Air Methods deal caps shortened $3 billion week; Wednesday deals busy, funds off $348 million

By Paul Deckelman and Paul A. Harris

New York, April 13 – The high-yield primary market saw just one deal price on Thursday, closing out a holiday-shortened week which saw issuance fall from week-earlier levels, the second less busy week in a row.

Air Methods Corp., a provider of air medical transportation and air tourism services, priced a downsized $500 million calendar offering of eight-year notes.

That finished out a week which saw $2.95 billion of new dollar-denominated and fully junk-rated paper brought to market in seven tranches by domestic or industrialized country borrowers – the second straight week in which new issuance lagged behind the previous week’s totals, according to data compiled by Prospect News.

Traders did not immediately report any initial aftermarket activity in the new Air Methods bonds, noting that by the time the deal priced Junkbondland was already winding down its activity for the day, making an early exit ahead of Friday’s scheduled full market close in observance of the Good Friday holiday.

However, they did see a hefty buzz of business surrounding the four new issues which had priced during Wednesday’s session, particularly Tutor Perini Corp.’s eight-year deal, the clear volume leader.

They also noted considerable turnover in Wednesday’s offerings from Tennant Co., Endo International plc and SNF Floerger Group.

Statistical market performance measures turned mixed on Thursday after being lower across the board on Tuesday and again on Wednesday and mixed for five straight sessions before that.

Another numerical indicator – flows of investor cash into high-yield mutual funds and exchange-traded funds, which are considered a reliable barometer of overall junk market liquidity trends – turned modestly negative in the latest reporting week, failing to maintain the previous week’s strongly positive tone, according to numbers released on Thursday.

Some $348 million more left those weekly reporting-only domestic funds in the form of investor redemptions than came into them during the week ended Wednesday, April 12, in sharp contrast to last week’s $2.375 billion net inflow, the biggest gain so far this year (see related story elsewhere in this issue).

Air Methods downsizes

Air Methods priced a downsized $500 million issue of eight-year senior notes (Caa1/CCC+) at par to yield 8%.

The issue size was decreased from $560 million, with a $60 million shift of proceeds to the concurrent term loan. That loan is now $1.13 billion, up from $1.07 billion.

The reoffer price and yield printed on top of final talk. Earlier yield talk was 7½% to 7¾%.

Morgan Stanley & Co. LLC, RBC Capital Markets, Barclays, Jefferies LLC and Citigroup Global Markets Inc. managed the bond sale.

Proceeds will be used to help fund the buyout of the Englewood, Colo.-based provider of air medical transportation and air tourism by American Securities LLC.

Tempo roadshow starts Monday

Tempo Acquisition LLC (unsecured ratings Caa1/CCC+) plans to start a roadshow on Monday in Los Angeles for a $730 million offering of eight-year senior notes.

Proceeds are being used to help finance Blackstone Group LP’s acquisition of Aon plc’s technology-enabled benefits and human resources platform, which is currently part of Aon Hewitt.

The roadshow moves to New York City on Tuesday and Boston on Wednesday. The Rule 144A and Regulation S for life deal is set to price after that.

Barclays is the left bookrunner. BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Citigroup Global Markets, Macquarie Capital, Morgan Stanley & Co., Deutsche Bank Securities Inc., Goldman Sachs & Co., RBC Capital Markets and CIBC World Markets are the joint bookruners.

Autodis taps floaters

Autodis SA announced on Friday that it priced an €80 million add on to its Euribor plus 437.5 bps senior secured floating-rate notes due 2022 at 100.5.

Proceeds will be used to repay €36.0 million under its revolving credit facility agreement entered into on Oct. 26, 2016, and for general corporate purposes.

Week totals $2.95 billion

Thursday’s one pricing from Air Methods raised to $2.95 billion the amount of new dollar-denominated junk which was priced in seven tranches this week, according to data compiled by Prospect News.

That was well down from the $6.11 billion of such paper which priced in 12 tranches the previous week, ended April 7, and was the second consecutive week of declining new issuance.

The April 7 week’s totals, in turn, had been down from the $7.33 billion which had gotten done in 14 tranches the week before that, ended March 31.

This week’s primary activity raised year-to-date issuance for 2017 so far to $93.46 billion in 168 tranches – a little less than double the $47.74 billion which had priced in 68 tranches by this point on the 2016 calendar, the Prospect News data indicated.

Full-year issuance in 2016 finished at $226.78 billion in 359 tranches –which ran 12.9% behind the $260.02 billion which had gotten done in 408 tranches in 2015.

‘A fairly muted week’

A trader – reached shortly before the scheduled 2 p.m. ET market close Thursday that had been recommended by the Securities Industry and Financial Markets Association ahead of the Friday holiday – summed things up by declaring that “the market was fairly muted this week, between the [Christian pre-Easter and Jewish Passover] holidays and school vacations in many areas.

“That meant a lot of people were out of the office this week and lighter activity and trading volume.”

Tutor Perini trades actively

However, there were exceptions to that general statement, one of them being the new 6 7/8% notes due 2025 that Tutor Perini had priced in Wednesday’s session.

A trader said that the Sylmar, Calif.-based civil and building construction company’s new deal “was clearly the most active on the day,” seeing the notes hovering in a 101½ to 102 bid context.

A second trader also quoted those notes around 101½ bid, 102 offered.

At another desk, a market source pegged the bonds at 101¾ bid, which he called about unchanged on the day, with over $80 million having changed hands.

Tutor Perini had priced $500 million of the notes at par late Wednesday as a regularly scheduled forward calendar offering.

In initial aftermarket dealing after their pricing, the new bonds were quoted as shooting up to around 101½ to 101¾ bid.

Other Wednesday deals firm

A trader said that Wednesday’s other new deals had also been “fairly active” during Thursday’s session.

He saw Tennant’s 5 5/8% notes due 2025 around the 102 bid level, up about ½ point from where those bonds had finished Wednesday’s session, with over $50 million having traded.

Another trader saw the Minneapolis-based cleaning and resurfacing products and technology supplier’s new paper at 101 7/8 bid, 102 3/8 offered.

That was up from the par level at which that $500 million offering had priced following an investor roadshow and up as well from the 101½ bid level where the bonds had been quoted late Wednesday.

Specialty pharmaceuticals producer Endo International’s 5 7/8% senior secured notes due October 2024 were seen by a market source having edged up to around 101 5/8 bid Thursday, on volume of nearly $50 million.

Another market source located them trading in a 101 3/8 to 101¾ bid range – about unchanged from the 101½ area to which those bonds had firmed in their initial aftermarket dealing Wednesday after the $300 million 7.5-year issue – downsized from an originally announced $750 million – priced at par off the forward calendar.

And traders saw another Wednesday deal – French chemicals manufacturer SNF Floerger Group’s $500 million of 4 7/8% notes due September 2025 – also firming slightly on the day in brisk trading.

One saw them at the 100¾ bid level while a second called them up 1/8 point on the day at 100 5/8 bid, with about $18 million having traded.

That regularly scheduled 8.5-year issue had priced at par after being upsized from $450 million.

Cedar Fair activity slows

One of the traders said “those four deals were busy – after that, it pretty much dropped off.”

For instance, he said that activity in the new Cedar Fair, LP 5 3/8% notes due 2027 just kind of dried up, with only a few million bonds seen having traded, even though the credit had traded fairly busily earlier in the week.

He quoted the bond little changed on the day around 101¾ bid.

That was around the level to which the bonds rose in initial aftermarket dealings after the Sandusky, Ohio-based amusement park operator had priced its $500 million quick-to-market deal on Monday – the week’s sole drive-by transaction.

Indicators turn mixed

Statistical market performance measures turned mixed on Thursday after being lower across the board on Tuesday and again on Wednesday and mixed for five sessions before that.

The KDP High Yield Daily Index eased by 1 basis point on Thursday to end at 71.99, its third consecutive loss after four straight gains. It had also been lower by 1 bp on Tuesday and 3 more bps on Wednesday.

Its yield was unchanged at 5.24%, steadying after three straight widenings, including a 1 bp rise on Wednesday.

The Markit CDX Series 28 Index, though, was better on Thursday for the first time after four straight setbacks.

It firmed by 3/32 point to finish at 106 27/32 bid, 107 29/32 offered after having dropped by nearly ¼ point on Wednesday.

However, the Merrill Lynch North American High Yield Index suffered its third loss in a row on Thursday, falling by 0.016% on top of downturns of 0.037% on Tuesday and 0.053% on Wednesday. It showed two straight gains before that.

Thursday’s setback pushed the index’s year-to-date return down to 2.987% from 3.004% on Wednesday. Those levels remain below the 2017 peak of 3.19%, set on March 1.

© 2015 Prospect News.
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