US Mid-Market Equity House: Stifel

US health insurer Anthem found itself in a potentially precarious situation in early 2015 with a US$3bn cash call that could come at any time. The company’s US$1.5bn principal 2.75% 30-year CB issued in 2012 (when the company was called Wellpoint) was the cause of concern. The conversion price was US$75.58 but the shares had since risen to US$154.20. With the bonds trading at 207, early conversion was a real risk. “Conversion would have brought about a potential liquidity event we would not have wanted,” said Anthem VP of corporate finance Merrill Yarling. “It was a potential put, at their choice and not ours.” The bonds are not callable until 2022. A net-share settlement structure meant Anthem had to fund the principal in cash and use cash or stock for the remaining value – and make that decision within 24 hours of notice. The shareholder-friendly option of full cash settlement would create a nearly US$3bn cash call for just half of the outstanding. Liability management on CBs was a common theme of the capital markets in 2015, though none dealt with the problem as elegantly as Anthem. The solution for Anthem, rated Baa2/A–, was a US$1.25bn mandatory convertible that allowed it to raise a significant amount of capital through a security that provided both partial equity credit and tax efficiencies and to negotiate a price to purchase half of the outstanding bonds. Key to success was to maintain tension on both the price paid for the 2042s and terms on the new MCB. Initially a 1–1.25 point premium was offered on the existing bonds, before pricing the purchase of US$700.5m principal at 0.875 points above parity. Management was still concerned about dilution, despite how far the stock had already risen. To achieve a higher upper conversion threshold of 30%, Anthem agreed to compensate investors for up to a 10% drop in its share price. “We were bullish on where we thought our stock price would be three years out,” said Yarling. Anthem reached agreement in July to acquire rival Cigna for US$54.2bn, including assumed debt. Credit Suisse, which was joined by Bank of America Merrill Lynch as a bookrunner, set the coupon at 5.75%, a 415bp pick-up to the yield on the underlying at the time. The banks increased the base deal from US$900m at launch to US$1.175bn, and subsequently exercised their US$75m overallotment option. To see the digital version of the IFR Americas Review of the Year, please click here . To purchase printed copies or a PDF of this report, please email gloria.balbastro@tr.com .

With US$1bn of orders, the deal found buyers from a variety of corners. Pricing was Treasuries plus 185bp, with a 3.976% coupon. For financials, the notes present a new source of contingent liquidity, especially during hard times. It was the second such offering of these securities by a life insurance company, a new structure devised by Credit Suisse. Prudential Financial was the first to market in 2014, when it sold US$1.5bn of the notes also through the Swiss bank. The key selling point for a financial such as Voya is flexibility in using proceeds and quick access to capital. David Pendergrass, Voya’s treasurer, said: “This gave us an opportunity to go ahead and raise capital – really at a time we didn’t need capital, which is opportunistically exactly when you want to raise capital.” He said that Credit Suisse was “very persistent” because it was touting a unique structure. “It took a lot of hand-holding and explanation” and it was over a year from start to launch. “Execution was very good,” he said. “It was oversubscribed on a day that was rocky in the marketplace.” Pendergrass said the deal was viewed as credit-positive by the rating agencies because the capital was pre-raised. Proceeds were invested in Treasury strips matching the payment date. The issue was rated Baa2/BBB. Harking back to the financial crisis, Pendergrass said that traditional credit sources, such as bank lines of credit, are not a guarantee. Even traditional debt offerings can be unwieldy and may not get the same favourable treatment by the raters, he noted. Arvind Sriram, a director in DCM solutions at Credit Suisse, said: “This is the product of the future.” It offers an alternative to traditional lines of credit, he noted. The economics for bank revolvers are not the same as they were pre-financial crisis. “It came down to a win-win situation,” Pendergrass said. “We got it down to where it was extremely cost-efficient.” There was a cost, he said, but it was manageable. The trust allowed the company to reallocate some investments into longer-term and more illiquid securities, generating income that would help cover the premium paid to the P-cap noteholders, he said. And others in the industry have taken notice. “Because it is so flexible in what it can be used for and because it is off the balance sheet, it would appear that it would make sense for a lot of the companies in our industry,” Pendergrass said. This industry may have unanticipated needs to raise capital or tap liquidity for a variety reasons, including credit and macro-economic events, and this structure allows companies to do both. “I think it is likely you see will see more of these deals next year in the industry,” he said. To see the digital version of the IFR Americas Review of the Year, please click here . To purchase printed copies or a PDF of this report, please email gloria.balbastro@tr.com .

The stock sale offered investors a rare opportunity to gain exposure to a Mexican industrial, and one that has a leading market share in lightweight auto components. “There had been a glut of real estate issues and this was the first time that a large industrial was coming to market – and a company that could say they are a global leader,” said Ian Taylor, who at the time was head of Latin America ECM, ex-Brazil, at Goldman Sachs, which led the deal with Deutsche Bank and JP Morgan. The sale was made up of all new shares but, other than US$150m earmarked for growth plans, the proceeds were handed to existing shareholders Ford and conglomerate Alfa. The flotation is the third-largest ever Mexican IPO, behind only the US$4.1bn issue by Santander Mexico in 2012 and miner Fresnillo’s US$1.77bn offering in 2008. Already facing strong headwinds in June when investors were turning their backs on emerging markets, the issuer also had to contend with heightened concerns over the Greek debt crisis. Four days before the deal was scheduled to be priced, the Greek prime minister surprised the market by calling a referendum on its bailout. The risk-off mood cast a pall over the market, sending the VIX up 35% and stocks of Nemak’s peers down by up to 6% the day before pricing on June 30. “There was a lot of uncertainty in the market, but it didn’t have a big effect on orders,” said Alberto Sada, Nemak’s CFO. “Oversubsription was very healthy and that gave me the green light.” And while the deal ultimately was priced at the bottom end of the Ps20–Ps23 range, the final valuation represented the highest forward EV/Ebitda multiple ever achieved in an auto sector IPO. “Volatile market conditions meant new issues were very difficult for many companies,” said Taylor. “That is why it was pretty remarkable for a Mexico-headquartered auto supplier to achieve a valuation more than two times over [peers] and it was able to do that just a few days after Greece [announced the referendum].” Leads positioned the deal as a growth story, taking advantage of the shift to lighter aluminium components as the auto industry seeks to comply with ever more stringent environmental regulations. “Being a public company is a big step,” said Sada. “It diversifies our sources of funding and gives us the ability to tap this market for potential sources of cash and for future growth prospects.” To see the digital version of the IFR Americas Review of the Year, please click here . To purchase printed copies or a PDF of this report, please email gloria.balbastro@tr.com .

The loan market was in a period of turmoil as oil prices plummeted in the second half of 2014, causing investors to tighten their purse strings. The size of the deal – which would end up being the largest leveraged buyout loan of 2015 – added to the potential difficulty of getting the loan done. “At different times we’ve had the view that US$4.3bn is a walk in the park, and at other times we’ve said it’s virtually impossible,” said William Hughes, head of North America syndicate at Citigroup. There was also unease over the amount of debt involved, which put adjusted leverage at the company near seven times, as regulators have cited loans with debt compared with Ebitda of more than six times as a concern in their leveraged lending guidelines. Additionally, PetSmart was part of a retail sector that had not performed well during the previous year. That led several banks, including Bank of America Merrill Lynch, Credit Suisse, Goldman Sachs and Wells Fargo, to pass on the deal. “Some people couldn’t get there on a regulatory basis, but there were others who couldn’t get there on the credit,” said John McAuley, co-head of US leveraged finance at Citigroup. Barclays, Deutsche Bank, Nomura, Jefferies, Royal Bank of Canada and Macquarie joined Citigroup in underwriting the buyout, which also included US$1.9bn of bonds. Their confidence in the credit was rewarded when regulators reviewed the loan to see if it met the leveraged lending guidance rules, which include the ability to pay down half the debt within five to seven years, and passed the deal. “We had done enough credit work to put together a case and ultimately they saw it the same way we did – that it was actually within the guidelines,” Hughes said. By working with virtually all the investors who had ties to BC Partners, over US$100m of commitments was raised in an early round and PetSmart’s deal ended up more than three times subscribed. The loan was priced at just 400bp over Libor with a 1% floor and traded up after allocating. In May, the company returned to the market and repriced the loan 75bp tighter than the original coupon. To see the digital version of the IFR Americas Review of the Year, please click here . To purchase printed copies or a PDF of this report, please email gloria.balbastro@tr.com .

The loan stood out for its complexity and the leads’ ability to syndicate among a whole new set of lenders at a time when investors were having second thoughts about committing funding in emerging market oil exporting countries such as Colombia. Looking for the longest tenor possible to fund fluvial equipment such as barges, Trafigura was unable to lean on its deep pool of around 130 relationship lenders. Not only were they unaccustomed to lending beyond three years, but many had already reached their limits on Trafigura exposure. “We didn’t want to compete against that capacity,” said Kristie Pellecchia, head of syndications for Latin America and US corporates at SMBC, which was joint bookrunner alongside Credit Agricole. “We felt there was a lot of liquidity in the regional market as well as in Asia.” Those issues hit home when Trafigura announced in July a US$1.68bn refinancing of its Asian revolver – just days after SMBC and Credit Agricole had launched general syndication on the asset-backed deal. The US$350m transaction comprised five and seven-year tranches, striking a balance between the tenors required by Trafigura and investor needs. The leads had to come up with a structure that mitigated some of the risks of having tenors that were shorter than the 20-year lease agreement entered into between the Trafigura subsidiary and the assets being financed. The solution was a hybrid loan that incorporated the features of straight corporate loans such as a guarantee from the parent as well as project finance structures such as a pre-payment mechanism with a cash sweep. “You had a corporate guarantee for the full seven years but also structural enhancements that are typical of a more project finance-type deal,” said Rose Mary Perez, director of the LatAm loan syndication group at Credit Agricole. Other such features included an equity cure in the event of a cash shortfall from the borrower, which is using revenues from the lease payments. The deal paid 265bp and 315bp over Libor on the five and seven-year tranches, respectively. That compares with the approximately 110bp over Libor that Dutch parent and guarantor Trafigura Beheer typically pays on a three-year loan. “The price levels reflected how people looked at an asset-driven transaction,” said Jaime Frontera, head of the Latin America loans syndication group at Credit Agricole.”It was a good balance between Trafigura’s needs and our ability to sell it.” The bookrunners spread their net far and wide to lure 10 more banks, many of which were new lenders for Trafigura. * Typical cost of funding corrected in paragraph 11. To see the digital version of the IFR Americas Review of the Year, please click here . To purchase printed copies or a PDF of this report, please email gloria.balbastro@tr.com .

AbbVie’s deal epitomised the US loan market in a year that was dominated by mergers and acquisitions – in particular from a healthcare sector that never stopped bringing hefty takeover loans to the market. Morgan Stanley, through its lending joint venture with MUFG, underwrote the US$18bn 364-day senior unsecured bridge that gave AbbVie financing certainty when the takeover was announced in March. Morgan Stanley committed US$14.25bn and MUFG US$3.75bn. The bridge was Morgan Stanley’s biggest single commitment as a firm in 2015. Using the lending joint venture, Morgan Stanley and MUFG were able to provide the bridge within days with speed and confidentiality, ensuring that there were no leaks prior to the announcement. The loan kicked off a series of jumbo M&A loan financings in the healthcare sector and also gave the investment-grade loan market confidence early in the year. “It set the stage because it gave people confidence that deals of this size could be done and that they would be refinanced in the capital markets. It showed that the bond market … and the bank syndication market would be receptive,” said Anish Shah, head of investment-grade corporate debt capital markets and acquisition finance at Morgan Stanley. “It reaffirmed the structure of the investment-grade bridge loan,” he said. The bridge loan, which financed a cash/stock acquisition coupled with an accelerated share repurchase, allowed AbbVie to satisfy the seller’s preference to mitigate equity dilution. It also backstopped the acquisition funding and the buyback funding. “They structured this in a combination of cash and stock and then they completed an accelerated share repurchase to buy back approximately half of the stock consideration to synthetically create a structure that was much more cash-heavy,” Shah said. The transaction was syndicated to existing AbbVie relationship banks with a 100% hit rate. It was also arranged in less than two weeks to ensure AbbVie was best positioned to win a highly competitive M&A process. “We put US$18bn of committed financing in place, quickly, quietly, confidentially,” said Shah. “We then syndicated it and then took them to the bond market.” Concurrent with the syndication of the bridge, Morgan Stanley also led an amendment to AbbVie’s existing credit facility to provide covenant flexibility to assist the transaction. To see the digital version of the IFR Americas Review of the Year, please click here . To purchase printed copies or a PDF of this report, please email gloria.balbastro@tr.com .

In a tough year for emerging market issuers, Jamaica excelled in a liability management transaction that vastly improved its debt ratios and accelerated progress already made under its fiscal adjustment programme with the International Monetary Fund. At US$2bn, the trade represented Jamaica’s largest bond sale ever or some 14.6% of its 2014 GDP, a large sum for any country. “Nobody comes close to 14% in the sum total of all their transactions, let alone in a single trade,” said Chris Gilfond, head of Latin America capital markets origination at Citigroup. “Jamaica did it in a day.” A small country raising such large amounts of debt would under normal circumstance have given fixed-income investors pause for thought. But for Jamaica the trade made sense as it was using the proceeds in part to retire US$3bn of PetroCaribe debt owed to Venezuela for a price of just US$1.5bn. “It was an opportunity which derived from a convergence of interests between the Venezuelan authorities and ourselves,” Peter Phillips, the country’s finance minister, told IFR on the sidelines of the IMF meetings in October. Not only did this allow the Caribbean nation to cut consolidated public debt to GDP by about 10 percentage points, but it also locked in its lowest coupon bonds ever along various points in the curve. In the end, leads Citigroup and Bank of America Merrill Lynch priced a US$1.35bn 6.75% 10-year due 2028 deal at 99.96 and a US$650m 7.875% 30-year at par after 178 accounts generated an order book that swelled to US$4.5bn in size. And despite a rocky backdrop for emerging markets in 2015, both instruments have performed well in the secondary markets, trading at mid-market prices of 102 and 101 on November 12. Jamaica’s pricing levels were a considerable improvement on similarly rated sovereigns tapping the markets. On the same day, Zambia, rated B by S&P and Fitch, launched a US$1.25bn 11-year average life amortiser at 9.375% – some 150bp wide to where Jamaica printed its 30-year. Indeed, tapping 30-year money was no mean feat for a Caa2/B/B– rated sovereign still under the watchful eye of the IMF following a domestic debt restructuring just two years before. “This puts Jamaica on a path of achieving its goal of breaking 100% debt-to-GDP by 2020,” said Max Volkov, head of LatAm debt capital markets at Bank of America Merrill Lynch. “It is very credit-positive and being able to issue 30-year paper for a Triple C issuer is quite extraordinary.” To see the digital version of the IFR Americas Review of the Year, please click here . To purchase printed copies or a PDF of this report, please email gloria.balbastro@tr.com .

Latin America found itself at the centre of a broader retreat from emerging markets in 2015 as investors fretted about a string of looming credit risks. Slowing economic growth in China spelt trouble for a region heavily reliant on commodity exports, while the impending threat of the US Federal Reserve’s first rate hike in nearly a decade unnerved an already volatile market. This was only exacerbated by a widening corruption scandal at frequent issuer Petrobras, which closed the door to funding opportunities not only for the oil company itself, but other borrowers from Brazil – a country that in years past had dominated issuance volumes out of the region. Bank of America Merrill Lynch found itself well positioned to cater to borrowers’ needs in this changing environment thanks to an integrated team that drew on expertise in lending, structured finance, liability management and derivatives. “We have full integration and are very agnostic in what we do,” said Augusto Urmeneta, head of Latin America debt capital markets, loan syndications, derivatives and foreign exchange at BAML. “We definitely focused on grabbing market share.” From Green bonds to liability management to euro deals, the bank took a lead on a wide range of trends in 2015, helping it leap to the top of the league table for issuance from the region during the awards period (November 16 2014 to November 15 2015). During that period, the bank acted as lead on 28 deals that raised a total US$10.6bn to give it a market share of 14.4%. BAML was quick to make a splash among sovereign and quasi-sovereign issuers – a sector that returned to prominence as corporates retreated and governments sought to cover growing fiscal deficits. The bank not only led deals for Mexico, Colombia, Uruguay, Panama and Paraguay, but also excelled among quasi-sovereigns. It clinched repeat business with Chilean copper giant Codelco, grabbed a mandate for Argentina’s YPF, and secured a lead spot on a debut trade for the Panama Canal Authority. It also closed its first trade with Jamaica, which selected Citigroup and BAML to lead its largest-ever bond sale – a US$2bn 10 and 30-year offering that allowed the Caribbean nation to retire debt owed to Venezuela at a steep discount. This followed a similar transaction for the Dominican Republic, which selected BAML as lead on two of its deals in 2015. Outside the US dollar market, the bank somewhat unexpectedly excelled in euro issuance, piggy-backing on its own experience with US corporates, many of which went to Europe en masse in 2015 to capture low nominal yields following the start of the European Central Bank’s quantatitive easing programme. BAML punched above its weight against European rivals, winning euro mandates from several Brazilian issuers, some of which had never tapped this market before. These included Brazilian telco Oi, food company BRF and Votorantim Cimentos, as well Mexican cement firm Cemex. That, combined with a long-standing liability management team, ensured that BAML maintained a solid foothold in Brazil despite declining volumes from that country. A €600m 5.625% 2021 deal from telecoms company Oi was part of Latin America’s first corporate tender and switch – which has become popular among sovereigns seeking to retire off-the-run bonds while also creating one large benchmark security. “In Brazil, the dialogue has been about liability management,” said Max Volkov, head of Latin America DCM. Going green BAML’s expertise was also brought to bear in the Green bond sector, where it took a leading role in opening up this space for Latin American issuers. Indeed, it held a lead position on all three Green bonds out of Latin America – the region’s first such trades – a US$204m 6% secured deal for Peru’s Energia Eolica, a euro for BRF and a US dollar trade for Mexican development bank Nafinsa With many Brazilian issuers out of commission, the bank turned its focus on Mexico. BAML led deals for a string of Mexican issuers, including

Driven Brands, one of North America’s top franchise companies for auto servicing and parts distribution, seized on America’s enduring love for their automobiles by selling the first ABS issue created from a portfolio of vehicle repair chain stores. Its US$410m whole-business securitisation, called HONK 2015-1, is IFR’s US Structured Finance Issue of the Year because it threw open the doors to lower-cost, repeatable funding that previously was reserved only for the nation’s biggest fast-food restaurants. Driven owns a portfolio of companies that cater to keeping older cars on the road for longer, which includes well-known brands like Maaco, Meineke and 1-800-Radiator. The trade also set a second milestone by being the first ABS to serve as take-out financing for an acquisition loan since the credit markets collapsed in 2008. “Obviously, we looked at various types of financing,” said Jonathan Fitzpatrick, CEO of Driven Brands. “But when we looked at the [WBS] market, which had more attractive rates, [and a] deeper market, that was important to us.” Roark Capital received a US$430m bridge loan facility from Barclays to acquire Driven in April, as well as a “hell or high water” promise that its take-out ABS financing would be structured and distributed through a WBS. Barclays, which had an exclusive mandate to structure and sell the deal, successfully navigated the maiden transaction through a volatile market in July at attractive levels. The single-tranche of 6.8-year BBB–/BBB rated notes was priced at a 5.25% yield, or roughly a 250bp saving per annum versus traditional term-loan financing. “It’s fun when you are winning,” said Ben Fernandez, a managing director at Barclays who worked on Driven. “We expect knock-on deals next year that use the securitisation structure and are whole-business in nature.” Dunkin’ Brands completed the most high-profile take-out securitisation deal in 2006, but until recently the appetite for bonds backed by whole business franchises had been slow to recover. As of early November, a total of US$6bn of ABS bonds backed by franchise businesses had cleared the market in 2015, more than four times the prior year’s output, according to Thomson Reuters data. “People had heard of food franchises and bond deals coming from the automotive industry, but no one had ever done an automotive franchise ABS,” Fitzpatrick said. To see the digital version of the IFR Americas Review of the Year, please click here . To purchase printed copies or a PDF of this report, please email gloria.balbastro@tr.com .

When the ABS market really started to founder this past August, most bulge-bracket firms hung out new signs: “Closed For Business”. But that’s when Barclays made the gutsy decision to step up its presence. The bank successfully manoeuvred billion-dollar bond deals packed full of consumer assets through choppy conditions, and ended up serving as the structuring agent and lead joint bookrunner on 45% of the month’s consumer ABS issuance. That helped Barclays increase its share in auto deals – the biggest slice of the consumer ABS market – by 10 percentage points from January to October versus the same period in 2014. By mid-November, the bank had also edged past Citigroup into the second-place spot in the year’s consumer ABS league table, only slightly behind heavyweight JP Morgan. The bank was a bookrunner on nearly US$18bn of consumer ABS issues in the year to November 15 for a 10.9% market share, versus JP Morgan’s nearly US$21bn and 12.6% market share, according to IFR data. For Barclays, the year was about more than just finding a way through choppy seas, though; it was also about putting its own skin in the game to get deals done. “In a tough market, with tough deals, we provided back-stops, bridge financing and balance sheet,” said Marty Attea, head of the bank’s US securitised products group. Among its standout trades was the market’s first acquisition finance package completed as a whole-business securitisation since the financial crisis. Roark Capital used bridge funding supplied by Barclays to acquire Driven Brands, a portfolio of car repair chains. The bank not only funded a US$430m bridge facility for Roark, but also took the relatively rare step of back-stopping its US$460m take-out financing through the niche WBS market. Aside from providing favourable financing, the trade gave Barclays bragging rights for completing the first-ever franchise ABS deal outside of the restaurant sector. The success of the Driven transaction had other market participants seeing serious potential for different types of businesses to access the franchise ABS market. “If you have a brand, or group of brands, that have a good recognition and scale, you should be looking seriously at this market,” said Ronald Borod, an attorney specialising in whole-business ABS at law firm DLA Piper. The securitisation financing paid investors a relatively low 5.25% yield on a 6.8-year BBB/BBB– bond, which saved the company roughly 250bp per annum versus other funding channels. Roark was so pleased by the bank’s performance that it awarded Barclays the mandate as sole active bookrunner on its next whole business deal, a US$635m transaction for roast beef sandwich chain Arby’s. The deal was priced in November, when the market was dealing with even more volatile market conditions, but Barclays was still able to get the 6.7-year securities priced to yield 5%. And this came around the time that sharply higher borrowing costs – and other headwinds – were knocking many deals out of the market. Porsche, BBVA Compass and Bank of the West all had to shelve deals that they should typically have been able to price: plain-vanilla issues of mostly Triple A rated securities on prime quality collateral. The Arby’s deal even managed to steal the thunder from Guggenheim Securities – and former Barclays securitisation co-head Cory Wishengrad – which had been the lone dominating force in structuring franchise-backed securitisations. Wishengrad left Barclays to set up shop at Guggenheim in 2013, just two years after former co-head Jay Kim had defected to Credit Suisse with nearly a dozen Barclays ABS bankers. But in short order, Barclays has defied strong headwinds of its own to become an important force in the tricky ABS market. Said Ben Fernandez, a managing director in Barclay’s esoteric ABS group: “Morale is high.” And not without reason: Fernandez said the bank has now established a dedicated bridge book to bolster more securitisations in the esoteric arena. “That means

Two days after the pet supplies retailer announced it would be bought by a private-equity consortium led by BC Partners for US$8.7bn in December, the spread on one of the main US high-yield indexes reached a two-year high of 7.28% amid a rout in oil prices. A month earlier, US regulators had taken a hard stance on leveraged lending, telling bankers at a meeting in New York that 10 out of 18 buyouts they had reviewed over the summer were viewed as problematic. Faced with uncertainties as to whether the deal could pass the scrutiny of regulators and volatility in the market, several banks backed off from the financing. Leverage of around seven times for the deal – above the six times threshold that US regulators view as problematic if not coupled with the ability to quickly pay down debt – was one of the main concerns for potential underwriters. Yet lenders who later signed commitments for the US$6.95bn bond and loan financing eventually earned a passing grade on the trade. PetSmart, which had come under shareholder pressure to sell itself, also walked away with a successful and well executed transaction. The US$1.9bn eight-year non-call three note issue that was part of the financing was the largest bond backing an LBO in 2015. Shrugging off a three-notch downgrade of the credit by Standard & Poor’s right before the deal was announced on February 12, investors piled in with some US$10bn of orders for the trade. The strong demand allowed lead-left Barclays to price the B3/B– rated notes at par to yield 7.125%, inside talk of 7.25% and well inside whispers of mid to high-sevens. “It was one of the tightest LBO executions in quite some time,” said Peter Toal, head of leverage finance syndicate at Barclays. “BC Partners … trusted us with this transaction.” In the retail space, PetSmart’s final 7.125% yield was the tightest ever achieved to finance an LBO, according to Barclays, beating the 7.75% yield printed by David’s Bridal in 2012 and Neiman Marcus’s offering in 2013, which was priced at 8%. The bond, issued via the Argos Merger Sub entity, traded up 1.25 points on the break to 101.25 and has traded well above par for most of the year, even as spreads across the asset class widened dramatically in August and September. To see the digital version of the IFR Americas Review of the Year, please click here . To purchase printed copies or a PDF of this report, please email gloria.balbastro@tr.com .

As the US high-yield market suffered its most volatile year since 2011, with weakness spreading from the battered energy sector to investor darlings in the pharmaceutical and telecoms space, Goldman Sachs demonstrated unparalleled commitment to borrowers. Issuance volumes declined in the year due to limited refinancing opportunities and softer conditions for leveraged buyouts, but the bank continued to grow its market share without compromising the quality of execution. It remained a trusted partner for multi-billion M&A financings, helped opportunistic issuers take advantage of short issuance windows and – most importantly – stood ready to deploy its balance sheet to support issuers’ financing plans even in times of acute volatility. “It’s not just about showing up with some capital and some advice,” said Kevin Sterling, US head of capital markets at the bank. “You have to know your client and understand the areas of concern for the market and how to address those concerns in a proactive and meaningful way.” That was particularly evident in the second half of the year, when the average yield on the main US high-yield index widened by as much as 200bp , with the Triple C segment blowing out to 15% by the end of November. Before volatility started to pick up in late August, Goldman provided commitments for and quickly executed a US$2.725bn bond and loan financing backing medical devices maker Hill-Rom’s acquisition of rival Welch Allyn . And in the midst of a sharp sell-off across global markets in early September, the bank still committed north of US$8bn on a sole basis to finance acquisition deals for Concordia Healthcare and Solera . Opportunities Goldman was quick to recognise opportunities in the market even before the tide turned, under the direction of co-head of leveraged finance Craig Packer. It encouraged a number of borrowers to bring refinancing deals to market when high-yield indices were at their tightest levels of the year and helped issuers such as IMS Health, VWR and Huntsman take advantage of a significant arbitrage opportunity in the swap market in February and March to raise funds in euros . Goldman also demonstrated strong execution capabilities in the challenging space of leveraged buyouts. The bank was the lead underwriter on the bond deal backing the US$5.3bn acquisition of business data integration provider Informatica by Permira and the Canada Pension Plan Investment Board. The Triple C-rated US$650m eight-year non-call three issue was priced at 7.125%, which was the tightest yield ever achieved by a software LBO since the financial crisis, and well inside the initial 7.5% area whispers. The deal was also priced 125bp inside a similar LBO bond for security software company Blue Coat, which had cleared the market two weeks earlier and had a similar leverage profile. Goldman also successfully pushed through the market LBO bonds for fitness company Lifetime – a debut issuer – and fuel tanker company Kenan Advantage. The former tapped the high-yield market at a time of heightened concerns around health club businesses and was marketed as one of its close competitors saw its bonds plunge by 15–20 points after posting disappointing results. The latter managed to execute its transaction in the middle of the Greek bailout discussions and was able to tighten pricing on its offering even as other issuers opted to sit out the volatility in the market. Struggle Some of the bank’s other deals admittedly faced an uphill battle to clear the market, especially in the second half of the year, when conditions worsened. Concordia, for example, had to fight against a wave of negative headlines surrounding the pharmaceutical sector amid a political uproar regarding pricing practices and accusations that Valeant had been artificially inflating its revenue figures. Investors who had bought the Concordia bridge eventually ended up holding the bag when the bond could not be priced at market levels. In the troubled energy s