Johnson Controls, Digicel on tap; Credit Acceptance, Scientific Games price; Intelsat drops

By Abigail W. Adams

Portland, Me., March 5 – The domestic high-yield primary market was in high-gear on Tuesday with $1.5 billion pricing over two deals and two deals totaling $5.25 billion joining the forward calendar.

Credit Acceptance Corp. priced $400 million of seven-year senior notes at par to yield 6 5/8% (existing Ba3/BB) following a brief roadshow.

Scientific Games International Inc. priced $1.1 billion of seven-year senior notes at par to yield 8¼% (existing Caa1/B) in a Tuesday drive-by.

The forward calendar ballooned on Tuesday with some highly anticipated deals surfacing.

Johnson Controls (Power Solutions) will begin a roadshow on Wednesday for a $4.7 billion equivalent three tranche offering of euro- and dollar-denominated senior notes with pricing expected March 15.

Digicel International Finance Ltd. and Digicel Holdings Ltd. plan to price $550 million of five-year first-lien senior secured notes (expected B1//B) on Thursday.

Meanwhile, the secondary space was largely unchanged on Tuesday with all eyes were on the growing calendar of deals.

However, Intelsat SA’s junk bonds were in focus with the capital structure trading down in high-volume activity on mounting political opposition to the 5G wireless proposal from the C-band alliance.

Credit Acceptance accelerates

Credit Acceptance priced $400 million of seven-year senior notes at par to yield 6 5/8% (existing Ba3/BB) on Tuesday following a brief roadshow, according to market sources.

Price talk was in the 6¾% area, according to market sources.

Wells Fargo Securities LLC is the left bookrunner. Credit Suisse Securities (USA) LLC and BMO Capital Markets Corp. were joint bookrunners for the Rule 144A and Regulation S offering.

Timing was accelerated with the deal initially expected to be marketed on a roadshow through Tuesday and to price on Wednesday.

The new paper was trading up out of the gate.

It was seen at par ¼ bid, par ¾ offered shortly after breaking for trade, according to a market source.

Scientific Games drive-by

Scientific Games priced $1.1 billion of seven-year senior notes at par to yield 8¼% (existing Caa1/B) in a Tuesday drive-by, according to market sources.

Pricing came wide of initial talk in the high 7% area.

J.P. Morgan Securities LLC, BofA Merrill Lynch, Deutsche Bank Securities Inc., BNP Paribas Securities Corp., RBC Capital Markets LLC, Credit Suisse Securities (USA) LLC, Citizens Bank, Fifth Third Securities Inc., PNC Capital Markets LLC, Macquarie Capital and Goldman Sachs & Co. LLC were bookrunners for the Rule 144A and Regulation S offering.

Proceeds will be used to call $1 billion of the technology-based gaming company’s 10% senior notes due 2022.

Johnson Controls roadshow

Johnson Controls (Power Solutions) will begin a roadshow on Wednesday for a $4.7 billion equivalent three tranche offering of euro- and dollar-denominated senior notes, according to a market source.

The offering will consist of a $2 billion senior secured tranche of seven-year senior notes (Ba3/B+/BB) to be led by J.P. Morgan Securities LLC and a $750 million equivalent euro-denominated senior secured tranche of seven-year notes (Ba3/B+/BB) to be led by Barclays.

The senior secured notes are whispered in the 7% area.

The offering will also consist of a $1.95 billion senior unsecured tranche of eight-year notes (B3/B/B-) to be led by Credit Suisse Securities (USA) LLC.

The senior unsecured notes are whispered in the low 9% area.

The roadshow will run from March 6 to March 8 in Europe and March 11 to March 14 in the United States with pricing expected on March 15.

Proceeds will be used to fund Brookfield Business Partners’ acquisition of Johnson Controls’ Power Solutions business.

Digicel on tap

Digicel plans to price $550 million of five-year first-lien senior secured notes (expected B1//B) on Thursday, according to a market source.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Barclays, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. are the bookrunners for the Rule 144A and Regulation S for life offering.

Proceeds will be used to refinance Digicel’s short-term secured debt.

With the new deal announced, Digicel’s outstanding issues continued to improve.

The Kingston, Jamaica-based mobile phone network provider’s 6¾% senior notes due 2023 rose another 1½ points to 72 5/8, according to a market source.

More than $22 million of the bonds were on the tape by the late afternoon.

The notes also rose 1 7/8 points on Monday.

Digicel’s junk bonds have been on a downward spiral since the company reported third-quarter earnings and announced that lenders had agreed to ease the leverage covenant on its bonds.

However, they have been trading up some whispers circulated the market about a pending refinancing deal.

Intelsat drops

Intelsat’s junk bonds were trading down in high-volume activity on Tuesday as political opposition grows to the communications satellite services provider’s C-band alliance proposal.

Intelsat Luxembourg’s 8 1/8% senior notes due 2023 dropped 5 points, sources said. The notes were changing hands at 77¾ with more than $56 million of the bonds on the tape by the late afternoon.

Intelsat Jackson Holdings SA’s 8½% senior notes due 2024 dropped 1½ points to 98¾. More than $53 million of the bonds changed hands during Wednesday’s session.

Intelsat SA’s 9½% senior notes due 2023 dropped almost 4½ points to 91 with more than $51 million of the bonds changing hands.

Intelsat’s 9¾% senior notes due 2025 dropped 1 3/8 points to 102 3/8 with more than $21 million of the bonds changing hands.

Intelsat’s capital structure was trading down as political opposition grows to its 5G wireless proposal.

There are rumblings that some lawmakers are threatening to dismantle the Federal Communications Commissions approval of a plan that would enable Intelsat and other satellite companies to sell access to the C-band spectrum to wireless carriers for 5G access.

Indexes slide

Indexes saw a slight decline on Tuesday.

The KDP High Yield Daily index dipped 4 basis points to close Tuesday at 69.87 with the yield 6.01%.

The index was flat on Monday.

After a mixed week last week, the index closed the week largely flat as well. The index saw a cumulative gain of 1 bp on the week last week.

The ICE BofAML US High Yield index slid 4.1 bps with the year-to-date return now 6.368%.

The index rose 0.2 bp on Monday after a cumulative gain of 51.3 bps on the week last week.

The index shot past 6% returns on Feb. 25 after passing 5% returns on Feb. 12.

The index initially crossed the 5% threshold on Feb. 5 but sunk below it on Feb. 7.

The index surpassed 4% year-to-date returns on Jan. 30.

The CDX High Yield 30 index dropped 26 bps to close Tuesday at 106.05.

The index was down 12 bps on Monday after a cumulative gain of 14 bps on the week last week.

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