The leveraged finance markets appear to be taking the unprecedented downgrade of U.S. debt in stride. Far from shutting down, industry practitioners said, markets have quickly started to factor in what is essentially a "political gridlock" discount.

There were some hiccups for sure, such as financings for Immucor Inc. in the U.S. or Securitas Direct AB in Europe, though these eventually pushed through at higher interest rates. Similarly, pricing for middle-market loans rose before closing, but the financings closed nonetheless. New issues remain a possibility, though if these can wait, sponsors will likely delay them until after Labor Day.

"Hopefully, the political noise will be contained by then, and the sovereign issues will be on more solid ground," said a leveraged finance banker. "U.S. sovereign issues [are] affecting leveraged credit far more tangibly than" are Portugal, Italy, Ireland, Greece and Spain.

In terms of recent loans, the forward calendar in the U.S. is about $23 billion, 70% of which is underwritten, according to a Babson Capital Management LLC Market Update. "The volume could be a concern if volatile market conditions persist," Babson said. Recent loans coming to market may provide a better indicator of how credits will squeeze through and what they will look like going forward.

For one, price talk for the debt backing TPG Capital's planned $1.973 billion acquisition of blood test equipment maker Immucor came to 11.25%-11.5% for the $400 million bond component, and LIBOR plus 575 for the $600 million term loan, according to Standard & Poor's Leveraged Commentary & Data.

While it priced amid jittery markets, investors lined up for Immucor's loan, which was oversubscribed on Tuesday.

Price talk for the term loan represents a jump of at least a full percentage point, according to LCD. J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and UBS are the bookrunners for the loan.

Moreover, following reports that it was having trouble taking out its bridge loan supporting a $3.2 billion buyout by Bain Capital LLC and Hellman & Friedman LLC, Swedish alarm business Securitas successfully placed €393.5 million ($567.4 million) of mezzanine loans on Monday, according to a source familiar with the financing.

Morgan Stanley arranged the loan, the largest mezzanine deal in Europe to date. The loan replaces the underwritten unsecured bridge and is split between cash and paid-in-kind notes, according to the source.

This allows Securitas to pay down at least part of the interest by adding principal. The loan is priced at Euribor plus 375 basis points on the cash, and plus 675 basis points on the PIK over an eight-year term.

"This gives confidence that there are alternative financing markets available for leveraged buyouts, despite the volatility," the source said.

The deal for Securitas was managed by Morgan Stanley alongside Goldman, Sachs & Co., Bank of America Merrill Lynch, Nordea Bank AB, Nomura Bank International plc, HSBC Holdings plc, MezzVest and Partners Group Holding AG. The mezzanine syndicate included five investors with mandated lead arrangers of MezzVest and Partners Group.

In many ways the current environment is not atypical of August. New issuance in European markets is nil and no new high-yield issues have priced since the downgrade. Babson said it expects the calendar to remain dormant until the broader markets stabilize.

"I think timing was good, heading right into the August doldrums, so there's not a lot of deals that had to get done before Labor Day," said the leveraged finance banker.

"At the moment, everyone's hit the pause button. If the supply and demand of new senior secured corporate loan issuance were to continue like it had, that would have indicated a turning point in the M&A cycle," said Peter Gleysteen, CEO of senior secured corporate loan asset manager CIFC Corp.

From an investing standpoint, he said, prices and yields are "superattractive." For issuers, though, it's a "lousy time to borrow."

In the middle market, garage door maker C.H.I. Overhead Doors, which Friedman Fleischer & Lowe LLC is buying from private equity firm JLL Partners Inc. for about $290 million, priced its first-lien loan at LIBOR plus 575, up from 525, with an original issue discount of 98 instead of 99, making it more expensive for the issuer. It was arranged by GE Capital Corp. and Wells Fargo & Co.

"That's sort of where the market's moving," said Ropes & Gray LLP corporate finance attorney Steven Rutkovsky. "It's definitely moved dramatically from where we were two weeks ago."

CIFC's Gleysteen and others expect new issuances to return in September. LCD showed how the average new-issue clearing yield for first-lien loans has risen to 7.79%, the highest reading since August 2010.

The collateralized loan obligation market, which has yet to bounce back to a meaningful level, may be the biggest casualty. Year to date, $8.23 billion in CLOs have been printed in the U.S., double last year's, and predictions for 2011 were as high as $20 billion. But at just $10 billion to $15 billion so far, "that isn't that material for leveraged finance at all; that's just a drop in the bucket," Gleysteen said.