CyrusOne, Howard Hughes, LPL price to cap $6 billion week; busy new BlueLine bonds jump

By Paul Deckelman

New York, March 3 – The high-yield primary market saw its second big session in as many days on Friday – although overall volume was only half of that which priced during Thursday’s frenetic activity.

Syndicate sources said that three new U.S. dollar-denominated and fully junk-rated deals got done in four tranches, accounting for a total of $2.1 billion of new paper.

Unlike Thursday’s session, which was dominated by opportunistically timed and quickly shopped drive-by offerings, all of Friday’s deals came off the forward calendar after having been in the market at least overnight.

Primaryside players saw a pair of $800 million issues get done.

CyrusOne Inc., a real estate investment trust specializing in data-center properties, brought two tranches to market – $500 million of seven-year notes and $300 million of 10-year paper. Both tranches were heard by traders to have moved up when they hit the aftermarket.

There was also a single-tranche $800 million deal from Howard Hughes Corp. – a real estate development company originally founded by the famous billionaire investor.

LPL Holdings Inc., a retail financial adviser, rounded out the day’s activity with a $500 million issue of 8.5-year notes.

Several other prospective issues surfaced, including offerings from chemical maker Rain Carbon Inc. and from Fortress Transportation and Infrastructure LLC.

The day’s deals, combined with the $4.2 billion that got done in six tranches, brought the week’s new issue total to $6.3 billion in 10 tranches, easily topping the $4.1 billion which got done in five tranches the week before.

Thursday’s megadeal-sized offering from construction equipment provider BlueLine Rental was by far the day’s busiest secondary market issue. Those notes firmed smartly from their par issue price

Statistical indicators of market performance were trending lower on Friday after being mixed on Thursday.

But those indicators were still improved across the board versus where they had finished last Friday, their third consecutive stronger week.

CyrusOne brings two-parter

CyrusOne Inc. did one of the two $800 million offerings which priced on Friday, in its case split into two tranches (BB), high-yield syndicate sources said.

The deal, brought by the company’s wholly-owned subsidiaries CyrusOne LP – its operating partnership – and CyrusOne Finance Corp., consisted of $500 million of senior notes due 2024 which priced at par to yield 5% and $300 million of senior notes due 2027 which priced at par to yield 5 3/8%.

The deal priced inside initial guidance of 5¼% to 5½% for the seven-year notes and 5¾% for the 10-year notes.

The seven-year tranche was upsized from an originally announced $450 million while the 10-year tranche was correspondingly downsized by $50 million from $350 million originally.

Joint bookrunners were J.P. Morgan Securities LLC, BofA Merrill Lynch, RBC Capital Markets LLC, Barclays, Deutsche Bank Securities Inc., Goldman Sachs & Co., Jefferies LLC, KeyBank Capital Markets, Morgan Stanley & Co. LLC, Stifel Nicolaus & Co. Inc., SunTrust Robinson Humphrey Inc. and TD Securities (USA) LLC.

CyrusOne, a Dallas-based real estate investment trust specializing in data-center properties, plans to use the proceeds to refinance its 6 3/8% senior notes due 2022 and to repay outstanding borrowings under the operating partnership’s revolving credit facility.

Howard Hughes comes to market

The day’s other $800 million issue also originated from a Dallas-based issuer.

Commercial, residential and mixed-use real estate developer Howard Hughes Corp. brought an offering of eight-year senior notes (Ba3/B+) with a 5 3/8% coupon.

Initial guidance had the deal coming at a yield in the mid 5% area.

J.P. Morgan was bookrunner.

Proceeds will be used to repurchase the company’s 6 7/8% senior notes due 2021 via a tender offer and for general corporate purposes.

LPL prices at talk

The day’s other new dollar-denominated issue was smaller – a $500 million offering of 8.5-year senior notes (B2/B+) – and did not come from a Texas company; issuer LPL Holdings Inc. is a San Diego-based retail financial adviser.

Its paper priced at par to yield 5¾%, in line with price talk envisioning a yield in the 5¾% area.

But like the Cyrus One and Howard Hughes deals, LPL’s offering is being done to let the company improve its balance sheet.

The plans to use the proceeds, together with borrowings under new senior secured credit facilities and cash from its balance sheet, to repay its existing senior secured credit facilities.

Joint bookrunners were Morgan Stanley, J.P. Morgan, Goldman Sachs, Wells Fargo Securities LLC, BofA Merrill Lynch, Citigroup Global Markets Inc., Citizens Bank, Credit Suisse Securities (USA) LLC and SunTrust Robinson Humphrey.

Nyrstar brings euro deal

In the European high-yield space, Nyrstar NV priced an upsized €400 million offering of seven year senior notes (B3) at par to yield 6 7/8% via its wholly owned subsidiary Nyrstar Netherlands (Holdings) BV.

The issue was upsized from an originally announced €350 million and it came at the low end of talk for a yield in the 7% area.

Global coordinator Deutsche Bank will bill and deliver. Goldman Sachs is also a global coordinator. NatWest and SG CIB are joint bookrunners.

Proceeds will be used to refinance the company’s 2018 convertibles and to pay down revolver debt, including the revolving structured commodity trade finance facility and the 2016 working capital facility.

Nyrstar is a multi-metals business incorporated in Belgium with corporate offices in Switzerland.

Alliance Data slates euro deal

Besides the issues which were priced on Friday, syndicate sources said several other offerings joined the forward calendar.

Alliance Data Systems Corp., a Plano, Texas-based provider of data-driven marketing and loyalty solutions serving large, consumer-based industries, plans to sell €300 million of five-year senior notes, becoming the latest domestic issuer to tap the euro-denominated market, following the lead of recent issuers such as Levi Strauss & Co., Avis Budget Group, Inc. and Quintiles IMS Inc.

The company has mandated BNP Paribas Securities Corp. to arrange fixed-income investor meetings in Europe starting on Monday.

Further timing on the Regulation S/Rule 144A deal will be announced.

Alliance Data Systems plans to use the proceeds to repay part of the borrowings outstanding on its revolver for general corporate purposes.

Rain Carbon plans megadeal

Back in the dollar-denominated market, Rain Carbon Inc. announced plans on Friday to sell $1.05 billion of senior notes due 2025.

Details were not immediately available.

The Stamford, Conn.-based producer of carbon-based and chemical products plans to use the proceeds to repay its 8% senior secured notes due 2018, 8¼% senior secured notes due 2021 and 8½% euro-denominated senior secured notes due 2021, as well as to repay its revolving line of credit and term loan facility. Any leftover proceeds will be used for general corporate purposes.

Fortress eyes five-year issue

Fortress Transportation and Infrastructure LLC plans to sell $250 million of senior notes due 2022, an offering that will come to market via bookrunner Morgan Stanley and lead manager Barclays Capital.

The notes are expected to price late in the upcoming week after being marketed to potential investors via a Tuesday investor call and New York luncheon and a Wednesday breakfast meeting in Boston.

The New York-based company, which owns and acquires transportation equipment and infrastructure, plans to use the new-deal proceeds to refinance its existing term loan debt of $100 million, and for general corporate purposes, including future investments.

Iamgold seeks seven-year issue

Canadian mining company Iamgold Corp. was heard by the syndicate sources to be planning to sell $500 million of senior notes due 2025.

Timing, marketing plans and underwriting banks involved will be announced.

The Toronto-based gold-mining company, which has operations in North America, South America and West Africa, plans to use the proceeds, together with cash on hand, to fund the redemption of its 6¾% senior notes due 2020.

Cyrus deal trades up

In the aftermarket, traders said that both halves of the new CyrusOne deal firmed solidly after pricing.

A trader saw the 5% notes due 2024 at 100¾ bid, 101¼ offered, while seeing the new 5 3/8% notes due 2027 in the 101 bid area; later on, he said that the last prints of the day were between 101 and 101½ bid, well up from the par level at which those bonds had priced.

A second trader quoted both halves of the CyrusOne deal around 101 bid.

BlueLine posts big gains

Among the deals that priced in Thursday’s busy session, traders saw hefty gains on heavy volume in the new BlueLine Rental 9¼% senior secured notes due 2024, which had priced at par.

A trader pegged the bonds at 102 – but said that was actually down by around ¾ point from the day’s peak levels.

“BlueLine opened up around 3 points,” a second trader said, “and got up to around 103 to 103½. But then they sold back and ended around 102 or 102 1/8, down a point from their peak.

The Shippensburg, Pa.-based construction equipment rental company’s $1.1 billion offering easily topped the Most Actives list with over $100 million having traded heading into late afternoon.

The regularly scheduled forward calendar offering had been upsized from an originally announced $1.025 billion.

Indicators turn lower

Statistical market performance measures turned lower on Friday after being mixed on Thursday and higher across the board Wednesday.

But those indicators were higher across the board versus their levels of the previous Friday for a third straight week.

The KDP High Yield Daily Index eased by 2 basis points on Friday to close at 72.70 after rising 6 bps on Thursday to end 72.72. Friday’s gain was its second straight advance and a new year-to-date and 52-week high close, eclipsing the old mark of 72.67, set on Monday.

The index’s yield rose 1 bp to 4.92% – its first widening since Feb. 8. On Thursday, it had come in by 2 bps, its second consecutive narrowing and third in four sessions.

Those levels compared favorably, however, with last Friday’s 72.57 index reading and 4.98% yield.

The Merrill Lynch High Yield Index also ended on the downside, its second straight loss. It was down by 0.137% after retreating by 0.047% on Thursday, the first downturn after eight gains.

The loss lowered its year-to-date return to an even 3.00% from 3.142% on Thursday and from Wednesday’s 3.19%, which had been its eighth straight new peak level for 2017, as well as the first time so far this year that the year-to-date gain had topped the 3% mark.

But for the week, the index was up by 0.316%, its sixth consecutive weekly gain.

© 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.