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August 2, 2017

Written by Dealogic Fixed Income and Fees Research

Higher share of refinancing and amendment revenue

Revenue generated from non-IG debt in EMEA and the Americas so far this year stands at $9.5bn, the highest YTD figure since 2014 and up by 26% year-on-year. Refinancings and amendments, which dominated volume for fixed income so far this year, accounted for 22.8% of the total wallet for non-IG deals, and their revenue increased by 36% since 2016 YTD. The market is currently in the midst of a refinancing cycle (with activity reaching 1,161 deals in 2017 YTD), which has been accelerated by the fall in both coupons and margins by 8.5% and 12.1%, respectively. In the current environment, outstanding debt will provide ample fee-generating opportunities.

Debt and opportunity concentrated in telecom

The maturity wall for non-IG debt will peak in 2021, which translates into $543.7bn of debt coming due that year. Of the total debt due to mature before 2027, loans account for 54.8% and bonds 45.2%. Outstanding debt is concentrated around three industries: telecom, oil & gas, and healthcare, with a total of 32.9% by volume. In parallel, the top five non-IG fee payers since 2015 have been within the telecom, technology, and healthcare sectors. Outstanding debt from these top five fee payers peaks a year later than for all outstanding debt, and together, they account for 7.3% of all debt due to mature in 2022.

Revenue potential from the maturity wall

Based on all outstanding debt, the top five fee payers alone are expected to generate $2bn+ in fees. Among these top five, telecom companies lead the way with an expected $1.3bn in fees. In particular, Next LP accounts for 41.2% of the projected fee pool from the top five corporates. On a deal level, notable fee-generating opportunities to watch out for are Numericable-SFR’s $5.2bn high-yield bond due in 2026 and Altice’s $10.6bn leveraged loan due in 2022.


Data source: Dealogic, as of August 1, 2017

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