A unit of Nomad Foods Ltd., the frozen-food maker backed by entrepreneurs Martin E. Franklin and Noam Gottesman, has increased the size of a loan it’s seeking to fund the acquisition of Findus Group Ltd.’s continental European business.
Iglo Foods Holdings Ltd. raised the size of its term loan due June 2020 by 40 million euros ($46 million) to 325 million euros, according to a person familiar with the talks, who is not authorized to speak publicly and asked not to be identified. Proceeds from the deal will help fund London-based Nomad’s 500 million-pound ($772 million) Findus purchase.
Nomad has turned to the loans market at a time when surging volatility deters borrowers from seeking funds through bond sales. Speculative-grade debt issuance in euros has dried up this month, according to data compiled by Bloomberg, with Standard & Poor’s blaming the paralysis on a slowdown in the U.S. junk debt market.
“In the loan market, people are more confident about putting their money to work now as they can see attractive value for the long term,” said David Milward, London-based head of loans at Henderson Global Investors. “Given the daily liquidity offered by many bond-fund structures, they have to think a bit more short term. The risk in high yield is always that these are retail funds and you can see significant swings flows in and out of the market.”
A company spokeswoman couldn’t immediately comment on the loan when contacted by phone.
Iglo’s covenant-light debt will be priced at 400 basis points more than benchmark rates, the person familiar with the matter said. That compares with a 450 basis-point premium for the 500 million euros of June 2020 floating-rate notes issued by Iglo Foods Bondco Plc, which Nomad purchased in April, according to data compiled by Bloomberg.
The loan has been rated B1, or four levels below junk, by Moody’s Investors Service. S&P graded the debt one level higher at BB-.
High-yield bond funds attracted inflows of $2.6 billion in the seven days ending Oct. 14, the largest in eight months, Bank of America Merrill Lynch strategists wrote today, citing EPFR global data. The funds registered outflows in 10 of the previous 11 weeks.
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