Cloud Crane prices to cap $3.3 billion week, bonds jump in busy dealings; recent issues hold gains

By Paul Deckelman and Paul A. Harris

New York, July 15 – The high-yield primary market closed out its busiest week in a month on Friday with one issue pricing, as heavy-equipment rental company Cloud Crane, LLC did a $470 million issue of eight-year secured notes.

Traders said that the new deal moved up strongly from its par pricing level in active aftermarket trading.

Cloud Crane’s new deal brought the week’s tally of new U.S. dollar-denominated, fully junk-rated paper to $3.37 billion in seven tranches, making it the busiest week the primary has seen in a month.

There was no other activity in the domestic new-deal market, with U.S. Express Enterprises Inc.’s prospective issue – originally expected to have priced on Friday – being pushed back to Monday or Tuesday’s business.

Word came from Europe that Italian gambling company Gamenet SpA, which announced a tender offer for an issue of its existing bonds, plans to sell new secured notes to fund that buyback.

On the domestic front, recently priced issues remained busy on Friday, particularly Thursday’s offering of five-year secured paper from casino operator Rivers Pittsburgh and Wednesday’s deal from television station owner Nexstar Broadcasting Group, Inc.

The new issues were seen continuing to trade at or near the peak levels to which they had moved – mostly a point or two over their respective issue prices.

Statistical market performance measures turned lower across the board on Friday after being mixed on Thursday, their second lower session in the last three trading days.

However those indicators were higher versus where they had finished out last week – their third consecutive week of such Friday-to-Friday gains.

Cloud Crane comes to market

Only one new deal was seen pricing during Friday’s session as Cloud Crane, LLC brought in a $470 million offering of new eight-year second-priority senior secured notes (B3/B).

Syndicate sources said that those notes priced at par to yield 10 1/8%.

That was inside of pre-deal market price talk that envisioned a yield between 10¼% and 10½%, which itself was tight to initial guidance in the 10½% area.

The regularly scheduled forward calendar offering, which was announced on July 11, was brought to market via joint bookrunners J.P. Morgan Securities LLC, Barclays Capital Inc. and Jefferies & Co.

The issuing entity, Cloud Crane, LLC, a Pittsburgh-based heavy-equipment rental company, was formed by New York-based private equity company Apollo Global Management, LLC to facilitate Apollo’s acquisition, announced May 2, of two Pennsylvania companies that rent and lease construction cranes, Maxim Crane Works and AmQuip Crane Rental.

Apollo plans to combine the two companies into a single corporate entity having a rental fleet of more than 1,900 cranes.

U.S. Xpress on tap

Nothing else was seen shaking in the domestic primary market. The only other prospective transaction that was being marketed during the week, U.S. Xpress’ planned $320 million offering of eight-year notes, which originally had been expected to price on Friday but has now been pushed back to Monday or even Tuesday’s business.

New preliminary guidance meantime has the deal coming to yield 9½% to 10%, up from the 9% area that had previously been shopped around.

J.P. Morgan and Wells Fargo Securities LLC have the books for the Chattanooga, Tenn.-based intermodal freight company’s debt refinancing deal.

Busiest week in a month

The Cloud Crane deal brought the week’s total of new dollar-denominated and fully junk-rated paper to $3.36 billion in seven tranches, according to data compiled by Prospect News.

That as well up from the $1.25 billion which had come to market in one tranche last week, which had one less trading session than usual due to the market shutdown for the Independence Day holiday on Monday, July 4.

And as sparse as last week’s activity was, it still far outpaced the week before that, ended July 1, which saw only one transaction – an unrated placement for Flagstar Bancorp, Inc. worth just $250 million. That week thus saw the lowest new-issuance volume of any week so far this year according to the data, eclipsing the previous low weekly total for the year to-date of $350 million in one tranche, seen during the week ended January 15, and again during the week ended Feb. 19.

The most recent previous relatively “normal” week in terms of junk bond new-issue activity was the week ended June 24, which saw $1.58 billion come to market in five tranches.

But this week was the busiest since the week ended June 17, when $5.40 billion got done in nine tranches.

This week’s new-issue activity meantime brought the year-to-date total up to $119.41 billion, which priced in 170 tranches.

That was running some 35.7% behind the new-deal pace seen at this time last year, when $186.01 billion had priced in 299 tranches by this point on the calendar, the Prospect News data indicated.

Gamenet plans euro deal

Away from the dollar-denominated sector, market sources said that Gamenet SpA, a Rome-based operator of betting parlors and other legal gambling establishments, plans to sell €200 million of new senior secured notes due 2021.

It disclosed its plans in a press release announcing that it will tender for up to €200 million of its existing 7¼% senior secured notes due 2018.

It said that the tender offer would be subject to a financing condition calling for Gamenet to issue the new notes via its direct holding company, Gamenet Group SpA, on or before the tender’s payment date, which is expected to be no later than Aug. 5, unless extended.

The proceeds of the new notes to be issued, together with cash on hand, will be used for, among other things, to fund the tender offer and the subsequent redemption of any of the 2018 notes not tendered

There was no additional information immediately offered about the prospective issue of the new notes.

Cloud Crane climbs

In the secondary market, traders saw the new Cloud Crane 10 1/8% secured notes due 2024 firming smartly when they hit the aftermarket.

One trader saw the bonds going home around 102 3/16, well up from their par pricing level. He said that volume in the new deal was around $47 million, making it one of the busiest credits of the session.

A second trader pegged the bonds in a 102 to 102½ bid context.

At another shop, a trader said that the right out of the gate the notes began trading around 101 3/8 bid and got as good as 103.

However, they narrowed later on, with the last prints in a 102¼ to 102 3/8 bid context.

Rivers Pittsburgh trades up

Traders said that the new Rivers Pittsburgh Borrower LP/ Rivers Pittsburgh Finance Corp. 6 1/8% senior secured notes due 2021 that priced on Thursday initially were slightly off their Thursday peak levels in early dealings but came back later in the day on relatively heavy volume.

A trader said that more than $50 million of the casino operator’s bonds traded on Friday, putting the issue right at the top of the day’s junk Most Actives list. He saw the bonds trading between 101½ and 102½ bid.

A second market source saw the bonds at 102½ bid, which he called up ¼ point on the day.

During the morning, traders had seen the bonds off from Thursday’s closing levels but still well above their par issue price.

One had quoted the bonds in a 101¾ to 102 bid context, while a second located them between 101¾ and 102¼ bid.

They said that was off slightly from levels topping 102 bid seen late Thursday.

The bonds – issued by the operator of the Rivers Casino in Pittsburgh – were priced at par on Thursday as a regularly scheduled forward calendar offering and then were heard to have moved up late in the day.

Nexstar notes busy

Among other recently priced new issues, Irving, Texas-based television station owner Nexstar Broadcasting Group’s new 5 5/8% notes due 2024 were among the most active issues Friday, with over $28 million trading.

A market source saw those bonds finishing the day at 101 bid, calling them off by ¼ point on the day.

On Thursday, those bonds had been the most actively traded paper in the junk market as more than $99 million changed hands. The debt went home at around 101¼, up around ¼ point from its late levels on Wednesday.

That was when that quickly shopped $900 million of paper had priced at par via the company’s Nexstar Escrow Corp. subsidiary.

Elsewhere among the new deals, Valvoline Inc.’s 5½% notes due 2024 and Holly Energy Partners LP’s 6% notes due 2024 continued to hover above 103 bid on Friday, both well up from their respective par pricing levels on Wednesday.

The Valvoline bonds were seen going home at 103 3/8 bid, although that was actually down 1/8 on the day from where they had finished on Thursday.

Volume in the bonds was around $128 million on Friday, although that was well down from Thursday’s more than $63 million.

The Covington, Ky.-based motor oil manufacturer and marketer, being spun off by chemical maker Ashland Inc., priced $375 million of the notes at par in a regularly scheduled forward calendar offering Wednesday and those new bonds had shot up to the 103 bid level in initial aftermarket dealings.

Holly Energy Partners’ 6% notes due 2024 were being quoted Friday afternoon at 103 bid, up ¼ point on the day, with around $15 million having changed hands.

On Thursday, the bonds had been ½ point gainers on the day, ending at 102¾ bid, with over $39 million traded.

The Dallas-based petroleum pipeline operator’s $400 million of new notes had priced at par after being twice upsized, from $300 million and then $350 million, coming off the forward calendar. Traders saw them get as good as 102 late in the day on Wednesday and continue to hold and then expand those gains on Thursday and Friday.

Indicators off on day, up on week

Statistical market performance measures turned lower across the board on Friday after having been mixed on Thursday, their second lower session in the last three trading days.

However those indicators were higher versus where they had finished out last week – their third consecutive week of such Friday-to-Friday gains.

The KDP High Yield Index eased by 2 basis points on Friday, ending at 69.26, after having gained 3 bps on Thursday. It was the second loss in the last three sessions – which had followed a string of 10 consecutive trading days during which the index had advanced.

The index’s yield meantime rose by 1 bp to 5.50% after having come in by 4 bps on Thursday to finish at 5.49% – a new low for the year – and being unchanged on Wednesday. Before that, it had tightened over 10 straight sessions.

But while they were in retreat on the day, those levels compared favorably with last Friday’s 68.52 index reading and 5.85% yield.

The Markit Series 26 CDX Index saw a third loss in a row on Friday, ending off by 3/32 point at 104 9/16 bid, 104 5/8 offered. On Tuesday, it had edged downward by 1/32 point. The losses over the last three sessions followed five straight gains.

For the week, the index was up from last Friday’s 103 15/16 bid, 104 offered.

The Merrill Lynch High Yield Index posted its second loss in the last three sessions, retreating by 0.026% on Friday. On Thursday, it had risen by 0.245% as it rebounded from Wednesday’s loss – its first downturn after four straight upside sessions.

Friday’s setback lowered its year-to-date return to 12.193%, down from Thursday’s 12.222%, which was just marginally shy of Tuesday’s 12.223%, which had been its fourth consecutive new peak level for the year.

On the week, the index rose by 1.179%, its third consecutive week-over-week gain and 21st such gain so far this year, versus just seven weekly losses. Last week, it had been up by 1.047%.

© 2015 Prospect News.
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