T-Mobile three-part megadeal, AMC drive by, new AMC gains; new Valeant again firm, existing paper off

By Paul Deckelman and Paul A. Harris

New York, March 13 – The high-yield primary market remained a busy place on Monday, starting the new week on an active note, this coming off of the busiest new-issuance week ever seen in Junkbondland.

Syndicate sources said that wireless provider T-Mobile US, Inc. priced a quickly shopped $1.5 billion of new U.S.-dollar denominated and fully junk-rated paper in a three-part offering consisting of five-, eight- and 10-year notes.

Movie theater operator AMC Entertainment Holdings Inc. did a quick-to-market $475 million of 10-year subordinated notes, part of a two-part, dual-currency transaction that also included a euro-denominated add-on tranche to its existing notes.

The new stand-alone dollar-denominated paper was heard by traders to have pushed higher in busy initial aftermarket dealings.

When all was said and done, the day’s session produced $1.975 billion of new dollar paper – up from the $500 million face amount that had priced in two deals on Friday. That Friday session had capped off a wild week that saw $17.525 billion of such bonds from domestic or industrialized-country borrowers, a new record.

The traders did not see much Monday activity in Friday’s two smallish new deals.

But they saw continued busy dealings in some of the issues that had come to market earlier last week, including Valeant Pharmaceuticals International Inc., CHS/Community Health Systems Inc., Charter Communications, Inc., Equinix Inc. and American Axle & Manufacturing Holdings Inc.

Away from the actual new deals, Canadian drugmaker Valeant’s existing issues continued to get hammered down, just as they had for much of last week.

Energy issues such as California Resources Corp. and EP Energy Corp. also remained lower, in line with yet another decline in world crude oil prices Monday, albeit a considerably smaller loss than some of those seen last week.

Statistical market performance measures turned lower all around on Monday, resuming a recent negative trend. They had been mixed on Friday – after having been lower all around for four consecutive sessions before that.

T-Mobile $1.5 billion deal

Trailing the record-setting week past, news volume in the primary market remained heavy on Monday.

Two issuers brought a combined four dollar-denominated tranches to raise a total of $1.98 billion.

Both issuers came with drive-by deals.

Neither issuer upsized.

Executions were 50/50: two tranches came at the tight ends of talk, and two came at the wide ends.

T-Mobile US, Inc. priced $1.5 billion of senior notes (Ba3/BB) in three tranches on Monday, according to a market source.

The debt refinancing deal featured $500 million of five-year bullet notes, which priced at par to yield 4%. The yield printed at the tight end of yield talk in the 4 1/8% area.

In addition, $500 million of eight-year notes priced at par to yield 5 1/8%. The yield printed at the wide end of yield talk in the 5% area.

The long-maturity tranche featured $500 million of 10-year notes, which priced at par to yield 5 3/8%. The yield came at the wide end of yield talk in the 5¼% area.

Deutsche Bank, Barclays, Citigroup and J.P. Morgan were the joint bookrunners.

AMC drives by

AMC Entertainment Holdings Inc. completed a quick-to-market two-part senior subordinated notes deal (B2/B+) on Monday, according to a syndicate source.

The acquisition financing deal included $475 million of new 10-year notes that priced at par to yield 6 1/8%. The yield printed at the tight end of the 6 1/8% to 6¼% yield talk. Initial guidance was 6% to 6¼%.

In addition the company priced a £250 million add-on to its 6 3/8% senior subordinated notes due Nov. 15, 2024 at 106.00, resulting in a 5.14% yield to worst and a 5.407% yield to maturity. The reoffer price came in the middle of the 105.75 to 106.25 price talk.

Citigroup was the left bookrunner.

Eldorado to price Wednesday

There was also a meaningful buildup to the forward calendar on Monday.

Eldorado Resorts Inc. is expected to price $375 million of eight-year senior notes on Wednesday.

J.P. Morgan, Macquarie, Capital One, KeyBanc, SunTrust and US Bancorp are the joint bookrunners.

The Reno, Nev.-based casino entertainment company plans to use the proceeds to fund its acquisition of Isle of Capri Casinos Inc., as well as to refinance bond and bank debt.

GasLog this week's business

GasLog Ltd. is expected to price a $250 million offering of non-rated senior notes due 2024 this week.

The deal is in the market with initial guidance of 8½% to 8¾%, the source added.

Stifel Nicolaus and DNB are the joint bookrunners.

The Monaco-based owner, operator and manager of LNG carriers plans to use the proceeds to repay debt and for general corporate purposes including working capital.

High Ridge Brands roadshow

High Ridge Brands Co. began a roadshow on Monday for a $250 million offering of eight-year senior notes.

The deal, via left bookrunner BMO, is set to price later this week.

The Stamford, Conn.-based personal care products company plans to use the proceeds to repay the bridge loan put in place to partially fund the acquisition of Dr. Fresh LLC and to repay the existing High Ridge Brands second lien term loan.

Merlin at the rich end

In the euro-denominated market, Merlin Entertainments plc priced a €200 million add-on to its 2¾% senior bullet notes due March 15, 2022 (Ba2/BB) at 103.50 to yield 2.01%.

The reoffer price came at the rich end of the 103 to 103.5 price talk.

BNP Paribas and HSBC were the global coordinators and physical bookrunners.

HSBC will bill and deliver.

The Poole, England-based operator of location-based visitor attractions to repay its senior facilities agreement and for general corporate purposes.

Progroup price FRN

Germany-based containerboard producer Progroup AG priced a €150 million issue of three-month Euribor plus 250 basis points seven-year senior secured floating-rate notes at par on Monday.

Deutsche Bank managed the sale.

Progroup plans to use the proceeds to fund the redemption of €150 million of its senior secured floating-rate notes due 2022.

Moto secured deal

Moto Hospitality plans to price a £150 million offering of 5.5-year senior secured notes on Tuesday.

Deutsche Bank is leading the debt refinancing deal.

Elsewhere, in a deal expected to play to both high-yield and emerging-markets accounts in Europe, Polish telecom Play Topco SA plans to price a €500 million offering of 5.5-year PIK toggle holdco notes on Tuesday.

JP Morgan is leading the PIK/holdco/dividend deal.

Fitch Ratings expects to assign its B- rating to the notes.

The Warsaw-based company plans to use the proceeds to fund a dividend.

New AMC paper busy and better

In the secondary realm, traders saw considerable activity, at modestly higher levels, in the new AMC Entertainment 6 1/8% senior subordinated notes due in May of 2027.

One saw the Leawood, Kan.-based movie theater operator’s new paper in a par to 100 5/8 bid context, while a second pegged the new bonds going home at 100½ bid.

Yet another trader quoted them at 100 3/8 bid, 100 5/8 offered.

A market source said that more than $33 million of the notes changed hands, putting the credit high up on the day’s Most Actives List.

Given the relative lateness of the hour at which it priced, traders did not immediately report any initial aftermarket dealings in the new three-part junk bond offering from Bellevue, Wash.-based T-Mobile US, the No. 3 wireless carrier in the United States.

Recent deals active

Traders said that as had been the case for much of last week, trading in the new or recently priced issues remained the focus of most investors’ activity.

“There was nothing” going on in the junk precincts away from the new deals, one of the traders said.

And as had been the case on Friday, Valeant Pharmaceuticals International’s big new two-part issue was right at or near the top of the Most Actives.

A trader saw the Laval, Que.-based drugmaker’s new 7% notes due 2024 just a shade below 102 bid, calling them up 3/32 point, with over $35 million traded, making it the busiest junk credit of the day.

He saw its 6 3/8% notes due 2020 around 101 15/16 bid, also a gain of 3/32 on the day, with more than $14 million having traded.

A second trader saw both issues in a 101½ to 101¾ bid context, calling them “just off slightly,” on “active” volume.

Valeant had priced its $3.25 billion deal – upsized from $2.5 billion originally announced, making it the biggest deal the junk market has seen so far this year – on Thursday, consisting of $1.25 billion of 6½% notes due 2022 and $2 billion of 7% notes due 2024.

Both halves of that regularly scheduled forward calendar megadeal priced at par and then moved sharply higher. Friday’s trading saw volumes of $80 million and $158 million, respectively.

Other recently priced deals seen trading around on Monday included Community Health System’s 6¼% senior secures notes due 2023, which a market source saw trading at par, calling them down ¼ point on the day on more than $20 million of turnover.

A second trader quoted the Franklin, Tenn.-based hospital operator’s deal at 100 1/8 bid, saying they haven’t really gone anywhere.

The company priced its quick-to-market $2.2 billion deal – upsized from $1.75 billion – at par last Tuesday.

Charter, Equinix, Axle active

Traders also saw Stamford, Conn.based cable and broadband operator Charter Communications’ new 5 1/8% notes due in May of 2027 off 1/8 point, at 100 1/8 bid, on volume of over $17 million. It had priced that $1 billion add-on to its existing issue at 97 on Thursday.

Equinix’s 5 3/8% notes due 2027 gained more than ¼ point on Monday to end at 100 13/16 bid, on volume of over $14 million. The Redwood City, Calif.-based data centers operator had priced its $1.25 billion forward calendar deal at par on Wednesday, after it was upsized from $1.125 billion.

Both halves of American Axle’s $1.2 billion offering were easier on Monday trading slightly below par on volume of about $12 million each.

Existing Valeants continue slide

Away from the new deals, Valeant’s existing paper continued to lose ground on Monday, just as it had throughout most of last week.

Its 6 3/8% notes due 2020 dropped by 1 full point, to 90½ bid, a trader said, with over $29 million moving around.

He saw its 6 1/8% notes due 2025 sliding by 2¾ points, to 74¾ bid, with over $19 million traded.

And its 5 7/8% notes due 2023 swooned by 2¼ points to the 75 bid level, with over $10 million traded.

The bonds had begun their retreat after the company announced its plans for its big new deal.

On top of that, traders noted that Valeant’s bonds were also hit by investor angst about the healthcare sector in general, prompted by Washington developments, as Congressional Republicans introduced their bill to repeal the existing Obamacare law in the U.S. – and as President Donald Trump’s tweets indicated that he was looking for a substantial rollback in drug prices as part of his planned healthcare overhaul.

Oil issues easier

Traders saw names of many energy companies off, such as Los Angeles-based exploration and production company California Resources.

A trader saw its benchmark 8% notes due 2022 down 7/8 point at 81 bid, while a second pegged those bonds at 80¾ bid, down 1 full point on the day, with over $12 million traded.

Sector peer EP Energy’s 8% notes due 2025 dropped to 90 bid, a loss of 1¾ points on the day.

Traders noted the continued retreat of oil prices, although they said that these were less on Monday than they had been last week.

West Texas Intermediate crude was off by 9 cents per barrel, to $48.40, in Monday dealings on the New York Mercantile Exchange, its sixth consecutive daily loss.

Drilling names improve

However, traders saw that energy drilling names, recently in retreat as oil prices fell sharply last week, were better on Monday.

One saw Houston-based driller Noble Energy’s 5 ¼% long bonds due 2042 “actually rebounding” at 63¾ bid, up 1¼ point on the day, while its 6.05% paper due 2041 rose nearly 2 points to 69¾ bid.

He said of Noble that “boy, that one has been under some pressure lately.”

Switzerland-based sector peer Transocean Ltd.’s 9% notes due 2023 firmed by 1½ points Monday to end at 105 bid, with over $10 million traded.

Indicators turn lower

Statistical market performance measures turned lower all around on Monday, resuming a recent negative trend. They had been mixed on Friday – after having been lower all around for four consecutive sessions before that.

The KDP High Yield Daily index eased by 3 basis points on Monday to end at 71.62, their seventh straight loss and eighth such downturn in the last 10 sessions. On Friday, it had edged down by 2 bps – after it had plunged by 49 bps on Thursday, on top of Wednesday’s 28-bps swoon.

Its yield crept by 1 bp for a second consecutive day on Monday to 5.29% its seventh consecutive widening out; it had also risen by 1 bp on Friday after having ballooned out by 16 bps on Thursday.

The Markit CDX Series 27 High Yield index was down by over 3/16 point on Monday, on top of Friday’s 3/32-point retreat. It closed Monday at 106 21/32 bid, 106 23/32 offered, its sixth straight loss and seventh setback in the last eight sessions.

After a one-session pause on Friday, the Merrill Lynch High Yield index resumed its recent rut on Monday, moving down by 0.219%, in contrast to Friday’s 0.05% firming.

Monday’s loss dropped its year-to-date return to 1.517% from 1.739% on Friday and remains well down from its 2017 peak level of 3.19%, which was hit on March 1.

© 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.