Downsized Dole, American Tire add-on price; new BWAY heavily traded; funds up $736 million

By Paul Deckelman and Paul A. Harris

New York, March 23 – The high-yield primary realm saw more deals price on Thursday versus the session before – though considerably less new U.S. dollar-denominated and fully junk-rated paper than got done on Wednesday.

Syndicate sources saw a pair of single-tranche issues totaling $420 million – well down from the $2.68 billion which had priced via a single tranche on Wednesday.

The big deal of Thursday’s session, such as it was, came from fruit and vegetable products provider Dole Food Co. Inc., which did a downsized $300 million of 8.2-year junior priority secured notes as a regularly scheduled forward calendar offering.

There was also an upsized and quickly shopped $120 million add-on from American Tire Distributors, Inc.

Traders meantime saw very heavy activity in both tranches of the two-part megadeal from metal and plastic containers maker BWAY Holding Co., consisting of seven-year secured and eight-year unsecured paper.

Both of those tranches were seen trading a little bit above their respective issue prices.

Statistical market performance measures turned mixed on Thursday after being lower across the board on Wednesday for a third consecutive session.

High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – saw their biggest inflow of the year so far in the most recent reporting week, according to data released on Thursday, as they bounced part of the way back from the gigantic $5 billion-plus outflow reported the week before – the biggest downturn so far this year and the second-largest cash loss on record.

This week’s inflow was the first after three weeks of losses.

Some $736 million more came into those weekly reporting-only domestic funds than left them in the form of investor redemptions during the week ended Wednesday, March 22 (see related story elsewhere in this issue).

Dole downsizes bonds

Two issuers priced single-tranche deals on Thursday for an overall total of $420 million.

One of the two issuers came with a drive-by.

One deal was upsized and the other was downsized.

Dole Food Co. priced a downsized $300 million issue of junior priority secured notes (Caa1/CCC+) at par to yield 7¼%.

The amount was decreased from $375 million as the company shifted $75 million of proceeds to its term loan, increasing that part of the financing to $950 million from $875 million.

The yield printed at the wide end of the 7% to 7¼% yield talk.

Morgan Stanley, Deutsche Bank, BofA Merrill Lynch and Scotia were the joint bookrunners.

The Westlake Village, Calif.-based fruit and vegetables company plans to use the proceeds to refinance its term loan B and ABL facility, and pay a settlement.

American Tire upsizes

American Tire Distributors priced an upsized $120 million add-on to its 10¼% senior subordinated notes due March 1, 2022 (Caa2/CCC+) at par.

The deal was increased from $100 million.

BofA Merrill Lynch was the bookrunner for the quick to market debt refinancing deal.

Federal-Mogul in Europe

In the European primary market, Federal-Mogul Holdings LLC priced €715 million of senior secured notes in two tranches.

A €415 million tranche of five-year fixed-rate notes priced at par to yield 4 7/8%. The yield printed at the tight end of yield talk that had been set in the 5% area.

A €300 million tranche of seven-year floating rate notes priced at par to yield three-month Euribor plus 487.5 basis points, with no Euribor floor. The spread came tight to spread talk of Euribor plus 500 bps. The tranche was talked with no Euribor floor.

Deutsche Bank was the bookrunner for the debt refinancing deal.

Aston Martin roadshow

Aston Martin Capital Holdings Ltd. plans to start a roadshow on Friday in London for £530 million equivalent of five-year senior secured notes (expected ratings B3/B-).

The deal is coming in dollar and sterling pieces. Tranche sizes remain to be determined.

The roadshow continues in London on Monday.

A roadshow is scheduled to being in the United States on Tuesday and wrap up on Friday, March 31.

Global coordinator JP Morgan will bill and deliver. Deutsche Bank and Goldman Sachs are also global coordinators.

BofA Merrill Lynch, HSBC, Morgan Stanley, Standard Chartered and UniCredit are bookrunners.

The Gaydon, England-based automobile manufacturer plans to use proceeds to redeem Aston Martin Capital Ltd.’s senior secured notes due 2018 and Aston Martin Holdings (UK) Ltd.’s senior subordinated PIK notes due 2018, and for general corporate purposes.

Day’s deals unseen

In the secondary market, traders pointed to the relative lateness in the day at which the Dole Food deal had priced in explaining why they had not immediately reported any initial aftermarket activity Thursday in those 7¼% junior priority secured notes.

They said the same reasoning applied in the case of Huntersville, N.C.-based independent tire provider American Tire Distributors’ add-on to its existing 10¼% senior subordinated notes.

BWAY bonds top Most Actives

Wednesday’s big new deal from BWAY Holding Co., on the other hand, was seen trading around actively on Thursday, easily topping the Junkbondland Most Actives list for the day.

A trader said that “there was no real trading in them last night [late Wednesday]” after the Atlanta-based maker of rigid metal and plastic containers had priced its upsized $2.68 billion two-part offering off the forward calendar.

“There were just some odd lots here and there.”

On Thursday, though, the new 7¼% notes due 2025 were trading down around 99¾ bid at one point on the session, but by the end of the day, had moved back up to above par, the trader said, while BWAY’s 5½% senior secured notes due 2024 “never got below par.”

At another desk, a trader saw the seven-year secured notes get as good as 100 3/8 bid 100 5/8 offered, up from the par level at which that $1.48 billion tranche had priced on Wednesday after having been upsized from $1.38 billion initially.

He saw the eight-year unsecured notes in a par to 100 1/8 bid context. That $1.2 billion tranche had priced at par Wednesday after having been downsized from $1.25 billion.

Another market source said that more than $100 million of the 7¼% notes traded on Thursday, quoting them at 100 1/8 bid.

He saw more than $75 million of the 5½% secured notes changing hands at levels as high as 100½ bid.

Healthcare vote delayed

One of the traders said that overall, “the market seemed a little squirelly,” with many participants waiting to see whether there would be a congressional vote on the Republican plan to repeal the existing Obamacare health care legislation and replace it with something else – a vote seen as an important test of whether the new Trump administration would be able to get its ambitious agenda enacted.

He said he was not surprised at the news that the vote had been delayed, theorizing that leadership wanted to make sure all of its ducks were in a row before taking the chance on a vote.

He predicted that the replacement measure probably would pass, when it is voted on, which he said would send a positive signal to the market.

In the interim, healthcare names saw some fairly active trading, with Community Health Systems Inc.’s 6¼% notes due 2023 slightly better on the day at 100¼ bid, with over $17 million traded.

Rival hospital operator Tenet Healthcare Corp.’s 8 1/8% notes due 2022 were off by around 1/16 point, ending just below 101 bid, also on $17 million of volume.

Indicators turn mixed

Statistical market performance measures turned mixed on Thursday after being lower across the board on Wednesday for a third consecutive session.

The KDP High Yield Daily Index lost 3 basis points on Thursday to end at 71.35, its fourth straight loss after two gains, which in turn had followed nine consecutive setbacks. On Wednesday, it had plunged by 25 bps, after retreating by 7 bps on Tuesday.

It yield rose by 2 bps on Thursday to end at 5.46%, its third straight widening after having been unchanged on Monday. It had risen by 3 bps on Tuesday and then widened by another 5 bps on Wednesday.

But the Markit CDX Series 27 High Yield Index saw its first gain on Thursday after three losses in a row, firming by more than 1/8 point to end at 106 13/16 bid, 106 7/8 offered, in contrast to Wednesday’s easing of 1/32 point on top of Tuesday’s loss of almost 7/16 point.

And the Merrill Lynch High Yield Index also snapped a losing streak on Thursday as it improved by 0.16%, its first upturn after four straight losses, including Wednesday’s 0.312% retreat and Tuesday’s 0.151% setback. The four losses followed gains in two sessions before that.

Thursday’s rebound raised its year-to-date return to 1.58% from 1.418% on Wednesday, although those levels remain well down from the index’s 2017 peak level of 3.19%, which was established on March 1.

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