Citrix Systems term loan B continues to slide, could impact Brightspeed syndication

By Sara Rosenberg

New York, Sept. 22 – Citrix Systems Inc.’s (Tibco Software Inc.) term loan B continued to slide in trading on Thursday with some suggesting that both general market heaviness and some deal specific items were to blame.

With Citrix’s term loan B now trading below its original issue discount, some sources believe syndication of Brightspeed’s (Connect Holding II LLC) term loan B could be negatively affected and lead to a wider issue price.

In other news, Latam Airlines joined this week’s primary calendar with plans to bring a new term loan B to market.

Citrix weakens

Citrix Systems’ $4.05 billion 6.5-year term loan B dropped to 89¼ bid, 90¼ offered from 90 7/8 bid, 91 1/8 offered on Wednesday, according to one trader, while a second trader had the loan at 89¾ bid, 90¼ offered, down from 90 5/8 bid, 91 1/8 offered in the prior session. Another trader remarked that he saw $10 million of the loan trade at 89¼. On Tuesday night, the loan broke for trading at 91¼ bid, 91¾ offered.

The trader said that with a break like Citrix, this slight softening was to be expected. He explained that the bonds came lower and there was a little whipsaw in the market for the name.

Also, the overall heavy tone in the secondary market was likely a factor as well, the trader added.

Pricing on the U.S. term loan B is SOFR+10 basis points CSA plus 450 bps with a 0.5% floor and it was sold at an original issue discount of 91. The debt has 101 soft call protection for one year.

Citrix is a Fort Lauderdale, Fla.-based provider of secure, unified digital workspace technology.

Brightspeed in focus

Syndication of Brightspeed’s $2 billion seven-year term loan B could be impacted by Citrix’s new loan trading below its original issue discount as well as by what some view as a risk not worth taking at current price talk.

One source said that although he has no color on how the book is filling out on Brightspeed, he thinks the deal “is an easy pass.”

“It’s priced wrong for the risk. Some risks include take rates at the presumed pricing in the very rural areas they own, decline rates in their existing business, future financing needs, increased competition, and a sponsor that many are wary of, all with more leverage than the similar Frontier story,” the source continued.

He also remarked that the way Citrix is trading in the secondary may be a “headwind”, explaining that there was an offer down 1.25 from OID this morning on Citrix.

“My vague guess as to where this might appeal to enough people would be high 80s,” the source added.

Current talk on the term loan B is SOFR+10 bps CSA plus 500 bps with a 0.5% floor, an original issue discount of 92 and 101 soft call protection for six months.

Commitments are due at 5 p.m. ET on Sept. 29.

Brightspeed leads

BofA Securities Inc., Barclays, Goldman Sachs Bank USA, Mizuho, BNP Paribas Securities Corp., MUFG, Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC, BMO Capital Markets Corp., Citigroup Global Markets Inc., Morgan Stanley Senior Funding Inc. and RBC Capital Markets are leading Brightspeed’s loan.

In addition to the term loan B, the company’s $3.6 billion of credit facilities (B2/B-) include a $600 million revolver and a $1 billion term loan A.

Proceeds will be used to help fund the acquisition of Lumen Technologies’ incumbent local exchange carrier business in 20 states by Apollo Global Management Inc. for $7.5 billion, with the acquired business being named Brightspeed.

Other funds for the transaction will come from $1.865 billion of seven-year senior secured notes that are expected to price late in the week of Sept. 26.

Closing is expected early in the fourth quarter, subject to customary conditions.

Brightspeed is a Charlotte, N.C.-based provider of broadband and telecommunications services.

Latam readies deal

Latam Airlines set a lender call for 11:30 a.m. ET on Friday to launch a $750 million term loan B (B2), a market source remarked.

Goldman Sachs Bank USA, JPMorgan Chase Bank, Barclays, BNP Paribas Securities Corp. and Natixis are leading the deal that will be used with $750 million of senior secured notes due 2027 and $750 million of senior secured notes due 2029 to repay existing debtor-in-possession facilities in connection with the company’s emergence from bankruptcy and for general corporate purposes.

Latam Airlines is a Santiago, Chile-based airline.

Fund flows

In more happenings, Wednesday’s actively managed loan fund flows were negative $110 million and loan ETFs were negative $35 million, sources said.

Leveraged loan funds are expected to post their largest outflow in two months, sources added.

The tracking estimate for Thursday night’s weekly Lipper numbers for loans are outflows totaling $1.18 billion.

Loan indexes

IHS Markit’s iBoxx loan indexes declined on Wednesday, with the Leveraged Loan indexes (MiLLi) closing out the day down 0.08% and the Liquid Leveraged Loan indexes (LLLi) closing out the day down 0.08%.

Month to date, the MiLLi is down 0.57% and year to date its down 2.02%. The LLLi is down 0.79% month to date and down 3.19% year to date.

Average secondary market bids in the U.S. on Tuesday were 93.43, down 0.03% from the previous day and 3.53% year to date.

According to the IHS Markit data, some of the top advancers on Wednesday were Diamond Sports/Sinclair/Regional Sports’ March 2022 first priority term loan at 96.58, up from 94.03, Liftoff Mobile/Vungle’s September 2021 covenant-lite term loan B at 65.50, up from 64.10, and Heritage Power’s July 2019 term loan at 35.98, up from 35.61.

Some top decliners on Wednesday were Electronics for Imaging’s July 2019 covenant-lite term loan at 81.67, down from 84.19, Hearthside Food’s June 2020 incremental covenant-lite term loan B-3 at 89.31, down from 92, and Prince International/Chromaflo/Ferro’s April 2022 covenant-lite term loan B at 83.25, down from 85.65.

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