With primary syndication on leveraged loans and high-yield (HY) bonds stalling as Russia continues its war against Ukraine, eyes are veering towards coming issuance.

Heaps of dry powder are parked awaiting deployment, and auction activity is ongoing albeit at a slower pace, so that when primary activity resumes, the market is expected to accelerate rapidly.

The large-cap pipeline currently comprises auction processes for firms with estimated debt financing worth almost EUR 90bn, while the mid-market pipeline represents over EUR 9bn of expected debt.

Almost half of the deals in the pipeline are in the pre-launch phase; however, this leaves EUR 8.5bn in the large-cap space and EUR 9.6bn in the mid-market in the second round, and therefore in imminent need of financing.

Russian invasion crashes automotives activity

The services sector holds the largest amount of potential deal volume, with manufacturing, consumer and healthcare industries rounding out the top four for both large-cap and mid-market firms.

In times of high volatility, certain sectors are bound to flourish, while others decline. This crisis is having a disproportionally negative effect on the automotive supply chain because of disruption to companies making automotive components and assembling certain vehicles. There are currently no automotive deals in the pipeline, and none are expected given the ripple effect from the Russia-Ukraine war.

UKI driving large-cap pipeline

UKI firms lead the large-cap pipeline, with EUR 17.9bn in auction processes, while the DACH region has edged ahead in the mid-market pipeline at almost EUR 2bn. Nordic firms, while strong in a close second place in the mid-market race, have the lowest amount of expected debt in the large-cap pipeline.

The number of Nordic firms is highest in the mid-market space, and lowest in large-caps. Overall trends largely tally with the number of deals in each category.

The UKI region has five upcoming deals worth over EUR 1bn, boosting it into the largest region. One is in pre-launch, Motor Fuel Group, while three are in the first round: Playtech, Global Switch and Inspired Education. The final firm, Parkdean Resorts, is in exclusive talks.