Euro Junk Bond Market Suffers First Pulled Deal in Nearly a Year

Europe’s rejuvenated junk debt market just had a wake-up call, with the first shelved offering in almost a year.

(Bloomberg) — Europe’s rejuvenated junk debt market just had a wake-up call, with the first shelved offering in almost a year.

Specialist French retailer FNAC Darty SA halted a €300 million ($322 million) bond sale, saying market conditions are not attractive enough in a statement on Wednesday. It’s the first euro corporate junk debt sale to be pulled since House of HR in October 2022, according to data compiled by Bloomberg.

It’s a reality check for a market that’s seen a healthy run of deals so far this month. Five non-bank corporates including Banijay Entertainment SASU and Coty Inc. have priced nearly €2.5 billion in Europe’s high-yield market in September, reopening the market after six weeks with no deals.

“We find this withdrawal surprising, as the group appeared to have secured satisfactory financial terms, a level at which we were recommending a purchase,” Spread Research analysts led by Benjamin Sabahi wrote in a note to clients this morning. “The cancellation may be due to management having favored the loan market rather to the detriment of the bond market for cheaper financial costs.”

FNAC announced its offering on Tuesday, with pricing set the following day at a yield of about 5.625%, according to a person with knowledge of the sale, who asked not to be identified as the information is private. The company had planned to reduce the amount available in a delayed-draw term loan facility after issuing the bonds, but will now maintain the full €300 million amount in that credit line for refinancing May 2024 senior bonds, it said.

BNP Paribas SA, Credit Agricole CIB, Natixis SA and Societe Generale SA were global coordinators on the sale.

The next big test of the market will be the debt package funding GTCR’s purchase of a majority stake in payment processor Worldpay Inc., which includes $4 billion of secured debt across dollar, euro and pound-denominated notes, according to a separate person with knowledge of the plans.

Click here for a worksheet of this year’s delayed or pulled debt deals.

–With assistance from Jacqueline Poh.

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