Financing packages arranged for companies backed by Australia’s Pacific Equity Partners (PEP) have been repriced higher, with banks increasing margins and adjusting maturities as investor appetite for leveraged debt shifts, according to a report by Bloomberg.
The report cites unnamed people familiar with the matter as revealing that underwriters have raised pricing on two proposed facilities — a AUD565m loan for education resources supplier Modern Star Holdings Bidco Pty, and a AUD310 million facility for hospital operator Healthe Care Australia Pty — by between 25 and 50 basis points.
In addition to higher spreads, the senior tranche of Modern Star’s financing has been shortened to five years from seven, reflecting reduced willingness among investors to lock up capital over longer durations in current market conditions.
The repricing highlights broader challenges facing syndicated loan markets, as global banks continue to work through a backlog of M&A-related leveraged debt while volatility persists amid geopolitical tensions, elevated energy prices, and inflationary pressures.
Although both transactions were initially underwritten, investors are now pushing for wider margins to compensate for perceived risk, the people said.
The adjustments take Modern Star’s senior tranche pricing to 425 basis points over the Bank Bill Swap Yield (BBSY), while Healthe Care’s facility has been lifted to 500 basis points over BBSY. The Modern Star deal is being underwritten by Barclays and UBS, while Standard Chartered and UBS are leading the Healthe Care financing.
Despite tighter conditions, Australia’s leveraged loan market remains active. Bain Capital is separately marketing a AUD430m facility linked to its acquisition of Perpetual Ltd’s wealth management arm, while tourism group Journey Beyond is also seeking AUD768m in debt financing.
Both Healthe Care and PEP reportedly declined to comment, while Modern Star did not respond to requests for comment.
