Moody’s cuts Nouryon’s Q4 estimates amid macro uncertainty and weak demand in construction markets
[AMSTERDAM] Speciality chemicals producer Nouryon has withdrawn a dual-currency leveraged loan deal worth around US$5.8 billion in the latest sign of investor unease in the frothy market for risky debt.
Singapore’s GIC and Carlyle Group-backed company was looking to push out its debt maturities by more than two years from April 2028, but shelved the deal amid concerns about higher costs in the chemicals sector, according to people with knowledge of the matter, who asked not to be identified because the transaction is private.
Representatives for Nouryon and Carlyle, as well as Goldman Sachs Group and JPMorgan Chase, the banks managing the deal, declined to comment.
The investor pushback comes as the leveraged loan market, which is coming off its best quarter ever, has had a flurry of deals launched to fund mergers and acquisitions in recent weeks, giving investors more lucrative alternatives than the torrent of repricing and refinancings that dominated the summer’s offerings.
This is the second deal within the chemical sector in the past week that has seen soft demand. The Chemours, a chemical maker that produces products including Teflon, priced a US$1.05 billion term loan on Oct 6, three days past its initial due date, but not before decreasing the size of the deal from US$1.55 billion, sweetening the terms for investors, and adding stringent lender protections, according to a different person with knowledge of the matter.
This also marks the seventh transaction to be yanked from the market since August, according to Bloomberg-compiled data. Among those was a US$6 billion refinancing for auto-part supplier First Brands Group, which has since filed for bankruptcy.
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Some deals tied to M&A have struggled too. MJH Life Sciences, a healthcare media company, was forced to sweeten the terms of a US$430 million loan to help finance its acquisition of a marketing firm, Bloomberg previously reported. A group of banks led by Banco Santander, meanwhile, will be forced to keep a portion of a US$2.7 billion financing to support an acquisition.
Nouryon had been seeking term loans of US$3.86 billion and 1.69 billion (S$2.5 billion) with margins of 325-350 basis points above the Secured Overnight Financing Rate for the US dollar tranche and 350 basis points over the Euro Interbank Offer Rate for the euro portion, with proceeds to be used to amend and extend previous debt by 2.5 years to October 2030 from April 2028.
The planned transaction was marginally credit positive because of the improved debt maturity profile, credit rating firm Moody’s said in a release on Sep 30.
Moody’s recently cut its fourth-quarter financial estimates for Nouryon due to ongoing macroeconomic uncertainties and weakness in certain end-markets, such as construction. That came after the credit agency said the chemical maker, which as a private company does not publicly report quarterly earnings, lowered its third-quarter financial guidance. Other end-markets for Nouryon include agriculture, paints and personal care products.
Nouryon, which has dual headquarters in Amsterdam and in Radnor, Pennsylvania, in March said its annual revenue dropped 1.1 per cent in 2024 to US$5.13 billion, mainly due to foreign exchange costs. The annual financial report also highlighted the company’s efforts to improve its liquidity profile through debt repricings and maturity extensions.
Carlyle filed confidentially for an initial public offering for Nouryon earlier this year, and was mulling a market debut in the second half that would potentially value the business at about US$13 billion, Bloomberg previously reported. The private equity firm and GIC originally agreed to acquire Nouryon from Akzo Nobel for 10.1 billion in 2018 – a deal that remains Carlyle’s largest in Europe. BLOOMBERG
