AmeriGas drives by with $1.35 billion two-parter; overall market posts solid gains

By Paul Deckelman and Paul A. Harris

New York, June 20 – The high yield market started the summer season off with a bang on Monday, with a broad-based market rally, following the lead of a stock market no longer trembling ahead of Thursday’s “Brexit” vote in the United Kingdom.

The primary saw retail propane distributor AmeriGas Partners LP price $1.35 billion of new paper in a two-tranche offering, equally split into eight- and 10-year notes.

In the secondary sphere, prices were seen up around ½ point generically, with some high-beta names doing even better than that.

Among recently priced issues, the Dell, Inc. megadeal remained busy, with the computer-maker’s new five- and eight-year notes continuing to post gains.

There was also activity in last week’s deal from retailer L Brands Inc., although not much price movement.

Away from the new deals, other gainers included Freeport-McMoRan, AK Steel and Toys ‘R’ Us.

Statistical market performance measures broke out of their recent rut on Monday, turning higher across the board after having been mixed three straight sessions and having fallen for three consecutive trading days before that.

AmeriGas drives by

AmeriGas Partners, LP priced $1.35 billion of senior notes (Ba3//BB) in two bullet tranches on Monday.

The quick-to-market transaction, the session's sole deal, included $675 million of eight-year notes, which priced at par to yield 5 5/8%. The yield printed in the middle of the 5½% to 5¾% yield talk. Early guidance was 5¾%.

In addition, AmeriGas priced $675 million of 10-year notes at par to yield 5 7/8%. The yield printed in the middle of the 5¾% to 6% yield talk. Initial guidance was 6%.

BofA Merrill Lynch was the left bookrunner. Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC were the joint bookrunners for the debt refinancing.

Meanwhile, the primary market forecast continues to call for muted new issue activity ahead of Thursday's Brexit vote, when voters in the United Kingdom will decide whether or not the kingdom should remain in the European Union.

Polls indicating that voters may be inclined to remain in the union improved the appetite for risk assets on Monday, sources said.

Friday outflows

The daily cash flows of the dedicated high yield bond funds were negative on Friday, the most recent day for which data was available at press time, a trader said.

High yield ETFs were flat, sustaining $5 million of outflows on the day.

Actively managed funds saw $50 million of outflows on Friday.

The dedicated loan funds were also negative on Friday, sustaining $45 million of outflows on the day.

A secondary trader, though, opined that “there’s plenty of cash coming into high yield, I think, even though there was an outflow last week,” referring to the $1.802 billion cash loss the junk bond mutual funds and ETFs saw during the week ended last Wednesday, according to the Lipper fund-tracking service.

“The tone is fine.”

At another desk, a trader said that “some of the high-flier beta-type names were up by as much as 1½ to 2 points today, while generically, the market was ½ point better.”

Dell issue improves again

Among recently priced offerings, “the new Dells are still the most active,” the trader said.

He saw both its 7 1/8% notes due 2024 and its 5 7/8% notes due 2021 having gained 1¼ point on Monday, pegging those issues at 103¼ bid and 101¾ bid, respectively.

At another desk, a market source also had the eight-year notes at 103¼, and the five-years at 101 7/8 bid.

More than $24 million of the former issue and more than $18 million of the latter traded, both high up on the day’s Most Actives list.

That extended the gains seen on Friday, when the 7 1/8s had gained 1¾ point on the day and the 5 7/8s were 3/8 point better, both on brisk volume.

The Round Rock, Texas-based computer giant had priced $3.25 billion of new paper – $1.625 billion of each series of notes – at par on June 8 as a regularly scheduled forward calendar transaction.

© 2015 Prospect News.
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