Acrisure caps $6.7 billion week; Thursday deals busy and better; oil names jump with crude

By Paul Deckelman

New York, Nov. 3 – The high-yield primary market saw a single dollar-denominated pricing on Friday as insurance brokerage company Acrisure LLC priced an upsized $925 million issue of eight-year notes.

Those new bonds traded actively when they hit the secondary market but slipped a little from their issue price.

Another anticipated pricing – telecommunications company Windstream Holdings, Inc.’s $250 million of eight-year first-lien notes – had not been seen by the market closing time, traders said.

Acrisure’s deal brought the week’s total of new dollar-denominated and fully junk-rated issuance up to nearly $6.7 billion, according to data compiled by Prospect News, surpassing last week’s roughly $6 billion of new issuance. Year-to-date new issuance remains well above the comparable year-ago pace.

In the secondary sphere, traders saw vigorous investor interest in the four new deals which had come to market on Thursday, from Navistar International Corp., Entegris Inc., Constellium NV and Freedom Mortgage Corp. Each of those new deals traded busily enough to make it to the day’s Most Actives list and the Freedom Mortgage deal was particularly strong.

Away from the new issues, traders said that oil and gas names such as California Resources Corp. and Denbury Resources Inc. ruled the roost, fueled by a surge in world crude oil prices.

On the downside, Frontier Communications Corp. continued to take a beating in the wake of disappointing numbers released earlier in the week.

Another big loser was cosmetics company Revlon Inc.

Statistical market performance measures turned mixed on Friday, after having fallen across the board on Thursday.

Those market measures meantime were ending the week mixed versus where they had been last Friday, when they closed lower all around, their second mixed week in the last four.

Upsized Acrisure prices

The sole dollar-denominated deal to price during Friday’s session came from Acrisure LLC and its Acrisure Finance, Inc. unit, who priced an upsized $925 million offering of senior notes due 2025 (Caa2/CCC+) at par to yield 7%.

The new deal was upsized from the originally announced $725 million, as $200 million was shifted into the bonds from a concurrent term loan deal the company is now lining up.

The notes priced at the tight end of price talk envisioning a yield in the 7% to 7.25% area.

High yield syndicate sources said the Rule 144A/Regulation S deal was brought to market via bookrunner J.P. Morgan Securities LLC. The roadshow marketing the deal to prospective investors began on Monday.

The notes will come with three years of call protection.

Caledonia, Mich.-based insurance brokerage Arcrisure – the 14th largest brokerage based in the United States in terms of revenues in 2016, according to the company announcement – plans to use the proceeds from the bond deal to replace all of its existing second-lien notes, to pay related fees and expenses, and to fund acquisitions.

Windstream a no show

The primaryside sources were meantime awaiting pricing on Windstream Holdings’ planned $250 million of add-on 8 5/8% senior first-lien notes due Oct. 31, 2025.

But traders said that they had not seen the Little Rock, Ark.-based telecommunications services provider’s deal by the time the market closed.

One market participant said that while the deal was marked as “may price today,” he had seen no price talk out on it, expressing skepticism that it would show up Friday.

The company had announced the issue on Thursday, with pricing expected either later Thursday or on Friday.

The transaction is being brought to market via left lead bookrunner Citigroup Global Markets Inc., with BNP Paribas Securities Corp., SunTrust Robinson Humphrey, Inc., Bank of America Merrill Lynch, MUFG Securities Americas, Inc., and J.P. Morgan also acting as bookrunners.

Windstream plans to use the add-on deal proceeds to pay revolving credit facility debt.

Week’s issuance nears $7 billion

With just Acrisure having priced by the close, the amount of new dollar-denominated and fully junk-rated paper from domestic or industrialized-country borrowers which came to market during the week came to just under $6.7 billion in 12 tranches.

That surpassed the pace seen last week, ended Oct. 27, when $6.01 billion had priced in nine tranches and it was well up from the meager $961 million which priced in just four tranches the week before, ended Oct. 20, the lowest weekly new-deal total since the weeks ended Aug. 25 and Sept. 1, when no new issues were priced either week, according to data compiled by Prospect News.

The week’s new deals raised year-to-date issuance for 2017 to $237.64 billion in 436 tranches, running about 21% ahead of the $196.24 billion which had priced in 303 tranches by this point on the 2016 calendar, the Prospect News data indicated.

Titan to hit the road

Primaryside sources meantime said that – Titan International, Inc., a Quincy, Ill.-based manufacturer of off-highway wheels, tires and undercarriage assemblies for original equipment manufacturer and aftermarket customers in the agricultural and earthmoving/construction equipment markets and the consumer market; was preparing to market a $400 million offering of senior secured notes due 2023, with pricing expected in the upcoming week

They said that the roadshow for the offering would begin on Monday in New York, continue on Tuesday in the New York and New Jersey area, then on Wednesday move to Boston before wrapping up on Thursday on the West Coast of the United States. Pricing will take place soon after.

The deal is being brought to market via sole bookrunner Goldman Sachs & Co.

Titan plans to use the proceeds to finance the repurchase of its $400 million of outstanding 6 7/8% senior secured notes due 2020 via a tender offer separately announced on Friday.

Acrisure active

In the secondary market, traders said that Acrisure’s new 7% notes due 2025 were among the most actively traded issues of the day, with over $41 million of those bonds changing hands.

One trader pegged the new notes at 100 1/8 bid, 100 5/8 offered, up slightly from their par issue price.

However, another market source saw the notes in a 99¾ to par range, opining that “it couldn’t hold its par bid.”

And yet another source saw the bonds going home at 99 7/8 bid.

Thursday deals do well

The four new deals that priced on Thursday were all seen actively trading around on Friday, with Navistar International’s 6 5/8% notes due 2025 the busiest of the bunch, generating more than $61 million of turnover.

Several traders saw those notes up around the 101½ bid area, about ½ point above where the note had finished out the day on Thursday.

The Lisle, Ill.-based maker of trucks, buses, military vehicles and heavy automotive engines priced $1 billion of the notes at par in a quick-to-market transaction.

While Navistar had the strongest volume on the day, Freedom Mortgage’s 8 1/8% notes due 2024 were by far and away the best aftermarket performer.

One trader said that the Mt. Laurel, N.J.-based non-bank residential mortgage loan originator and servicer’s new bonds “did pretty well,” quoting them at 103 7/8 bid.

That was well up from the par level at which that $435 million regularly scheduled forward calendar offering had priced, after having been upsized from an originally announced $400 million.

A second trader, also seeing the Freedom bonds at 103 7/8, called them up nearly 2½ points from the levels at which they had finished in initial trading Thursday following their pricing.

He said that Friday’s volume in the issue was more than $28 million.

Also seen doing well in Friday’s market were Entegris’ 4 5/8% notes due February 2026.

The traders saw those bonds up ¾ point on the day, closing at 101¾ bid, on volume of around $19 million.

The Billerica, Mass.-based producer of specialty chemicals and performance materials for high-tech applications priced $500 million of those notes at par in a regularly scheduled offering after upsizing the deal from $450 million originally.

Constellium’s 5 7/8% notes due February 2026 were seen by traders Friday only marginally better on the day, up ¼ point or so to around 101 7/8 bid, with $12 million moving around.

But those bonds had jumped more than 1½ points in active initial aftermarket dealings on Thursday after the Amsterdam-based manufacturer of aluminum products for the aviation automotive and other industrial markets had priced its $500 million offering at par, after upsizing the issue from $450 million.

Those dollar bonds priced as part of a regularly scheduled two-part offering that also included a euro-denominated tranche due February 2026.

Energy names on the upside

Away from the new issues, traders said that energy-related credits were solidly higher in Friday’s trading, helped by yet another surge in world crude oil prices.

Los Angeles-based oil and natural gas exploration and production operator California Resources’ 8% notes due 2022 “have been lately outperforming” on the back of the crude oil price rise, a trader said, and it was the same story on Friday, with the bonds up more than 2 points, ending at 69 5/8 bid on volume of more than $20 million.

Plano, Texas-based E&P credit Denbury Resources’ 9% notes due 2021 firmed by ½ point to 99½ bid, with over $120 million traded.

Houston-based Jones Energy Inc.’s 6¾% notes due 2022 zoomed more than 3 points on the day to end at 80 7/8 bid, on volume of more than $11 million.

Frontier fall continues

On the downside, a trader said that Frontier Communications paper “just continues to sell off,” taking its lumps for a third straight session after the Stamford, Conn.-based telecom services provider reported disappointing quarterly results, including a continued erosion of its business, residential and broadband subscriber bases.

Its 10½% notes due 2022 dropped by 2 1/8 point to 81¾ bid while its 11% notes due 2025 were also down more than a deuce on the day, closing at 78 bid.

Volume in both of those credits was over $40 million.

Another sizable loser on the day following a poorly received quarterly earnings report was Revlon.

The New York-based cosmetics company’s 5¾% notes due 2021 were anything but beautiful on Friday, plunging more than 5 points on the day to close at 81¾ bid, with over $31 million traded.

Its 6¼% notes due 2024 were likewise under pressure, finishing at 66½ bid, with over $20 million changing hands.

Indicators mixed on day, week

Statistical market performance measures turned mixed on Friday, after having fallen across the board on Thursday. Before that, the indicators had been mixed over the previous four sessions.

Those market measures meantime were ending the week mixed versus where they had been last Friday, when they closed lower all around, their second mixed week in the last four.

The KDP High Yield Daily Index gained 2 basis points on Friday to close at 72.25, after losing 3 bps on Thursday. On Wednesday, the index had risen by 3 bps – its first advance in more than a week of setbacks or days which saw the market measure unchanged.

Its yield came in by fully 7 bps to 5.13%, after having risen by 2 bps on Thursday.

The index’s reading was unchanged from last Friday’s, while the yield tightened from 5.17% a week ago.

For a second straight session, the Markit CDX Series 29 High Yield Index fell back by 3/32 point, matching Thursday’s retreat and finishing at 108 1/8 bid, 108 5/32 offered. It was the index’s third straight downturn overall.

On the week the index ended lower versus last Friday’s close at 108 11/32 bid, 108 3/8 offered.

The Merrill Lynch North American High Yield Master II Index saw a second straight loss, easing by 0.016% on Friday, after declining 0.54% Thursday, which had snapped a winning streak of three successive gains, a rise that had in turn followed three straight losses.

Friday’s loss dropped the index’s year-to date return to 7.442%, down from 7.459% on Thursday and down as well from the 7.636% cumulative return posted last Tuesday, Oct. 24 – the peak YTD return for 2017 so far.

But for the week, the index rose by 0.062%, bouncing back from the 0.132% loss it had suffered last week, which ended with the year-to-date return at 7.375%.

Last week’s downturn had been the first such weekly setback for the index after 10 straight weeks on the upside.

With 44 weeks in the books year-to-date, the Merrill Lynch index has seen weekly gains in 35 of those weeks and downturns in the other nine weeks so far.

© 2015 Prospect News.
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