U.S.
Fig. 1: US: ABL Volume & Deal Count Record ABL issuance completed in 2021
asset-based lenders had an extraordinarily busy year in 2021, pushing a record US$125bn through retail syndication by mid-December to eclipse the prior market high of US$101bn set in 2011 (Fig. 1). “The market is about as MARIA C. DIKEOS hot as it has been since the Director of Analytics, financial crisis,” said one Refinitiv LPC arranger. “We are pitching aggressively and we are seeing others come in and throw their balance sheets around to pitch aggressively.”
Fig. 2: US: ABL Volume, New Money & Refinancings New loan assets represent 27% of total ABL volume; Set record for dollars raised
“We looked at 23.6% more deals in 2021 than in 2020,” said another lender. Year over year, issuance was up over 72.5% amid what many refer to as a “COVID bump.” Almost US$30bn of assetbased lending (ABL) volume was completed in 1Q21, an 84.5% jump compared to the same time last year and the strongest quarterly results in almost three years. Borrowers and lenders built on the strong momentum each of the next two quarters to shatter previous quarterly records in 3Q21 via roughly US$47bn of issuance. “From an ABL perspective,” said one arranger, “we knew at this time last year that we would see a market that was basically fully recovered, operating at pre-pandemic levels. By October and November 2020, we had already walked back floors and the richer pricing.”
All About the Refi Most of the momentum in the ABL market can be traced to refinancings. Just over 11 months into 2021, more than US$91bn, or 73% of asset-based loan volume, represented some sort of refinancing activity, the highest pro rata share of the market in four years (Fig. 2).
Fig. 3: US: ABL Estimated Maturing Volume Maturities pushed out to 2026
It all came down to timing and appropriate – often bundled – deal structures. Several issuers sought to reprice or restructure COVID liquidity facilities that were put in place, amended for financial flexibility or drawn in 2020, making them more permanent or regular way (Abercrombie & Fitch, Dillard’s Inc.). Other vintage borrowers who were not able to comfortably tap the capital markets during the height of COVID uncertainty returned in 2021 for extension trades and repricings often with terms reminiscent of pre-COVID structures. Levi Strauss tapped the market in January with an US$850m five-year ABL credit that refinanced its 2017 facility, pushing maturity out five years to 2026 and retaining existing spread levels of 150bp over LIBOR.
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THE SECURED LENDER JAN/FEB 2022
Source: Refinitiv LPC