Asia Pacific Loan: MYOB Group’s A$1.52bn leveraged financing
Overcoming obstacles
MYOB Group in June tackled an upcoming debt maturity with a A$1.52bn (US$973m) financing that overcame tough conditions in the leveraged finance market and avoided potential ratings downgrades.
The KKR-backed Australian accounting, payroll and tax software company had A$1.38bn in debt falling due in 2026. In late 2024 lead arrangers KKR Capital Markets and UBS kicked off the refinancing process, but soon faced challenges. US president Donald Trump’s "liberation day" announcement in April 2025 sent the US leveraged finance market into a swoon for weeks.
Despite the tough market conditions, MYOB was intent on achieving as much flexibility as possible with the new borrowing to refinance term loan B facilities in US and Australian dollars totalling A$1.22bn. It also needed additional funding to cover a A$160m subordinated facility relating to a deferred payment for its 2022 acquisition of Australian workplace financial services and benefits provider Flare.
The leads quickly pivoted to a private credit solution from what was originally planned as a two-year extension of the first-lien TLBs. Within three weeks, commitments were secured from private lenders, warding off the risk of potential ratings downgrades from Moody’s and S&P.
The borrowing was priced soon thereafter and comprised a A$1.21bn covenant-lite five-year unitranche financing, a A$72.5m revolving credit facility and a privately placed A$235m holding company term loan for the deferred payment for Flare.
The terms achieved were impressive as well as cost-effective with the unitranche term loan pricing at 550bp over BBSY and an original issue discount of 98.5. The loan carries a payment-in-kind toggle option for the first 30 months, longer than the 24 months that is typical in the US leveraged finance market. The unitranche portion is one of the largest covenant-lite financings from Asia Pacific and carries a leverage of 7.8x, while the revolver represents gearing of 0.5x.
Such leverage multiples combined with the PIK optionality and the tight timeline would have been difficult to achieve in the traditional Asian bank loan market.
A total of 19 global accounts participated in the financing, of which 11 were new, including large cornerstone commitments from Apollo Global Management and Golub Capital.
Following the repayment of the A$1.22bn TLB, Moody’s and S&P concluded their reviews for downgrades initiated earlier and changed the outlooks to stable before withdrawing their respective B3 and B− ratings on MYOB in June.
The new borrowing is entirely denominated in Australian dollars, resulting in savings on cross-currency swap costs for MYOB, which now has more breathing room given there is no pressure of ratings downgrades and no interest payments or refinancing due in the near term.