Key Takeaways
- • ABS East in Miami Beach drew more than 7,000 corporate credit professionals, with insurance capital seeking high-grade securitized debt as credit investing has had an epic year led by hundreds of billions of dollars raised for data centres.
- • Musk has said Tesla and SpaceX set up special committees of independent directors to study a potential $3.6tn merger, which he cannot be involved in given his roles at both companies.
- • The Institutional Limited Partners Association (ILPA) issued new guidance on continuation fund deals, urging LP advisory committee members to arrive fully prepared and to challenge buyout firms.
- • Concerns over CoreWeave's credit have intensified, with its credit default swap prices surging and unsecured bonds trading at distressed yields at or above 15 per cent.
- • The FT's Due Diligence newsletter reported that CVC is exploring a bid for Verisure and LSEG is nearing a $3.5bn deal to acquire Octus from Permira.
Summary
The corporate debt market showed no sign of slowing at this week's ABS East conference in Miami Beach, where more than 7,000 people from the corporate credit world gathered. The conference, whose tagline is "Eat. Sleep. Securitize. Repeat.", featured active buy-side and sell-side dealmaking, and the Financial Times reported that insurance companies were particularly eager for high-grade securitized paper. One representative from a major life insurer said the firm had billions of dollars in excess money to deploy annually and had dozens of meetings scheduled with firms including Apollo, Blackstone and KKR.
The backdrop is a record year for credit investing, driven by hundreds of billions of dollars raised to finance data centres. The FT has reported that concerns about over-leverage, inflated compute demand and circular financing structures have intensified this month. CoreWeave, a neocloud operator, has seen its credit default swap prices surge, while its unsecured bonds have reached distressed yields at or above 15 per cent.
Elsewhere, Elon Musk said Tesla and SpaceX have each set up special committees of independent directors to evaluate a potential merger valued at $3.6tn, which would be the largest ever. Musk, the key shareholder and executive of both companies, has said he cannot take part in the talks but called a merger "a good idea". Analysts cited by the FT estimated that joint chip development could save a combined group more than $1tn over the long term. Musk controls about 84 per cent of SpaceX votes through super-voting shares, compared with roughly 20 per cent at Tesla. Any transaction would require approval from regulators in the US, EU, UK and China, as well as shareholders.
In private equity, the Institutional Limited Partners Association published new guidance on continuation fund transactions, in which buyout firms sell holdings to vehicles they manage. The guidance targets limited partner advisory committees, urging members to arrive "fully prepared for meetings" and to have the experience to challenge the manager, and it highlights potential conflicts where an LP's secondaries business invests in the continuation vehicle.
Other deal news included a report that CVC is exploring a bid to take Verisure private, a year after Hellman & Friedman took it public, and that LSEG is nearing a $3.5bn acquisition of credit specialist Octus from Permira.
The backdrop is a record year for credit investing, driven by hundreds of billions of dollars raised to finance data centres. The FT has reported that concerns about over-leverage, inflated compute demand and circular financing structures have intensified this month. CoreWeave, a neocloud operator, has seen its credit default swap prices surge, while its unsecured bonds have reached distressed yields at or above 15 per cent.
Elsewhere, Elon Musk said Tesla and SpaceX have each set up special committees of independent directors to evaluate a potential merger valued at $3.6tn, which would be the largest ever. Musk, the key shareholder and executive of both companies, has said he cannot take part in the talks but called a merger "a good idea". Analysts cited by the FT estimated that joint chip development could save a combined group more than $1tn over the long term. Musk controls about 84 per cent of SpaceX votes through super-voting shares, compared with roughly 20 per cent at Tesla. Any transaction would require approval from regulators in the US, EU, UK and China, as well as shareholders.
In private equity, the Institutional Limited Partners Association published new guidance on continuation fund transactions, in which buyout firms sell holdings to vehicles they manage. The guidance targets limited partner advisory committees, urging members to arrive "fully prepared for meetings" and to have the experience to challenge the manager, and it highlights potential conflicts where an LP's secondaries business invests in the continuation vehicle.
Other deal news included a report that CVC is exploring a bid to take Verisure private, a year after Hellman & Friedman took it public, and that LSEG is nearing a $3.5bn acquisition of credit specialist Octus from Permira.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.