M/I Homes brings $300 million drive-by issue; domestic primary otherwise quiet; TerraForm up

By Paul Deckelman

New York, Nov. 23 – The high-yield primary market began what will be a holiday-abbreviated week with an opportunistically timed and quickly shopped offering that priced during Monday’s session.

Columbus, Ohio-based builder M/I Homes, Inc. came to market with an unscheduled $300 million of five-year notes.

After the bonds priced at par, traders said they edged up when they reached the aftermarket, although trading volume was relatively active.

Not much else was seen going on in the domestic primary market.

Two companies, ATM machine producer Diebold Inc. and gaming operator Pinnacle Entertainment Inc., made regulatory filings disclosing plans for upcoming corporate financings, with each company intending to sell some junk bonds as part of that. But such issuance was not expected to be imminent.

Out of Europe came word that Greece-based Hellenic Telecommunications Organization SA plans to issue new four-year euro-denominated bonds in order to finance a tender offer for several issues of its existing bonds.

In the secondary market, traders saw relatively active dealings in some of the recently priced new issues, including Sally Beauty Holdings, Inc., LifePoint Health, Inc. and Equinix, Inc.

There was also movement in TerraForm Power Inc.’s recently beleaguered bonds, which moved up after parent company SunEdison Inc. announced a management shake-up.

Statistical measures of junk market performance turned lower on Monday after having been mixed on Friday. Monday’s was the second lower session in the last three.

M/I Homes drives by

The junk bond primary market saw one quickly shopped domestic deal pricing on Monday.

M/I Homes priced $300 million of new five-year notes (B1/B+), syndicate sources said.

The notes priced at par to yield 6¾%, in line with pre-deal market price talk.

The offering was brought to market via joint bookrunners Citigroup Global Markets, Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

M/I Homes, which builds single-family homes, plans to use the net proceeds from the offering to redeem all $230 million of its currently outstanding 8 5/8% senior notes due 2018 and to repay borrowings under its $400 million unsecured revolving credit facility.

Diebold, Pinnacle plan deals

Elsewhere in the new-deal realm, Diebold – a North Canton, Ohio-based maker of ATM machines and other kinds of self-service delivery, value-added services and software primarily to the financial industry – disclosed plans to sell $500 million of new bonds as part of an overall financing plan connected with its pending acquisition of Wincor Nixdorf AG, a German provider of IT solutions and services to retail banks and the retail industry.

In an 8-K filing with the Securities and Exchange Commission, Diebold outlined plans for $1.84 billion of delayed-draw term loans and the $500 million of bonds.

There was no immediate information on the timing or other details of the prospective bond financing, which is likely to be done once the bank debt portion of the financing has been completed.

JPMorgan and Credit Suisse Securities (USA) LLC are the joint lead arrangers and bookrunners on the debt.

Another junk bond issuer unveiling financing plans via an SEC filing on Monday was Las Vegas-based gaming concern Pinnacle Entertainment.

Pinnacle is spinning off the operating business and the real property of Belterra Park Gaming & Entertainment (OpCo) into a separately traded public company in connection with the planned acquisition of the remaining real estate assets (PropCo) of Pinnacle by Gaming & Leisure Properties Inc.

Financing for the OpCo spinoff includes a $935 million senior secured credit facility and $300 million of senior unsecured notes, the details of which have not surfaced yet.

JPMorgan, Bank of America Merrill Lynch, Goldman Sachs Bank USA, Fifth Third Bank, U.S. Bank, Credit Agricole Corporate and Investment Bank, Deutsche Bank Securities Inc. and Wells Fargo are the joint lead arrangers and bookrunners on the debt.

Hellenic Telecom plans deal

Out of Europe came word that Hellenic Telecommunications Organization plans to issue new four-year, euro-denominated, fixed-interest rate bonds.

The timing on the planned note issue has not been announced.

Investment banks handling the prospective issue are not known at this time.

The company’s OTC plc unit will issue those bonds under its global medium-term note program.

The Athens-based telecommunications company, which provides various telecom services in Greece, Romania and Albania, plans to use the proceeds from the notes to fund a tender offer for the existing OTE bonds maturing in May 2016 and February 2018.

New M/I Homes notes edge up

When the new M/I homes 6¾% notes due January 2021 were freed for secondary dealings, traders did not see too much upside movement.

One said that the bonds traded between 100 1/8 and 100½.

He said that “nobody told me they were playing in this deal,” which he called “not too exciting.”

However, at another desk, a market source noted that there had been some activity in the new issue, with around $16 million having changed hands – one of the more active names during a generally not very busy Thanksgiving week session.

He said that the notes went home around 100 3/8 bid, up from their par pricing level.

Recent deals seen easier

There was a fair amount of activity in some of the recently priced new issues – most of it to the downside, in line with a generally easier junk bond market.

Sally Beauty Holdings’ 5 5/8% notes due 2025 were ending at 101½ bid, down 1/8 point. More than $15 million of the notes traded.

The Denton, Texas-based retail and wholesale distributor of beauty supplies priced $750 million of the notes at par in a quickly shopped offering on Wednesday.

LifePoint Health’s 5 7/8% notes due 2023 lost 3/8 point, ending at 100 1/8 bid, with over $12 million traded.

At another desk, the bonds were quoted at par bid, 100¼ offered, which a market source there also called down 3/8 point.

The Brentwood, Tenn.-based health-care services provider did a $500 million drive-by offering on Thursday, pricing the notes at par after the deal was enlarged from an initially announced $300 million.

Another Thursday deal, Redwood City, Calif.-based interconnection and data-center company Equinix’s 5 7/8% notes due 2025, eased by 1/8 point on Monday, ending at 101 1/8 bid. A market source estimated trading volume at over $9 million.

Equinix had priced its unscheduled $1.1 billion offering at par after the issue was upsized from $1 billion originally.

“So volumes have not been great,” one of the traders said, “but there has been some trading going on.”

TerraForm firms

Away from the recently priced deals, TerraForm Power’s bonds popped on Monday after parent company SunEdison announced some management changes.

“TERP moved higher today on some news,” a trader said, referring to the Bethesda, Md.-based wind and solar power producer by its equity ticker symbol.

He saw more than $28 million of its 5 7/8% notes due 2023 having moved up to 72¾ bid, 73 offered from around 68 bid, 69¾ offered on Friday.

A second trader said the credit gained over 3 points to end at 73, while a third agreed that the debt was “better, moving up to [the] 73 to 74 area from the high 60s.”

TerraForm’s 6 1/8% notes due 2025, which on Friday had moved up to 67 bid from 65½ before that, were seen going home Monday at 72 bid, 73 offered, although a trader said “it was not much traded,” with volume only at around $5 million.

“The first print was 69½, then it just moved higher.”

TerraForm’s bonds, as well as SunEdison’s convertible debt and stock, had been getting hammered of late as hedge funds reportedly were bailing out of the Maryland Heights, Mo.-based renewable energy producer.

SunEdison’s New York Stock Exchange-traded stock meantime jumped 18 cents, or 6.38%, to $3.00.

SunEdison reported Monday that Brian Wuebbels, chief financial officer, would take over as chief executive officer for the TerraForm Power units.

Wuebbels will retain his CFO position at SunEdison.

Rebecca Cranna was appointed as TerraForm’s new CFO.

The company also made several changes to its board of directors.

The news also helped TerraForm’s debt emerge little-fazed from a downgrade from Moody’s Investors Service.

The shake-up comes as SunEdison’s debt and equity have been in decline and reports of hedge funds bailing out of the name have run rampant. All that came after the company issued weak earnings and said it was revising its business strategy, cutting jobs and reducing projects.

Indicators turn lower

Statistical measures of junk market performance turned lower across the board on Monday after having been mixed on Friday. Monday was the second lower session in the last three trading days.

The KDP High Yield Daily index lost 6 basis points to close at 65.68, its fourth straight loss after 1 gain and its 11th downside finish in the last 12 sessions, including Friday’s 9-bps loss.

Its yield edged up by 1 bp to close at 6.93%, its third straight widening out after one unchanged session and one narrowing and its 10th such move upward in the last 12 sessions.

The Markit Series 25 CDX North American High Yield index was unchanged on the day Monday, closing at 101 23/32 bid, 101 25/32 offered, where it had finished on Friday after having moved up by 1/32 point.

The Merrill Lynch North American Master II High Yield index posted its fourth straight loss on Monday, finishing off by 0.073% after having fallen by 0.234% on Friday; it had fallen by 0.355% on Thursday after having retreated by 0.103% on Wednesday. With only a 0.354% gain recorded on Tuesday, following three straight lower sessions before that, Monday was the seventh loss in the last eight trading days.

The index’s year-to-date loss widened to 2.219% from Friday’s 2.148%.

But big as they are, those year-to-date losses still remain well above the index’s worst 2015 cumulative setback of 3.069%, recorded on Oct. 2.

Sara Rosenberg and Stephanie N. Rotondo contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.