Madison IAQ continues to weaken; Citrix Systems rises slightly; GoDaddy holds steady

By Sara Rosenberg

New York, Oct. 24 – Madison IAQ LLC’s term loan was a little lower in trading on Monday on the back of a ratings downgrade by Moody’s Investors Service last week, and Citrix Systems Inc.’s (Tibco Software Inc.) term loan was a touch higher.

Meanwhile, GoDaddy Inc.’s recently priced term loan B was unchanged in a secondary market that was described as generally flat with extremely light trading volume.

Madison IAQ dips

Madison IAQ’s term loan was quoted at 90¾ bid, 91¾ offered on Monday by one trader, down from 92¾ bid, 93½ offered prior to the ratings downgrade by Moody’s on Friday. A different trader had the loan quoted on Friday at 91 bid, 92 offered post downgrade news.

On Friday, Moody’s cut Madison IAQ’s term loan rating to B2 from B1 and the corporate family rating was dropped to B3 from B2.

Moody’s said the ratings downgrade reflects the company’s failure to reduce its very high financial leverage following the acquisitions of Nortek Air and Big Ass Fans LLC in 2021.

Moody’s expects Madison IAQ’s earnings to contract in 2023 as demand is expected to decline within the residential and commercial markets. This is anticipated to result in modest amounts of free cash flow generation and little debt retirement above the scheduled amortization on the first-lien term loan, keeping debt/EBITDA above 7.5x.

Madison IAQ is a Chicago-based provider of indoor air quality solutions.

Citrix better

Although the general market felt relatively unchanged, Citrix’s term loan B was a little stronger with levels quoted at 89¾ bid, 90½ offered on Monday, up from 89 5/8 bid, 90 3/8 offered at the end of last week, according to a market source.

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

GoDaddy unchanged

GoDaddy’s $1.77 billion seven-year term loan B-5 (Ba1/BB) continued to be quoted at 98¼ bid, 99¼ offered on Monday, in line with where the debt broke for trading on Friday, a trader remarked.

Pricing on the term loan is SOFR plus 325 basis points with a 25 bps step-down at 1.45x net first-lien leverage and a 0% floor. The debt was sold at an original issue discount of 98 and has 101 soft call protection for six months.

During syndication, the pricing was step-down was added to the term loan and the discount was tightened from 97.5.

RBC Capital Markets, BNP Paribas Securities Corp., HSBC Securities (USA) Inc., Morgan Stanley Senior Funding Inc., Wells Fargo Securities LLC, JPMorgan Chase Bank, Barclays, Deutsche Bank Securities Inc. and Goldman Sachs Bank USA are leading the deal that will be used to refinance an existing $1.77 billion term loan B due 2024 priced at Libor plus 175 bps with a 0% Libor floor.

The company is also getting a $1 billion revolver due in 2027 to replace its existing $600 million revolver.

GoDaddy is Tempe, Ariz.-based provider of web hosting and domain names.

Fund flows

In other news, actively managed loan fund flows on Friday were negative $117 million and loan ETFs were negative $33 million, according to market sources.

Outflows for loan funds year to date total $3 billion.

High yield ETFs inflows on Friday were $1.16 billion and actively managed high-yield funds flows were negative $50 million, sources added.

Loan indices soften

IHS Markit’s iBoxx loan indices softened on Friday, with the Leveraged Loan indexes (MiLLi) closing out the day down 0.11% and the Liquid Leveraged Loan indices (LLLi) closing out the day down 0.20%.

Month to date, the MiLLi is up 0.66% and year to date its down 3%. The LLLi is up 1.01% month to date and down 3.83% year to date.

Average secondary market bids in the U.S. on Friday were 92.39, down 0.08% from the previous day and down 4.61% year to date.

According to the IHS Markit data, some of the top advancers on Friday were AMC Entertainment’s April 2019 covenant-lite term loan B at 70.19, up from 68.81, Genesis Care’s March 2020 U.S. covenant-lite term loan B at 35.10, up from 34.80, and Filtration Group’s March 2018 U.S. covenant-lite term loan at 97.54, up from 96.81.

Some top decliners on Friday were Cineworld’s February 2018 U.S. covenant-lite term loan at 24.81, down from 28.33, Capital Vision/MyEyeDr’s August 2019 covenant-lite term loan at 76.75, down from 83.94, and Lucky Bucks’ July 2021 covenant-lite term loan at 71, down from 73.40.

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