IHS Markit add-on drives by as dollar primary reopens; ClubCorp climbs on Apollo buyout plan

By Paul Deckelman and Paul A. Harris

New York, July 10 – The dollar-denominated portion of the high-yield primary market came back to life on Monday after having taken more than a week off, as financial information company IHS Markit Ltd. priced an upsized and quickly shopped $300 million add-on to its existing February 2025 notes.

The offering was the first dollar-denominated transaction among domestic or industrialized-country borrowers seen since June 29, when five issuers had brought a total of $1.79 billion of such paper to market, according to Prospect News data.

The recently moribund dollar-denominated junk primary was scheduled to see another prospective issue emerge Monday as British auto manufacturer McLaren Automotive began a U.S. roadshow for the dollar-denominated tranche of a two-part, dual-currency five-year secured offering.

Secondary market traders said that as had been the case for much of last week, there was little activity among recently priced credits, although communications satellite operator Intelsat Jackson Holdings SA’s new eight-year paper, which came to market in mid-June, was somewhat busy, as it had been during Friday’s session.

There was also some volume seen in car-rental giant Hertz Corp.’s new five-year issue, which had priced right at the end of May.

Away from the new issues, golf club operator ClubCorp Holdings, Inc.’s bonds firmed smartly and its shares soared on the weekend announcement that it will be acquired by Apollo Global Management in a $1.1 billion deal.

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 Wednesday and Thursday. The indicators had started last week mostly higher last Monday heading into Tuesday’s holiday break, after having been mixed for the four consecutive sessions before that.

IHS Markit breaks drought

The first dollar-denominated deal of July cleared the market in a Monday drive-by.

IHS Markit Ltd. priced an upsized $300 million add-on to its 4 ¾% senior bullet notes due Feb. 15, 2025 at 105.5 to yield 3.882%.

The issue size was increased from $250 million.

The reoffer price came at the rich end of the 105.25 to 105.5 price talk.

The came with split ratings – Ba1 from Moody's, BB+ from S&P, and BBB from Fitch – but was priced on the high-yield desk, and was perceived in the market as a high yield trade, an informed source said, and added that the deal – upsized and priced rich – went well.

Wells Fargo was the left bookrunner. RBC, HSBC, J.P. Morgan and BofA Merrill Lynch were the joint bookrunners.

The London-based financial information and services company plans to use the proceeds for working capital and general corporate purposes which may include debt repayment or share repurchases; pending those uses, the proceeds will be used to pay down the company's revolving credit facility.

With IHS Markit in the book, the dollar-denominated active calendar is scant indeed.

British performance automobile manufacturer McLaren Automotive was scheduled to start the American leg of its international roadshow on Monday for the dollar-denominated tranche of its proposed £525 million equivalent two-part (dollars and pounds) offering of five-year senior secured notes.

Early guidance on the dollar-denominated notes is in the 6% area, 75 basis points behind guidance on the euro-denominated notes, a trader said.

McLaren roadshowed the sterling-denominated tranche last week in Europe.

Beyond McLaren there was no visibility on dollar-denominated business at Monday's close, sources said.

United Group brings €1.35 billion

The European market is a different story entirely, as the dealers rolled out €3.17 billion of deals on Monday, all expected to price ahead of this coming Friday's close.

Amsterdam-based United Group BV started a European roadshow on Monday for a €1.35 billion three-part offering of senior secured notes.

The deal includes tranches of five-year fixed-rate notes and six-year floating-rate notes, with tranche sizes to be determined.

Joint bookrunner Credit Suisse will bill and deliver.

Proceeds will be used to refinance debt and fund acquisitions.

HEMA two-part deal

Amsterdam-based discount retailer HEMA BV plans to price €760 million of high yield notes on Thursday.

The deal includes €610 million of five-year senior secured floating-rate notes and €150 million of 5.5-year senior unsecured notes.

Credit Suisse is the lead for the debt refinancing deal.

Maxeda two-part secured deal

Maxeda DIY Holding BV plans to price a €475 million offering of senior secured notes due 2022 in fixed-rate and floating-rate tranches on Thursday.

Tranche size remain to be determined.

Goldman Sachs & Co. is the lead bookrunner.

The Amsterdam-based do-it-yourself store chain plans to use the proceeds to pay off its credit facility.

Demire five-year secured notes

Deutsche Mittelstand Real Estate AG (Demire) plans to price €270 million of five-year senior secured notes (Ba2/BB+) on Wednesday.

Deutsche Bank is the lead bookrunner for the debt refinancing deal from the Frankfurt, Germany-based real estate company.

AnaCap FRN

AnaCap Financial Europe SA SICAV-RAIF began marketing a €315 million offering of seven-year senior secured floating-rate notes on Monday.

Morgan Stanley is the lead bookrunner for the debut deal from the London-based private equity firm.

The calm continues

In the secondary market, the recent becalmed tone was seen having continued over from the holiday-shortened last week.

“The summer doldrums are here,” as one trader put it.

There were no immediate reports of any initial aftermarket activity in the new newly priced and quick-to-market 4¾% add-on notes due IN February of 2025 from IHS Markit, which priced at 105.5.

The company’s original $500 million of the notes had priced at par in a drive-by transaction back on Feb. 6.

Among other recently priced names, a trader saw the Intelsat Jackson SA’s 9¾% notes due 2025 as “somewhat busy,” with around $9 million having changed hands – good enough on a largely quiet day to put that issue near the top of the Most Actives List in Junkbondland.

He saw the notes essentially unchanged on the day at 99 7/8 bid.

The Intelsat bonds had seen brisk trading around the middle of last week, topping the actives list on Thursday with over $25 million having traded, although that volume had dwindled to around $7 million on Friday.

The notes had finished out last week about unchanged in a 99¾-to-99 7/8 context.

That $1.5 billion offering by wholly owned subsidiary of the Luxembourg-based communications satellite company Intelsat SA had priced at par on June 19 in a quick-to-market transaction, and has orbited around that issue price ever since then.

The Hertz 7 5/8% senior secured second-lien notes due 2022 were seen having gained ¼ point on the day to close at par, with about $9 million having traded.

Estero, Fla.-based car-rental colossus Hertz had priced its $1.25 billion offering of the notes at par back on May 31, after that regularly scheduled forward calendar offering had been upsized from an originally announced $1 billion.

And a trader saw PetSmart Inc.’s 5 7/8% first-lien senior secured notes due 2025 up 3/8 points at 96 3/8 bid.

The San Diego-based specialty retailer had priced $1.35 billion of those notes at par on May 25, along with a $650 million tranche of 8 7/8% senior unsecured eight-year notes.

Hole-in-one for ClubCorp

Elsewhere, the big news of the day was ClubCorp.’s pending acquisition for $1.1 billion by affiliates of Apollo Management.

That news, announced on Sunday, sent the Dallas-based golf course operator’s 8¼% notes due 2023 as high as 112¼ bid, before it finally closed at 111 3/8 bid, still well up from the 109 bid area where the bonds had most recently traded, at the end of June.

The announcement of the all-cash transaction did not specifically mention the future of $350 million of those bonds, which had priced at par in December of 2015 after the scheduled calendar offering had been downsized from an original $400 million.

The bonds have a 101 change of control put, which holders are unlikely to exercise, and are first callable in December 2018 at 108.25.

The company’s NYSE shares jumped by 30% on Monday, with volume more than 30 times the norm.

Indicators stay 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 Wednesday and Thursday. The indicators had started last week mostly higher last Monday heading into Tuesday’s holiday break, after having been mixed for the four consecutive sessions before that.

The KDP High Yield Daily Index eased by 1 basis point on Monday to end at 71.90, its fourth straight downturn. The index had plunged by 10 bps on both last Wednesday and again on Friday, with a 5 bps loss on Thursday sandwiched in.

Its yield rose by 6 bps on Monday to 5.11%, its fourth consecutive widening out. It had also risen by 2 bps each on Wednesday and again on Thursday, and by 4 bps on Friday.

But the Markit CDX Series 28 High Yield Index improved by 1/32 point on Monday, its second straight firming, on top of Friday’s 7/32 point upturn. It ended at 106 11/16 bid, 106¾ offered. Those gains had followed three successive losses before that.

The Merrill Lynch North American High Yield Index was also better on Monday by 0.063%, its first advance after having been down for three sessions before that, including Friday’s 0.201% retreat.

The gain lifted the index’s year-to-date return to 4.683% from 4.617% on Friday, although it remained below its high point for the year to date of 5.173%, recorded on June 14.

© 2015 Prospect News.
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