Laureate, Trilogy, Clearwater deals top off $4.4 billion week; new issues firm in trading

By Paul Deckelman and Paul A. Harris

New York, April 21 – The high-yield primary sphere topped off a busier week on Friday, as a trio of issuers priced $1.4 billion of new dollar-denominated and fully junk-rated paper.

All three were regularly scheduled deals pricing off the forward calendar following investor roadshows.

Laureate Education, Inc., a global network of degree-granting higher educational institutions, had the day’s biggest deal, some $800 million of eight-year notes.

Trilogy International Partners Inc., a provider of wireless communications to areas including Latin America and the Caribbean, did a $350 million offering of five-year secured paper, which priced at a discount.

And Clearwater Seafoods Inc., a seafood harvester, processor and distributor, served up a $250 million issue of eight-year notes.

Those three deals capped off a somewhat busier primaryside week which saw $4.45 billion of new paper brought to market by domestic or industrialized-country borrowers, up from the $2.95 billion that got done the previous week, ended April 14, which was one day shorter than a normal market week due to the junk market’s shutdown in observance of Good Friday.

In the secondary arena, traders said that both the new Laureate Education and Clearwater Seafoods bonds firmed smartly in active dealings when they hit the aftermarket.

Those traders also saw recently priced issues, including Thursday’s deals from NuStar Logistics, LP, Tempo Acquisition LLC, E.W. Scripps Co., Booz Allen Hamilton Holding Corp. and Murphy Oil USA solidly above all of their respective issue prices, on busy volume.

Statistical market performance measures stayed mixed for a third straight session on Friday. They had turned mixed on Wednesday and stayed that way for the rest of the week following a lower across-the-board session on Tuesday.

The indicators also ended the week mixed on Friday versus where they had been a week earlier, on April 14, although debt markets in the United States and other places were not in session that day due to the Good Friday holiday observance. The indicators had been lower all around last Thursday – the final trading session of that week – versus where they had finished in each of the previous two weeks.

Laureate at the wide end

A busy Friday saw three issuers with single-tranche dollar-denominated deals price a combined face amount of $1.4 billion.

Laureate Education priced an $800 million issue of eight-year senior notes (Caa1/B-) at par to yield 8¼%.

The yield came at the wide end of the 8% to 8¼% yield talk. Early guidance was set in the 8% area.

J.P. Morgan, Barclays, BMO, Citigroup, Credit Suisse, Goldman Sachs, KKR and Macquarie were the joint bookrunners for the debt refinancing deal.

Trilogy at a discount

Trilogy International Partners priced a $350 million issue of 8 7/8% five-year senior secured notes (B3/B/B) at 99.506.

JP Morgan managed the sale, a market source said.

The Bellevue, Wash.-based wireless telecommunications company plans to use the proceeds to refinance its 13 3/8% senior secured notes due 2019.

Trilogy operates in Latin America, the Caribbean and New Zealand.

Clearwater comes at mid-talk

Clearwater Seafoods priced a $250 million issue of eight-year senior notes (B3/B+) at par to yield 6 7/8%.

The yield printed in the middle of the 6¾% to 7% yield talk.

Wells Fargo was the left bookrunner. BMO and BofA Merrill Lynch were the joint bookrunners.

The Bedford, Nova Scotia-based vertically integrated seafood harvester, processor and distributor plans to use the proceeds, together with expected borrowings under a new credit facility, to repay certain debt under its existing credit facilities, with the remainder, if any, to be used for general corporate purposes.

The week ahead

The final week of April will get underway with a modest active calendar.

Garda World Security Corp. plans to launch $630 million of senior notes (Caa2/CCC+) on Monday via lead bookrunner Citigroup.

Further details on the deal will become available on Monday, the source added.

Proceeds will be used for a debt refinancing and recapitalization.

Meanwhile Sugarhouse Casino is touring with a $300 million offering of eight-year senior secured notes on a roadshow set to run into the middle part of the week ahead.

Goldman Sachs is the left bookrunner for the debt refinancing. Wells Fargo, US Bancorp and Fifth Third are the joint bookrunners.

Drax upsizes

During a busy primary market session in the European market, Drax Group plc priced an upsized £550 million of five-year senior secured notes (BB+/BB+) in two tranches.

The issuer priced £350 million of fixed-rate notes at par to yield 4¼%. The yield printed on top of final yield talk. Initial guidance was 4¼% to 4½%.

It also sold £200 million of Libor plus 400 basis points floating-rate notes at par. The floating-rate tranche priced with a 0% Libor floor. The spread came on top of final spread talk. Initial guidance was at Libor plus 400 to 425 bps.

The deal was increased from £500 million.

Joint bookrunner Barclays will bill and deliver. J.P. Morgan was also a joint bookrunner.

The Selby, England-based coal and biomass generator plans to use the proceeds to repay its bridge facility and refinance existing term debt. The additional proceeds resulting from the £50 million upsizing of the deal will be used for general corporate purposes.

Voyage Care brings secureds

Voyage Care BondCo plc priced £250 million of secured notes in two tranches.

The deal, which saw £5 million of proceeds shifted to the senior secured tranche from the second lien tranche, included an upsized £215 million of six-year senior secured notes (B+) which priced at par to yield 5 7/8%. The tranche size was increased from £210 million.

In addition Voyage Care priced a downsized £35 million of 6.5-year second lien notes (CCC+) at par to yield 10%. The tranche size was decreased from £40 million.

JPMorgan managed the sale.

Proceeds, together with equity to be injected in Voyage BidCo Ltd. by some of its shareholders, an expected draw on a new revolving credit facility and cash on hand, will be used to fully redeem the company’s £222 million of 6½% senior secured notes due 2018 and £50 million of 11% second-lien notes due 2019 on May 13 and to fund working capital requirements.

Nomad Foods downsizes

Nomad Foods Ltd. launched and priced a downsized €400 million issue of seven-year senior secured notes (B1/BB-) at par to yield 3¼%.

The note offer was downsized from €500 million, with €100 million of proceeds shifted to the concurrent term loan B, increasing its size to €570 million

Deutsche Bank and Credit Suisse managed the debt refinancing bond deal.

Look for an American-based issuer to show up with a euro-denominated deal early in the week ahead, a London-based debt capital markets banker advised.

Morgan Stanley will lead the deal which is scheduled to kick off with an investor call on Monday.

Busier new-issue week

Friday’s three completed junk bond pricings raised to $4.45 billion the amount of new dollar-denominated and fully junk-rated paper from domestic and industrialized-country borrowers which had priced in 10 deals during the week, according to data compiled by Prospect News.

That was up from the $2.95 billion which came to market in seven tranches the previous week, ended April 14. That week had one less trading day than usual, with the debt markets closed in observance of Good Friday on April 14 and an abbreviated session the day before that.

However, this week’s total was still down from the $6.11 billion which gotten done in 12 tranches the week before that, ended April 7.

Several additional deals priced on Friday afternoon.

This week’s primary activity raised year-to-date issuance totals for 2017 so far to $97.91 billion in 178 tranches – considerably more than the $56.9 billion which had priced in 74 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 in 408 tranches for 2015.

Laureate, Clearwater climb

In the secondary realm, traders saw solidly higher levels, on brisk volume, for the new issues from Laureate Education and Clearwater Seafoods.

They indicated that Trilogy International Partners’ new deal had hit the tape too late in the session to generate much in the way of quotable aftermarket activity.

A trader saw Baltimore-based college operator Laureate’s new 8¼% notes in a 101½ to 102 bid context, up from their par issue price.

At another shop, a market source pegged the bonds going home at 101¼ bid on volume of more than $35 million, putting the new issue high up on the day’s Most Actives list.

He also saw Laureate’s existing 9¼% notes due 2019 up marginally on the day to just under 105 3/16 bid, with over $14 million traded.

The company plans to refinance a portion of the approximately $1.4 billion of those 2019 notes on its balance sheet, as well as its existing term loan debt, using the proceeds from the bond deal and a new $1.6 billion seven-year term loan it is currently lining up.

A trader meantime saw the new Clearwater Seafoods 6 7/8% notes due 2025 ending the day at 102 1/8 bid, with over $32 million changing hands.

Another market source put the notes in a 102 to 102¼ bid context, well up from their par issue price.

Thursday issues improve

The traders said that the new issues which came to market in Thursday’s busy $2.1 billion session – high yield’s biggest one-day issuance total in more than two weeks – “continue to trade well,” as one put it.

NuStar Logistics’ 5 5/8% notes due 2027 was the most active credit in Junkbondland on Friday, with more than $81 million changing hands, a market source said. He saw the bonds at 101¾ bid, calling that a gain of nearly 1¼ points on the day.

The San Antonio, Texas-based provider of petroleum terminaling and storage services had the biggest deal on Thursday, as its quick-to-market $550 million of 10-year notes priced at par.

Cincinnati-based broadcaster E.W. Scripps’ 5 1/8% notes due 2025 gained 3/8 point to end at 101½ bid, with over $74 million of that paper traded. That $400 million regularly scheduled forward calendar offering priced at par and then gained more than 1 point in active initial aftermarket dealings.

McLean, Va.-based engineering and consulting services provider Booz Allen Hamilton’s 5 1/8% notes due 2025, another regularly scheduled deal, was seen 1/8 point better on Friday at 101 5/8 bid, with over $25 million traded. That $350 million offering had priced at par and then moved up by around 1½ points when it hit the aftermarket.

Murphy Oil USA’s 5 5/8% notes due 2027 were 5/8 point better on Friday at 101 5/8 bid on volume of more than $22 million. The El Dorado, Ark.-based filling station and convenience store chain operator priced a quickly shopped $300 million of the 10-year paper at par and it gained 1 point in initial secondary trading.

The new Tempo Acquisition LLC 6¾% notes due 2025 were seen ½ point better at 101½ bid on Friday, with over $13 million traded. The financing vehicle for private equity firm Blackstone Group LP’s pending acquisition of some technology assets of insurer Aon plc, did a downsized, regularly scheduled $500 million offering of eight-year notes at par, after the issue was trimmed back from an originally planned $730 million. The bonds were later initially seen in a 100½ to 101 bid context.

Indicators stay mixed

Statistical market performance measures stayed mixed for a third straight session on Friday. They had turned mixed on Wednesday and stayed that way for the rest of the week following a lower across-the-board session on Tuesday and had stayed mixed for the rest of the week.

The indicators also ended the week mixed on Friday versus where they had been the previous week, ended April 14, although debt markets in the United States and other places were not in session that day due to the Good Friday holiday observance. The indicators had been lower all around last Thursday – the final trading session of that week – versus where they had finished up in each of the previous two weeks

The KDP High Yield Daily Index moved up by 3 basis points on Friday to end at 71.87 – its first advance after seven consecutive losses, including Thursday’s 2 bps drop.

Its yield came in by 1 bp on Friday to 5.26%, its first narrowing after being unchanged on Thursday and widening over the two sessions before that, including by 2 bps on Wednesday.

But those levels compared unfavorably to the 71.99 index reading and 5.24% yield seen last Thursday.

The Markit CDX Series 28 Index finished marginally lower from Thursday’s level on Friday, closing at 106 13/16 bid, 106 27/32, its first loss after one gain. On Thursday, it had moved up by almost 9/32 point.

The index also ended down from its week-earlier levels around 106 27/32 bid, 106 29/32 offered.

However, the Merrill Lynch North American High Yield Index firmed by 0.065% on Friday, its third gain in a row. On Thursday, it had improved by 0.022%.

Friday’s advance lifted the index’s year-to-date return to 3.175% from 3.108% on Thursday, although that level remained below the 2017 peak of 3.19%, set on March 1.

For the week, the index rose by 0.182%, its fourth consecutive weekly gain and 13th such advance in the 16 weeks since the start of the new year, against just three weekly declines. It had been up by 0.061% last week, when the Friday year-to-date return was 2.987%.

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