US telecoms reach highest debt volume YTD

Favorable market conditions, speculation on relaxed regulations, and a slew of debt maturing in the near future have all contributed to a surge of debt activity in the US telecom space. Volumes total $55.9bn in 2017 YTD, with $18.7bn in bonds, the highest since 2013 ($19.5bn), and record-high loans of $37.3bn. While the US loan market in 2017 YTD ($209.6bn) is down 13% compared to last year, telecoms have bucked the trend with a 225% increase (of $25.8bn) — marking the largest increase and highest total volume of any sector.

Leveraged loans lead the way for telecoms

Telecoms are traditionally dominated by leveraged loans and 2017 looks to be no exception, with a majority of YTD loans consisting of leveraged transactions (71.9% or $26.8bn). This equates to 16.7% of the total leveraged loan market share YTD, the highest percentage since 2003 (18.9%).

Telecom refinancing

Loan refinancings total $10.7bn YTD (33% of telecom debt volume), with Ziggo’s $4.9bn deal at the top. In the same period, $13.6bn of telecom loans were acquisition-related, with Verizon’s $5.5bn loan for acquiring Yahoo! and Nexstar’s $3.0bn deal for Media General, which both rank in the top five loans in 2017. Looking into the future, $199.5bn in loans are expected to mature in the next 5 years. In conjunction with expectations of relaxed regulations from the incoming Federal Communications Commission (FCC) chairman, this suggests a steady pipeline in the sector can be expected for the remainder of the year.

Data source: Dealogic, as of February 21, 2017