UK-based insurance broker Ardonagh Group Ltd. has secured a US$1.2 billion (approx. £0.96 billion) refinancing deal through Wall Street banks, marking another significant shift from private credit to the syndicated loan market.
The transaction involved a US$700 million leveraged loan and US$530 million in high-yield bonds, managed by Morgan Stanley, Bank of America Corp., and JPMorgan Chase & Co.
The move enables Ardonagh to partially refinance its existing private credit debt, benefiting from lower borrowing costs in the syndicated loan market. The US$700 million loan was priced at 3 percentage points over the Secured Overnight Financing Rate (SOFR), with a quarter-point reduction available if the company reduces its leverage.
This latest financing highlights growing competition between private credit providers and investment banks for deals, Bloomberg says. According to a December report from JPMorgan, in 2024 alone, approximately US$34 billion in broadly syndicated loans were refinanced by direct lenders, while US$30 billion in private credit loans shifted to banks.
Jeremy Burton, a portfolio manager at Pinebridge Investments, noted that banks are actively working to reclaim market share, aided by heightened demand from collateralized loan obligations (CLOs), which are the largest buyers of leveraged loans.
Burton added that banks are leveraging this demand to syndicate more transactions and attract borrowers like Ardonagh back to the syndicated market.
The report also noted that Ardonagh’s pivot to the public markets is not unprecedented. In February 2024, Morgan Stanley and Goldman Sachs Group Inc. redirected a significant portion of a multi-billion-dollar debt package for Ardonagh away from private credit.
At the time, the company’s US$3.3 billion private credit loan, led by Ares Management Corp., carried a spread of 4.75 percentage points over the US benchmark.
The competitive pricing of syndicated loans has become a key factor in these transitions. John McAuley, head of debt capital markets for North America at Citigroup Inc., remarked that the broadly syndicated market remains difficult to compete with on pricing when functioning effectively.
Burton noted that private credit’s flexibility allows it to serve a different purpose than traditional syndicated loans, which focus on pricing advantages. This underscores the distinct roles both markets play, with borrowers navigating between them based on cost, flexibility, and the specific terms of their financing needs.
For Ardonagh, the US$1.2 billion refinancing demonstrates its strategic shift toward optimising its capital structure while taking advantage of competitive conditions in the syndicated loan market.
As competition between private credit providers and investment banks continues, similar moves by other borrowers are likely to follow, further reshaping the financing landscape.
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