Blackstone buys Spanish gaming company Cirsa's PIK notes

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EMEA
Eleanor Duncan

Blackstone has bought back a large chunk of PIK toggle bonds issued by its portfolio company, Spanish gaming company Cirsa, causing the price of the bonds to surge in secondary.

The notes, the 7.25% October 2025s, jumped 10 points in secondary to 50 bid on Wednesday, up from 40 the previous day, according to MarketAxess data. The bond was seen bid as low as 30 on May 22.

Funds managed or advised by Blackstone acquired around €120m of the outstanding €400m senior secured PIK toggle bonds due 2025, issued by Cirsa subsidiary LHMC Finco 2, through "open market purchases and individually negotiated transactions", according to a quarterly report.

One high-yield investor said the note repurchase was a sign that Blackstone was "massively supporting" its portfolio company Cirsa.

"It's very good signalling," said the investor. "They are effectively increasing their equity ownership."

A source familiar with Blackstone said the private equity company is putting more money in to support the portfolio company and to support its balance sheet.

The source said the debt repurchase didn't use any money from Cirsa itself, and that Blackstone was providing liquidity at a time when it is scarce elsewhere in the market.

Sources speculated that Blackstone might eventually buy back the entire bond.

The PIK toggle bond, issued in September, was a contentious instrument at the time. The debt was issued by Cirsa in order to pay a dividend to its owner Blackstone.