Pattonair prices; new Friday names busy; Ruby Tuesday jumps on buyout; hospitals steady after Friday drop

By Paul Deckelman and Paul A. Harris

New York, Oct 16 – High-yield primary market activity lessened on Monday, syndicate sources said, as a sole new U.S. dollar-denominated and fully junk-rated issue worth $280 million priced – versus Friday’s busier schedule, which saw some $1.53 billion of such paper get done by a trio of domestic or industrialized-country borrowers.

Britain-based aircraft industry supply chain provider Pattonair did an issue of five-year secured paper.

Traders did not immediately report significant aftermarket dealings.

However, they saw considerable activity in the new deals that came to market on Friday – UPC Holding BV’s 10.25-year notes, Vine Oil & Gas LP’s 5.5-year paper and Catalent Pharma Solutions, Inc.’s issue of 8.25-year bonds.

There was also significant trading in recent new issues from West Corp. and Beacon Roofing Supply, Inc.

Away from the new issues, Ruby Tuesday, Inc.’s bonds firmed smartly on the news that the restaurant chain operator is to be bought out by a private-equity company.

And traders saw hospital names such as Community Health Systems Inc. and Tenet Healthcare Corp. steady, after being knocked around in Friday’s dealings amid news of planned changes in the Affordable Care Act.

Statistical market performance measures were mixed for a second consecutive session on Monday. They had turned mixed on Friday after having been lower across the board on Thursday.

Europcar began roadshows on Monday for €950 million of high-yield notes in Rule 144A and Regulation S secured and unsecured tranches, according to market sources.

EC Finance plc (Fleetco) is selling €350 million of five-year senior secured notes (expected ratings B1/BB), which come with two years of call protection. Joint global coordinator and joint bookrunner BNP Paribas will bill and deliver. HSBC is also a joint global coordinator and joint bookrunner. CM-CIC, Credit Agricole CIB, Deutsche Bank, ING and SG CIB are also joint bookrunners. Proceeds will be used to refinance €350 million of EC Finance notes due noted due 2021.

Europcar Drive DAC (EGSA) is selling €600 million of seven-year senior unsecured notes (expected ratings B3/B-). Joint global coordinator and joint bookrunner Deutsche Bank will bill and deliver for the unsecured notes. Credit Agricole and BofA Merrill Lynch are also joint global coordinators and joint bookrunners. BNP Paribas, Goldman Sachs, HSBC, Lloyds, Natixis and NatWest are also joint bookrunners. Proceeds will be used to finance the acquisition of smart car rental company, Goldcar.

The roadshows for both tranches wrap up on Wednesday.

Europcar is a Paris-based vehicle rental company.

Friday bonds stay busy

In the secondary arena, traders noted a fall-off in new-deal activity from last week – which itself saw a slower pace than the week before, when over $10 billion of new paper had come to market.

One trader quipped that “today felt like the real Columbus Day” rather than last Monday, Oct. 9 – when fixed-income markets in the United States were closed in observance of the holiday.

Nonetheless, there was still considerable activity seen in some recently priced issues, particularly Friday’s new deal from UPC Holding BV.

A trader quoted those 5½% notes due in January of 2028 “hanging around” at 100½ bid, which he called unchanged.

At another desk, the notes were quoted at 100 9/16 bid, down 3/16 point from Friday’s closing levels, with over $69 million having changed hands, making it the day’s busiest name in Junkbondland.

The Netherlands-based telecommunications company – a unit of international media giant Liberty Global – priced $550 million of those 10.25-year notes at par in a quick-to-market transaction on Friday.

Also active was Friday’s issue of 8¾% notes due in April of 2023 from Vine Oil & Gas LP, which several traders quoted at the same 99 bid level at which the Plano, Texas-based oil and natural gas exploration and production company had priced its $530 million regularly scheduled forward calendar offering of 5.5-year paper, yielding 8.985%.

More than $19 million of the new Vine securities were seen having traded on Monday.

And the new Catalent Pharma Solutions 4 7/8% notes due in January of 2026 were seen finishing up at 102 1/8 bid, which a trader said was “about where they went out on Friday.”

A second trader saw that paper down 3/8 point at 102 1/8 bid, on volume of over $18 million.

The new deal had jumped to around the 102 bid level in active trading on Friday, after the Somerset, N.J.-based provider of advanced-delivery technologies for drug, biologic and consumer health products had priced its $450 million deal off the forward calendar.

Other recent deals active

Going back a little further, a trader saw considerable trading in West Corp.’s recently priced 8½% notes due 2025, seeing the issue going out at 98¼ bid, up ¼ point on the day.

More than $41 million of those notes traded on Monday.

West, an Omaha, Neb.-based provider of communications and network infrastructure services, priced $1.3 billion of those notes at 98.579 back on Oct. 3, yielding 8¾%.

That regularly scheduled forward calendar offering was downsized from an originally announced $1.3 billion.

Another recently priced name high up on the day’s Most Actives list was Beacon Roofing Supply’s 4 7/8% notes due 2025, which saw turnover of more than $19 million.

A market source pegged the bonds at 100½ bid, up 1/8 point on the day.

The Herndon, Va.-based provider of roofing materials for the residential and commercial building markets priced $1.3 billion of those notes at par in a scheduled forward calendar transaction last Wednesday.

Ruby Tuesday rises

Away from the new deals, traders saw Ruby Tuesday, Inc.’s 7 5/8% notes due 2020 shoot up by more than 3 points Monday, ending at around 102½ bid, with over $13 million changing hands.

That sharp improvement was in line with the company’s New York Stock Exchange-traded shares, which zoomed by 37 cents, or 18.59% Monday, closing at $2.36, on volume of nearly 24 million shares – roughly 78 times their daily norm.

The shares and bonds soared on the news that the Maryville, Tenn.-based operator of more than 500 casual dining restaurants across the U.S. had agreed to be bought out by NRD Capital, a private-equity company.

NRD will pay $2.40 per share, or $146 million, for the company; including debt assumption, the deal has an enterprise value of about $335 million.

The deal is expected to close in early 2018.

The deal comes after four straight years of declining sales, which forced Ruby Tuesday into closing some of its weaker-performing outlets as it tried to straighten things out.

The company said in March that it was looking for ways to revive its business, possibly including the sale of the company or merger with another restaurant operator.

Concurrently with the sale announcement, Ruby Tuesday released results for its fiscal 2018 first quarter; it lost $9.8 million, or 16 cents per share, although that was an improvement from its year-ago results.

Same-store sales at restaurants open for at least one year fell 5.8% from year-earlier levels.

Hospital names a little healthier

Traders said that the recently beleaguered hospitals sector – which came under renewed pressure last week amid news of Trump Administration changes in the Affordable Care Act, popularly known as Obamacare – seemed to have regained some of their footing on Monday.

A trader said that Community Health Systems’ 6 7/8% notes due 2022 “saw something of a bounce,” rising ½ point on the day to 74 bid.

Another trader saw the issue going out at 73¾ bid, up ¼ point but said that it “traded small – their whole structure didn’t really traded that much.”

A market source at another desk said that the Franklin, Tenn.-based hospital operator’s 8% notes due 2019 were the exception to that generally quiet rule, with over $9 million moving around and the notes shooting up to 96 7/8 bid, a gain of nearly 2 points on the session. Those same bonds had plunged by 7/8 point on Friday to around the 95 bid level, with over $18 million traded then.

Dallas-based hospital operator Tenet Healthcare’s 8 1/8% notes due 2022 gained 3/8 point to end just below par on Monday, with around $14 million traded. The issue had retreated by ¾ point on Friday, on volume of over $25 million.

Tenet’s 6¾% notes due 2023 were unchanged at 93½ bid, on over $11 million of volume. Those notes had fallen half a point on Friday, with over 430 million changing hands.

But while those healthcare names were unchanged-to-better on Monday, a market source said that HCA “failed to follow along,” with the Nashville-based industry giant’s 5 3/8% notes due 2025 seen down 7/8 point Monday, ending at 103¼ bid, with about $8 million traded.

Concordia secured notes climb

A trader said that among the drug companies, Laval, Que.-based Valeant Pharmaceuticals International Inc.’s 6 1/8% notes due 2025 “off a little on the day” at 85¾ bid, down 1.8 point.

But he said that fellow Canadian pharmaceuticals company Concordia International Corp.’s 9% senior secured notes due 2022 were up a deuce on the day, rising 2 points to close at 80-bid, although he said there were “just a couple of [large-sized] trades.”

The Oakville, Ont.-based drug manufacturer’s secured paper rose even as it announced that it will forgo paying $26 million of interest due Monday on its $735 million 7% unsecured notes due 2023 as part of its “efforts to realign its capital structure.”

“The company will use this time to continue its discussions with lenders with the goal of reaching a consensual agreement that would significantly reduce the company's debt and interest payments to create a financial foundation able to support Concordia's long-term growth,” according to a company announcement.

The payment deferral will not result in an event of default until the 30-day grace period ends.

The company said it plans to operate its business as usual.

The company has about $340 million of cash on hand as of Sept. 30, the release noted (see related story elsewhere in this issue).

Indicators mixed

Statistical market performance measures were mixed for a second consecutive session on Monday. They had turned mixed on Friday after having been lower across the board on Thursday.

The KDP High Yield Daily Index eased by 1 basis point on Monday to end at 72.34, its second loss in a row. It had lost 4 bps on Friday, after having been unchanged on Thursday.

Its yield rose by 2 bps to 5.19%, its sixth successive session of widening. On Friday, the yield had risen by 1 b p.

While the KDP index struggled along, the Markit CDX Series 29 High Yield Index moved up by 3/32 point on Monday to end at 108 3/32 bit, 108 1/8, its second straight gain after two straight losses. On Friday, the CDX gained 1/8 point, in contrast to Thursday’s 3/16 point downturn.

The Merrill Lynch North American High Yield Index improved by 0.075% on Monday, its first advance after two straight sessions during which it was in retreat, losing 0.01% on Friday and 0.067% on Thursday.

The latest gain lifted its year-to-date return to 7.296%, versus Friday’s close at 7.215%, and left it just slightly shy of last Wednesday’s 7.298%, its third consecutive new 2017 peak level.

© 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.