its debt maturity profile and optimise the refinancing of the 2026s.
In the concurrent tender offer for the €500m 2.25% October 2026s, Tikehau indicated the maximum acceptance size would be the size of the new notes minus €300m.
Pro forma for a €300m increase in Tikehau's gross debt, Fitch said it expects the company's balance sheet leverage to increase moderately from 0.6 at end-2024, but to remain below the downgrade rating sensitivity trigger of 0.8.