Operator of Ireland’s most expensive school signs €2bn leveraged loans deal

Nord Anglia Education, the London-based private school operator which runs the most expensive school in the State, raised about €2 billion of debt on Thursday.

The deal could help pave the way for prospective loan deals by other issuers, and tests a pickup in market sentiment. Nord Anglia Education did not respond to requests seeking comment.

The funding is meant to refinance existing debt falling due next year and comes in the form of two term loans worth €1.5 billion and $610 million (€560 million), maturing in 2028, the term sheet showed.

Nord Anglia Education runs dozens of schools around the world, including one in Leopardstown in south Dublin. Tuition fees start at just over €18,000 per year, rising to about €27,000 for students in the equivalent of sixth year, according to its website. The group overall generated more than $1 billion in net revenue and an operating profit of $179 million in the year to August 2021, according to its latest UK accounts.

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The business was taken off the stock market in 2017 by Canada Pension Plan Investment Board and Baring Private Equity Asia, now part of buyout group EQT.

The underwriting banks – led by Deutsche Bank, HSBC and JPMorgan – sold the loans to investors at 98 cents on the dollar, up from the much steeper discounts seen in deals last year.

The euro loan pays 475 basis points (bps) over the benchmark euro area money market rate, while the dollar loan pays 450 bps above the benchmark US money market rate.

A source close to the matter said Nord Anglia had previously paid 325 bps over the benchmark, which is subject to interest rates hikes by central banks.

Demand for riskier assets such as leveraged loans weakened last year in the face of geopolitical and macro headwinds, but with sentiment improving, firms are once again trying to entice investors in with attractive terms.

The Nord Anglia Education syndication kicked off in the second week of January, making it the first major European leveraged loan transaction of 2023.

The deal tests market sentiment due to its sheer size, but the specifics of the credit make it hard to extrapolate conclusions for future deals.

Despite growing momentum in leveraged loan activity, riskier issuers are expected to continue to struggle to sell new debt for the time being. – Reuters