Leveraged buyouts spurred $20.9 billion in new lending in November, making it the busiest month this year as companies tapped the loan market to finance acquisitions of Birds Eye Foods Inc. and a Northrop Grumman Corp. unit.
Blackstone Group LP’s Pinnacle Foods Finance LLC said it will back its purchase of Birds Eye, the largest U.S. frozen- vegetable company, with as much as $1.17 billion of debt, according to a regulatory filing. Banks led by Barclays Capital and Deutsche Bank AG are raising as much as $690 million in loans to back KKR & Co. and General Atlantic LLC’s buyout of Northrop’s government-consulting unit, according to a person familiar with the matter.
Lenders have arranged about $36.8 billion of U.S. syndicated loans in the past two months, more than any other quarter in 2009, as the value of announced takeovers more than tripled in November from the previous month, according to data compiled by Bloomberg.
Leveraged loans have outpaced equities this year, with prices reaching the highest in a month on Wednesday.
“Loan market financing was a centerpiece of LBO financing over the last few years, and this seems to be a return to circa 2006-, 2007-type activity,” Chris Garman, president of Orinda, Calif.-based Garman Research LLC, said in a telephone interview.
The S&P/LSTA U.S. Leveraged Loan 100 Index, which tracks the 100 largest dollar-denominated first-lien leveraged loans, has recorded a total return of 46.25 percent this year as of Wednesday.
Total returns reached 47.07 percent on Oct. 26, an all- time high since the inception of the index in January 2002, according to data provided by Standard & Poor’s.
