Great Lakes, FirstCash, Delek price, move higher; Intelsat gains more; funds up $650 million

By Paul Deckelman and Paul A. Harris

New York, May 18 – After two days on the sidelines, the high-yield dollar-denominated market swung back into action on Thursday, with a trio of new issues pricing as regularly scheduled forward calendar deals.

Coastal and inland river construction contractor Great Lakes Dredge & Dock Corp. had the big deal of the session, a restructured $325 million of five-year notes.

Pawn shop proprietor FirstCash, Inc. brought $300 million of seven-year paper to market.

And energy operator Delek Logistics Partners LP did $250 million of eight-year notes.

In Europe, document and records storage and management company Iron Mountain Inc. became the latest U.S.-based issuer to tap the euro-denominated market, while British foods manufacturer Premier Foods plc priced a sterling-denominated offering.

Back in the dollar realm, secondary traders saw the new Great Lakes, FirstCash and Delek deals all firming solidly when they hit the aftermarket.

Away from the new deals, Intelsat SA’s various bonds were mostly higher across the company’s capital structure for a second consecutive session, in mostly active trading, after the communications satellite company sweetened its pending exchange offer aimed at taking out a sizable chunk of its more than $15 billion debt load.

Statistical market performance measures turned mixed on Thursday after being lower across the board on Wednesday – their first retreat in nearly two weeks, since May 4. They had also been mixed on Tuesday and higher all around for two sessions before that.

Another numerical indicator – flows of investor cash into or out of high-yield mutual funds and exchange-traded funds, which are considered a reliable barometer of overall junk market liquidity trends – moved back to the upside in the latest reporting week, posting its first net inflow after two straight weekly net outflows, according to numbers released on Thursday. Some $650 million more came into those weekly-reporting-only domestic funds than left them in the form of investor redemptions during the week ended Wednesday, May 17, in contrast to two consecutive weeks of outflows before that totaling $2.11 billion (see related story elsewhere in this issue).

Great Lakes atop talk

Thursday brought a burst of activity in North American and European new issue markets that have been generally quiet so far this week.

Three issuers brought single tranche deals to raise a combined total of $873 million.

All three deals were priced at their marketed sizes and at the conclusions of roadshows.

Great Lakes Dredge & Dock priced a restructured $325 million issue of five-year senior notes (Caa1/B-) at par to yield 8%.

The yield printed on top of yield talk in the 8% area; initial guidance was in the 7½% area.

A structural change in the debt refinancing deal extends call protection to three years from two years.

Deutsche Bank and SunTrust Robinson Humphrey were the joint bookrunners.

FirstCash tight to talk

FirstCash priced a $300 million issue of seven-year senior notes (Ba3/BB) at par to yield 5 3/8%.

The yield printed at the tight end of yield talk that was set in the 5½% area.

The deal was initially guided at 5¼%, a trader said.

Credit Suisse was the lead left bookrunner. Jefferies and Wells Fargo were the joint bookrunners.

Delek brings eight-year deal

Delek Logistics Partners priced a $250 million issue of 6¾% eight-year senior notes (B3/B) at 99.245 to yield 6 7/8%.

The yield printed in the middle of the 6¾% to 7% guidance.

BofA Merrill Lynch, Fifth Third, RBC and BBVA were the joint bookrunners for the debt refinancing deal.

Xplornet roadshow

Canadian telecom Xplornet Communications, Inc. began a roadshow on Thursday for a $225 million offering of five-year senior PIK notes (Caa2/CCC).

The deal is set to price early in the week ahead.

SunTrust, BMO and Jefferies are the joint bookrunners.

The notes feature optional PIK interest payments during the first two years, at the issuer’s discretion. They become callable after two years at par plus 50% of the coupon.

The rural-focused broadband service provider plans to use the proceeds, along with a $75 million term loan add-on, to refinance its 13% senior PIK notes and finance the acquisition of Canadian satellite capacity on the ViaSat-2 satellite.

Iron Mountain prints at 3%

The European new issue market also saw activity on Thursday.

Iron Mountain priced a €300 million issue of senior notes due Jan. 15, 2025 (Ba3/BB-) at at par to yield 3%.

The yield came at the tight end of the 3% to 3¼% yield talk and inside of initial talk in the 3½% area.

Joint global coordinator Barclays will bill and deliver. Credit Agricole was also a joint global coordinator.

BofA Merrill Lynch, HSBC and JPMorgan were joint bookrunners.

The Boston-based information management services provider plans to use the proceeds to pay down its revolving credit facility and for general corporate purposes.

Premiere Foods’ floater

Premier Foods priced a £210 million issue of Libor plus 500 basis points five-year senior secured floating-rate notes (B2/B) at par, with a 0% Libor floor.

The spread, reoffer price and floor came on top of talk.

Joint bookrunner BNP Paribas will bill and deliver. Barclays, HSBC and Lloyds were also joint bookrunners for the debt refinancing deal.

Norwegian Air mulls NOK deal

Norwegian Air Shuttle ASA mandated Arctic Securities, Danske Bank, DNB Markets and SEB to arrange meetings with fixed income investors on Monday ahead of a possible bond offering.

The Fornebu, Norway-based passenger airline is contemplating issuing Norwegian krone-denominated 3.5-year bonds, in addition to a possible tap of its existing euro-denominated notes of which there are €185 million outstanding, against a €250 million borrowing limit.

Proceeds would be used to refinance the company’s outstanding floating-rate notes and for general corporate purposes.

Day’s deals move up

In the secondary sphere, traders saw the three new issues which priced during the session all trading up from their respective issue prices.

A trader quoted the new Great Lakes Dredge & Dock 8% notes on the break at 100 3/8 bid versus their par issue price.

A second trader initially saw the notes at 100 5/8 bid, but later on pegged those bonds in a 101 to 101¾ bid context.

Yet another trader initially located the notes around 100 13/16 bid, but later saw them trading between 101 and 101½ bid.

More than $12 million of the Oak Brook, Ill.-based coastal and inland river dredging company’s new issue changed hands, a market source said, calling it the busiest new deal of the session.

Arlington, Texas-based pawnbroker FirstCash’s 5 3/8% notes were seen by two separate traders around 101¼ bid, 101¾ offered.

A trader quoted Brentwood, Tenn.-based energy master limited partnership Delek Logistics Partners’ 6¾% notes at 99¾ bid, 100½ offered, up from their 99.245 issue price.

Cheniere activity slackens

Also among the new or recently priced issues, a trader said that Cheniere Corpus Christi Holdings, LLC’s 5 1/8% senior secured notes due 2027 were in a 100 7/8 to 101 bid context, off marginally from their Wednesday close.

But he saw only around $11 million traded – in contrast to the brisk volume seen over the three previous sessions, when the Houston-based liquefied natural gas company’s new deal had topped the Most Actives list each day.

It priced that quickly shopped $1.5 billion offering at par on Monday, after it was upsized from $1 billion.

Intelsat gains continue

Intelsat’s paper continued to improve for a second straight session after it sweetened the terms of its bond exchange.

Its 5½% notes due 2023 jumped by 2¼ points to 84¾ bid on volume of over $48 million, making it Junkbondland’s busiest credit.

The latest amendments increase the aggregate consideration to be received by noteholders following the closing of Intelsat’s combination with WorldVu Satellites Ltd. (OneWeb); extend the expiration time for each of the exchange offers and each of the related consent solicitations to midnight ET at the end of the day on May 31 from 5 p.m. ET on May 18; and extend the withdrawal deadline for each of the offers and consent solicitations to 11:59 p.m. ET on May 31 from 4:59 p.m. ET on May 18.

Indicators turn mixed

Statistical market performance measures turned mixed on Thursday after being lower across the board on Wednesday – their first retreat in nearly two weeks, since May 4. They had also been mixed on Tuesday and higher all around for two straight sessions before that.

The KDP High Yield Daily Index lost 6 basis points for a second straight session on Thursday, matching the size of Wednesday’s downturn to end at 72.32. It had firmed on Monday and Tuesday.

Its yield rose by 2 bps to 5.11% – its second such widening out after five straight narrowings. It rose 3 bps on Wednesday.

But the Markit CDX Series 28 Index improved by more than 3/32 point on Thursday to 107 3/32 bid, 107 5/32 offered, after losing ground for two straight sessions, including Wednesday’s 11/16 point plunge.

The Merrill Lynch North American High Yield Index saw its second straight setback after seven consecutive advances, as it surrendered 0.098% on top of Wednesday’s 0.113% retreat.

That now-ended seven-session winning streak followed two successive losses and, before that, a streak of 11 gains in a row.

Thursday’s downturn cut the index’s year-to-date return to 4.09% from 4.192% on Wednesday and down from Tuesday’s 4.311%, which had been its fourth straight new high point for the year.

© 2015 Prospect News.
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