Banks including JPMorgan Chase and Credit Suisse have started selling some of the debt that got stuck on their books during the pandemic, as Europe’s credit markets continue to rally.
When the coronavirus hit, debt markets ground to a halt, leaving banks holding on to loans they had planned to trade. In recent weeks, however, as investors return to the market, bankers have felt confident enough to launch some deals for syndication. 
Among them, offerings from French medical diagnostics firm Biogroup-LCD and Dutch equipment-rental company Boels Verhuur BV.
The pickup in issuance comes as bankers have advised borrowers to take advantage of the increased appetite for risk. Underwriters in Europe have been stuck with about $13bn of M&A-related debt since the crisis hit, part of which contributed to first-quarter write-downs at several banks. Representatives for JPMorgan in Europe and Credit Suisse declined to comment on the recent offerings.
European investors saw their first major private equity deal since the start of the coronavirus pandemic this week with the 3bn euro ($3.3bn) proposed acquisition of Spanish phone carrier Masmovil.
Meanwhile BMC Software Inc’s $1.35bn cross-border bond issue last month to fund its purchase of Compuware Corp. also highlighted how conditions are easing. 
The transaction was upsized by $100mn and both the dollar and euro tranches have priced at the lower end of initial guidance.
“All of this is very encouraging because it means that deals can be done,” Allen & Overy LLP partner Jonathan Brownson, who advises lenders on financings, said. “Most importantly for borrowers, they’ve got a bond market that will accept certain credits and a loan market where we are seeing an appetite for underwritten debt, which we haven’t seen for a while.”
Bankers are even mulling the launch of the 8.3bn euro financing behind the acquisition of ThyssenKrupp AG’s elevator unit as soon as this month, Bloomberg has reported. ThyssenKrupp’s offering would be among the largest to hit Europe’s leveraged finance market this year.
“The picture is definitely improving, the real test will be the larger-cap LBOs,” said Ben Thompson, head of JPMorgan’s EMEA leveraged finance capital markets.
To be sure, banks agreed to the terms of these deals before the pandemic struck and they now face the challenge of unloading their exposure to investors who are still hesitant to add risk. Offerings now in the market are coming at a price. Investors are analysing Boels’ 985.5mn euro term loan, which has been downsized from 1.6bn euro initially and is being marketed at 92 to 93 cents on the euro, a large discount from the 99.5 level when it initially launched in late February.
Meanwhile, the 274.7mn euro loan from Biogroup-LCD is being offered at 96 cents on the euro, down from 99 cents back in March.
Lenders are due to commit to both deals in the coming days. Meanwhile, a 725mn euro loan from French insurance broker Financiere CEP Group has priced at the tight end of price talk amid strong investor demand. The financing supports Bridgepoint’s acquisition of the company.
Biogroup-LCD didn’t return requests for comment while Boels and Bridgepoint declined to comment.