K2 Insurance Services has joined the growing list of companies looking to reduce borrowing costs by swapping private credit debt for leveraged loans by initiating $500m refinancing deal, according to a report by Bloomberg.
The report cites unnamed sources familiar with the matter as confirming that the deal, led by JPMorgan Chase & Co, aims to replace the existing privately placed debt and fund a dividend payout.
The refinancing package includes a $440m loan set to mature in 2030, which constituted the bulk of last year’s lending, with the price guidance for the new loan reportedly a margin of 3.75 percentage points above the Secured Overnight Financing Rate (SOFR), offered at 99.5 cents on the dollar. In contrast, the current debt package carried a spread of 6.75 percentage points and was initially issued at 97 cents.
JPMorgan and HPS Investment Partners led the original private credit deal, while private equity firm Warburg Pincus & Co, which owns K2, declined to comment on the refinancing initiative.
Other private equity-backed firms, such as Circor International Inc and Alegeus Technologies, have recently sought similar refinancing strategies.
Loan issuance has reached record levels this year, driven by a surge in repricings and refinancings. In response, direct lenders have been adjusting their terms to remain competitive, offering features like payment-in-kind and delayed-draw term loans, which are difficult to execute in the syndicated loan market. Recently, more than 20 private credit lenders collaborated on a $3.2bn debt package to support the buyout of Smartsheet Inc.
