Credit desks at firms that include Barclays Plc and broker Market Securities LLC have been showing indications near 101 for both currencies on Merlin's upcoming euro and dollar loans. The sizes are €418 million and $396 million, and pricing runs on an "if and when issued" basis with the deals expected to print before year-end. In contrast, the company's €700 million secured bond maturing in June 2030 sits around 66 cents after sliding about 14 cents since the new funding was unveiled on Sept. 10.
When private loans and public bonds disagree on a company, one of them is wrong. Market Briefs covers credit markets free every weekday.
These new facilities sit pari passu with Merlin's existing senior secured debt, yet they carry additional liens backed by the London Eye and other UK assets that generate cash. If Merlin ends up in a default or a restructuring, that added collateral could leave these lenders better positioned on recoveries than holders of existing securities.
A small group of funds is supplying the financing, with a slice reserved for existing lenders to take part. The financing package is designed to take out Merlin's $830 million in unsecured bonds that mature next year. Spokespeople for Merlin, Barclays and Market Securities said they had no comment.
The broader backdrop is not ideal: the Legoland owner is contending with softer earnings and higher costs, and, per its latest quarterly update, waning consumer confidence in the UK has pressured visitor numbers at some attractions. For your wallet, the split pricing signals how much investors will pay up for stronger collateral, and how vulnerable lower-ranking debt can be when operating headwinds pick up.
That gap is one of the most useful signals in private credit right now. Join Market Briefs free and follow the divergence.
