Alert February 21, 2013

Market Status on Repricing of Credit Facilities

The buyout pipeline is picking up and market talk is that the repricing window may start shrinking soon. Average repricing rates are currently considerably lower than rates under most existing credit facilities. As you consider the current market for transactions, attorneys in Goodwin Procter's Leveraged Finance Practice have prepared the following summary of key data points:

  • Considerable increase in repricing activity in Q1 2013  ($40B in January based on S&P reports).
  • Current average spread over LIBOR when repricing sub $600M/$500M middle market senior debt is around 3.25%-3.50% (some 3.75%) (industry, facility size/vintage and company rating/credit health also impact what’s available).
  • Repricing average levels for (similarly rated/healthy) larger facilities may be as low as L+2.75%-3.00%.
  • Softcall premium (at 101%) will most likely apply (or clock may be reset) if repriced facility gets further repriced/refinanced within a certain timeframe after closing, although many lenders are shortening softcall period to 6-10 months.
  • Fee in exchange for repricing applies.

Please contact us if you would like to discuss or receive more information:

Jennifer Bralower

Laura Rupenian

Mat Sibble