Select Medical prices; Ardagh on tap; Nesco at a premium; Global Aircraft at par; Refinitiv active

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 29 – The high-yield primary market generated a steady news stream on Monday with one deal pricing and the stage set for three more on Tuesday.

Select Medical Corp. priced an upsized $550 million issue of seven-year senior notes (B3/B-) at par to yield 6¼% in a drive-by.

Ardagh Group SA set price talk on two dollar-denominated tranches of notes on Monday with pricing expected to Tuesday.

Iqvia Inc. and GEMS Education also set official price talk for their offerings, which are expected during Tuesday’s session.

The forward calendar also grew with Forgital Group joining with a $505 million offering of seven-year senior secured notes and Swissport running a roadshow for a €780 million two-tranche offering.

Meanwhile, volume was relatively light with the secondary space unchanged during Monday’s session.

New paper continued to be the focus of trading activity with Select Medical’s new notes in focus and making gains shortly after breaking for trade.

While volume was light, Nesco Holdings I, Inc. and Investment Corp. IV’s 10% senior notes due 2024 continued to trade at a large premium to their issue price.

However, Global Aircraft Leasing Co., Ltd.’s 6½% cash contingent PIK toggle notes due 2024 remained wrapped around their issue price in secondary activity.

Outside of the new paper, Refinitiv’s junk bonds continued to make gains on Monday as details emerged about the London Stock Exchange’s proposed acquisition of the organization.

Select Medical upsizes

Select Medical priced an upsized $550 million issue of seven-year senior notes (B3/B-) at par to yield 6¼% in a drive-by.

The issue size was increased from $500 million.

The yield priced well inside of initial guidance in the high 6% area.

The new paper was in focus after breaking for trade and saw a strong start out of the gate.

The notes traded up to par 5/8 bid, 101 1/8 offered with more than $74 million in reported volume in the late afternoon.

Big Tuesday expected

Dealers set the stage for a big Tuesday.

Ardagh Group set price talk on two dollar-denominated tranches of notes on Monday.

A $600 million tranche of seven-year notes (existing ratings Ba3/BB) is talked to yield 4% to 4¼%.

Meanwhile, talk remains to be announced on a €350 million tranches of seven-year senior secured notes (existing ratings Ba3/BB).

The sole unsecured tranche comes as $800 million of eight-year senior notes (existing ratings B3/B) talked to yield 5¼% to 5½%.

Iqvia talked its $800 million equivalent offering of euro-denominated senior notes due 2028 (expected ratings Ba3/BB) to yield in the 2½% area.

Official talk comes tight to the 2½% to 2¾% initial guidance.

Meanwhile, GEMS Education, which completed a full roadshow on Monday, set price talk for its $800 million equivalent two-part offering of seven-year senior secured notes (B2/B/B+).

The deal is coming in tranches sized at $500 million, talked to yield in the 7½% area, and $300 million equivalent of euro-denominated notes talked in the 5% area.

GEMS, Iqvia and Ardagh are all expected to price on Tuesday.

Calendar grows

The active forward calendar also took on a bit of heft on Monday.

Forgital Group was scheduled to kick off a $505 million offering of seven-year senior secured notes with an investor conference call.

The deal will be marketed on an investor roadshow through Thursday and price thereafter.

Credit Suisse is the left lead bookrunner.

Elsewhere, Swissport plans to run an Aug. 6 through Aug. 8 roadshow for a €780 million two-part offering of high-yield notes.

The deal features €500 million of five-year senior secured notes (expected ratings B2/B-) and €280 million of 5.5-year senior unsecured notes (existing ratings Caa2/CCC).

Sole bookrunner Barclays will bill and deliver.

Nesco at a premium

While the notes were coming in slightly from their highs on Friday, Nesco’s 10% senior notes due 2024 continued to trade at a large premium to their issue price in the secondary space.

The 10% notes were seen at 103¼ bid, 103½ offered on Monday, according to a market source.

However, volume was light with less than $5 million in reported volume.

Volume was also relatively light on Friday although the notes skyrocketed after breaking for trade.

The 10% notes closed out Friday at 103½ bid, 103¼ offered, a market source said.

Nesco priced a $475 million issue of the 10% senior secured second-lien notes at par on Friday.

The yield printed in the middle of yield talk in the 10% area.

Talk widened significantly from initial guidance in the 9% area. There were also covenant changes.

Global Aircraft at par

While most new deals were trading at a large premium to their issue price due to pent up demand, Global Aircraft Leasing, the holding company with a 70% stake in Avolon, was not one of them, sources said.

The 6½% PIK toggle notes due 2024 remained wrapped around their issue price on Monday. They were changing hands at 99 7/8 bid, par 1/8 offered, a market source said.

More than $18 million of the bonds were on the tape by the late afternoon.

Global Aircraft priced an upsized $1.55 billion issue of the 6½% notes at par on Friday.

The yield printed at the wide end of the 6¼% to 6½% yield talk. Initial talk had been in the mid 6% area.

The coupon steps up by 75 basis points, to 7¼%, for PIK payments.

Refinitiv gains continue

Refinitiv’s junk bonds remained in focus and continued to make gains on Monday.

The 8¼% senior unsecured notes due 2026 (Caa2/B-/B+) were changing hands between 111 and 111½, according to a market source.

About $39 million of the bonds were on the tape by the late afternoon.

The notes closed Friday at 109½ after about a 5 point gain.

Refinitiv’s 6¼% first-lien notes due 2026 (B2/B/BB+) also remained active with the notes continuing to change hands between 107 5/8 and 108 on Monday.

The notes rose 3 points on Friday.

The junk bonds have been in focus and trading up since news broke on Friday the London Stock Exchange was in talks to acquire the financial data company.

The London Stock Exchange confirmed that it is in talks to acquire Refinitiv in $27 billion deal that includes debt on Monday.

The final terms of the deal could be announced as early as this week, Reuters reported.

Refinitiv’s junk bonds priced at par in September 2018 to help fund the acquisition of a 55% stake in Thomson Reuters Financial & Risk unit by Blackstone, Canada Pension Plan Investment Board and GIC.

Friday inflows

The cash flows of the dedicated high-yield bond funds were positive on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $199 million of inflows on the day.

Actively managed high-yield funds saw $30 million of inflows on Friday, the source said.

The combined funds have seen $15.5 billion of net inflows in the year to Friday's close, the largest amount in that time-frame since 2012, according to the market source.

Indexes mixed

Indexes opened the week mixed after all saw cumulative gains on the week last week.

The KDP High Yield Daily index sank 3 bps to close Monday at 71.68 with the yield now 5.46%.

The index saw a cumulative gain of 16 bps on the week last week.

The ICE BofAML US High Yield index rose 3 bps with the year-to-date return now 10.727%.

The index saw a cumulative gain of 55.8 bps on the week last week.

The CDX High Yield 30 index dropped 17 bps to close Monday at 107.87.

The index saw a cumulative gain of 109 bps on the week last week.

© 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.