Low-Rated Borrowers Tap Private Credit Over Cheaper Bank Debt

Junk-rated companies have been flocking to the broadly syndicated loan market to take advantage of lower interest rates to raise funding. But a handful of borrowers at the bottom of the rating spectrum are moving in the opposite direction: refinancing existing debt with private credit.

France-based Nemera Development SA and UK-based Constellation Automotive Group recently tapped private lenders to refinance their syndicated loans. Spanish amusement park operator PortAventura similarly refinanced existing debt with a direct loan from Macquarie Principal Finance, according to people with knowledge of the matter. All three were rated B3 by Moody’s Ratings, or six steps below ...