Morning Commentary: United Rentals drives by; AssuredPartners upsizes; Goodyear bonds weaken

By Paul A. Harris

Portland, Ore., July 28 – United Rentals, Inc. appeared Friday morning with a $925 million registered drive-by offering of 10.5-year senior notes, which have initial guidance of 5% to 5¼%.

The deal, being run by BofA Merrill Lynch, Barclays, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, MUFG, Morgan Stanley & Co. LLC, Scotia Capital (USA) Inc. and Wells Fargo Securities LLC, ought to fly off the shelves, a trader said.

The Stamford, Conn.-based equipment rental company is bringing the bonds in order to take out its 6 1/8% senior notes due 2023 at a make-whole price it reckons to be 104.371.

Elsewhere in the active Friday primary market AssuredPartners, Inc. launched an upsized $500 million offering of eight-year senior notes (Caa2/CCC+) at 7%, at the tight end of the 7% to 7¼% talk.

The deal which was marketed by means of a roadshow, is upsized from $450 million and is playing to demand in excess of $3 billion, with over 100 accounts in the order books, sources say.

Morgan Stanley, BofA Merrill Lynch, Barclays, RBC Capital Markets LLC, BMO Capital Markets Corp. and Macquarie Capital are the joint bookrunners for the debt refinancing deal.

Goodyear slips on guidance

The bonds of Goodyear Tire & Rubber Co. fell after the company slashed its 2017 profit guidance, a trader said.

With its share price down 11% the bonds were down as much as a point but may have regained a bit of that ground, the source said.

The Goodyear 4 7/8% senior notes due March 15, 2027 were 102¼ bid, 103 offered at midmorning, down ¾ of a point on the day.

The company said its net profit for the quarter ending June 30 dropped to $147 million, or 58 cents a share, from $202 million, or 75 cents a share, year over year.

Elsewhere in the secondary market the Vivint, Inc. (APX Group, Inc.) 7 5/8% senior notes due Sept. 1, 2023 (Caa2/CCC) were above new issue price at par ½ bid, par ¾ offered on Friday.

The $400 million deal came at par on Thursday following a restructuring that saw the maturity decrease to six years from seven years and concessions from the company on what market sources were characterizing as an aggressive covenant package.

Meanwhile the above-mentioned deal from AssuredPartners is also said to be coming with an aggressive covenant package, and people are piling into it, the trader mused, adding that the market seems to be reacting to aggressive covenants on a name-by-name basis.

Thursday outflows

The daily cash flows of the dedicated high-yield bond funds were flat to negative on Thursday, according to a trader.

High-yield ETFs sustained $75 million of outflows on the day.

Actively managed high-yield fund flows were just below the balk line Thursday, at negative-$1 million.

The news follows the closely watched weekly report from Lipper US Fund Flows that the dedicated high-yield funds sustained $21 million of outflows on the week to last Wednesday's close.

© 2015 Prospect News.
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