AkzoNobel downsizes deal; Refinitiv busy; Diamondback gains; Neiman Marcus mixed

By Paul A. Harris and James McCandless

San Antonio, Sept. 19 – The high-yield primary was subdued in Wednesday’s session but AkzoNobel NV reformulated its planned deal to help fund the buyout of the company by Carlyle Group.

Some of the planned borrowings were shifted to the bank loan portion of the financing and price talk was tightened across the board.

Meanwhile trading in the secondary market remained fixed on recent new issues.

Refinitiv’s new dollar-denominated tranches were seen leading secondary trading for a second day and ended mixed.

Diamondback Energy, Inc.’s new 4¾% senior notes due Nov. 1, 2024, an outstanding issue boosted by a quick-to-market add on priced on Tuesday, improved in trading.

Clearway Energy, Inc.’s new $600 million issue of seven-year 5¾% senior notes sustained a positive streak.

Among older issues, Neiman Marcus Group, Inc.’s bonds were mixed a day after the company released its second-quarter earnings report.

AkzoNobel downsizes, tightens

In a quiet Wednesday session, with activity muted by the Yom Kippur holiday, AkzoNobel revamped the financing backing Carlyle Group’s buyout of the company.

The revisions see €385 million equivalent shifted to the bank loans from the bonds in a transfer that leaves the overall bond amount at €1 billion equivalent, and the loans at €5.5 billion equivalent.

Pricing on all bond and loan tranches tightened.

A downsized $600 million tranche of eight-year notes to be issued by Starfruit US Holdco LLC is talked to yield 8% to 8¼%. Initial talk was in the 9% area.

The tranche was reduced from €900 million equivalent originally.

Sole physical bookrunner Barclays will bill and deliver for the dollar-denominated notes.

An €485 million tranche of notes to be sold by Starfruit Finco BV is talked in the 6¾% area versus initial price talk in the high 6% area to 7%. The euro tranche is unchanged in size.

Joint physical bookrunner HSBC will bill and deliver for the euro-denominated notes. Barclays and JPMorgan are also joint physical bookrunners for the euro-denominated bonds.

The loans and bonds are set to allocate Thursday.

Proceeds will be used to help fund the buyout of AkzoNobel Specialty Chemicals by Carlyle Group and GIC from AkzoNobel for an enterprise value of €10.1 billion.

Basic is back

Basic Energy Services, Inc. returned to the primary market on Wednesday with a deal that it postponed last March when it found the availability of attractive rates as well as flexibility on the part of bond buyers lacking, according to a market source.

The Fort Worth oilfield services provider started a roadshow on Wednesday for a $300 million offering of five-year senior secured notes.

The deal, via joint bookrunners BofA Merrill Lynch, UBS and Morgan Stanley, is set to price early in the Sept. 24 week.

Proceeds will be used to repay debt under the company’s existing second amended and restated term loan, as well as to repay its asset-based secured revolver and for general corporate purposes.

InterXion prices tap

InterXion Holding NV priced a €200 million add-on to its 4¾% senior notes due June 15, 2025 (B1/BB-) at 103.

Global coordinator BofA Merrill Lynch will bill and deliver.

The Amsterdam-based provider of carrier and cloud-neutral colocation data center services plans to use the proceeds for general corporate purposes including expansion projects.

Together prices PIK toggle

Bracken Midco1 plc, the indirect parent of Together Financial Services Ltd., priced a £350 million issue of senior PIK toggle notes due 2023 (Fitch: B).

The notes pay an 8 7/8% cash coupon which steps up to 10 3/8% for PIK payments.

Global coordinator Credit Suisse will bill and deliver. Citigroup is also a global coordinator. Barclays and JPMorgan are joint bookrunners.

Proceeds, together with cash from Together Financial Services Ltd., will be used to repurchase or redeem the issuer’s senior PIK toggle notes due 2021 as well as to provide Bracken Topco Ltd. with the funds required to pay off outstanding vendor notes and make a distribution to Topco’s shareholder including payment of accrued interest on certain shareholder debt and making a dividend payment to shareholders.

Bilfinger mandates banks

Bilfinger SE (S&P: BB) mandated BNP Paribas, Deutsche Bank and HSBC to act as joint bookrunners for a €300 million offering of senior notes with a five-year to seven-year maturity.

The deal size will not grow.

Meetings with European fixed-income investors are set to begin on Monday.

Tuesday fund flows

Daily cash flows for dedicated high-yield bond funds were essentially flat on Tuesday, the most recent session for which data was available at press time, a trader said.

High-yield ETFs sustained $1 million of outflows on the day.

Actively managed funds sustained $5 million of outflows on Tuesday, the trader said.

Refinitiv mixed

In trading, Refinitiv’s new dollar-denominated tranches continued to take the lead in secondary activity.

The 8¼% notes due 2026 lost about 1 point to close at around par ¼, a market source said.

The 6¼% notes due 2026 rose about ¼ point to close at 101 bid.

“There’s been more demand for the secured bond tranches than their term loans,” a trader said.

Another trader lamented that the term loans were not as active as many had hoped.

On Tuesday the company priced a downsized $4.25 billion equivalent amount of high-yield notes in four tranches.

A downsized $1.25 billion tranche of 7.5-year first lien notes (B2/B/BB+) priced at par to yield 6¼%, the tight end of final talk and well below initial guidance was in the low 7% area.

In the unsecured tranches, the downsized $1,575,000,000 tranche of eight-year senior notes (Caa2/B-/B+) priced at par to yield 8¼%, at the tight end of final talk and much lower than initial guidance was in the low 9% area.

The deal also included euro tranches and $9.25 billion equivalent of term loans.

Proceeds from the bonds and loans will be used to help fund the acquisition of a 55% stake in Thomson Reuters Financial & Risk by Blackstone, Canada Pension Plan Investment Board and GIC, and for general corporate purposes.

Diamondback up

Diamondback Energy’s 4¾% senior notes due Nov. 1, 2024, which got a $750 million boost in a quick-to-market trade on Tuesday, improved in secondary trading.

The notes moved up to par 1/8 after the add-on priced at 99.75.

“People can’t get enough of it, it seems,” a trader said.

Clearway rises

Clearway’s new upsized $600 million issue of seven-year 5 ¾% senior notes were generating interest in secondary trading, a market source said.

The notes finished at par 7/8 after pushing upwards to end at par ½ on Monday and par ¾ on Tuesday.

Neiman Marcus mixed

Neiman Marcus’ paper was mixed, market sources said.

The 8% paper due 2021 rose about ¼ point to close at 65¾ bid. The 7 1/8% paper due 2028 lost about 4½ points to close at around 81¾ bid.

On Tuesday, the 8% paper lost about 8¾ points.

Neiman reported rising sales and revenue and a net loss of $75.3 million for the fourth quarter of 2018. Adjusted EBITDA was $56.1 million for the fourth quarter and $477.1 million for the fiscal year, according to a company news release.

“A lot of people jumped on it yesterday and they probably won’t let go for a while,” a trader said. “It’s not doing all that well versus a few direct competitors.”

Neiman Marcus is a Dallas-based luxury department store chain.

Indexes

The KDP High Yield Daily index rose by 2 basis points on Wednesday to close at 70.44. The yield lost 1 bps to 5.83%.

The index rose 6 bps on Tuesday to close at 70.42 and maintained a yield of 5.84% from Monday.

The Merrill Lynch High Yield index eased by 3.9 basis points after several sessions of gains.

It closed Wednesday with a year-to-date return of 2.342% versus 2.381% on Tuesday.

The measured had risen 6.6 bps on Tuesday and 4.2 bps on Monday.

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