Credit traders are quoting Merlin Entertainments Ltd.’s private loans far above the distressed prices of the leisure-park operator’s existing securities, reflecting the value investors place on debt backed by prized UK assets like the London Eye.
Traders at banks including Barclays Plc and broker Market Securities LLC are showing indicative prices of around 101 cents on the euro and dollar for the €418 million ($470 million) and $396 million tranches ahead of their expected issuance by year-end, according to the people.
By comparison, Merlin’s €700 million secured bond due in June 2030 is quoted at around 66 cents on the euro after falling about 14 cents since the new financing was announced Sept. 10, according to data compiled by Bloomberg.
The new loans rank alongside Merlin’s other senior secured debt but also carry additional claims over the London Eye and other cash-generative UK assets, according to the people. That could give holders higher recoveries if the company defaults or restructures, the people said.
Spokespeople for Merlin, Barclays and Market Securities declined to comment.
The debt was arranged to help refinance Merlin’s $830 million of unsecured bonds due next year. A small group of funds is providing the financing, with a portion reserved for existing lenders to participate.
The loans are being quoted on an “if and when issued” basis, the people added.
The refinancing comes as the Legoland owner battles weaker earnings and rising costs. In the UK, lower consumer confidence has hit visitor numbers at some attractions, according to its latest quarterly results.
Read more: Legoland Owner’s Bonds Tumble as Debt Fix Leaves Doubts