ViaSat, Station, LPL, MGM price in $2 billion session; Toys down again, hospitals off

By Paul Deckelman and Paul A. Harris

New York, Sept. 7– The high-yield primary market revival continued on Thursday, led by a trio of opportunistically timed and quickly shopped drive-by offerings.

Syndicate sources said that gaming operator Station Casinos LLC priced $550 million of 10-year notes while MGM Growth Properties LLC, a real estate investment trust specializing in casino resort properties, rolled the dice with a $350 million 10-year deal.

Away from those gaming-related names, LPL Holdings, Inc., a retail financial adviser, brought a $400 million add-on tranche to its existing 2025 notes.

But the big deal of the day among the fully-junk-rated issues came off the forward calendar, as communications technology company ViaSat, Inc. priced and upsized $700 million of eight-year notes.

All told, those four deals totaled $2 billion on new junk paper – the most new issuance seen in Junkbondland in a full month, since Aug. 7, when $2.15 billion got done in three tranches.

Besides those purely junk credits, Medical Properties Trust Inc., a healthcare-oriented REIT, priced an upsized $1.4 billion of split-rated 10-year paper.

In the secondary realm, traders saw brisk aftermarket activity in the new LPL and MGM Growth Properties deals, along with Wednesday’s offerings from Iron Mountain Inc. and Steel Dynamics, Inc.

Away from those new or recently priced deals, the traders said that Thursday was another tough day for Toys ‘R’ Us, Inc., whose bonds slid for a second straight session on investor fears that the struggling retailer might be eventually headed for the bankruptcy courts, stoked by the news that it had retained a law firm specializing in debt restructurings.

And hospital operators such as Tenet Healthcare Corp. and HCA Inc. were off on market concern that Hurricane Irma could hurt the healthcare companies’ extensive Florida operations.

Statistical market performance measures turned mixed on Thursday after having improved across the board on Wednesday. It was the second mixed session in the past three trading days.

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 – improved this week after three consecutive weeks on the downside as $641 million more came into those weekly-reporting-only domestic funds than left them during the week ended Wednesday (see related story elsewhere in this issue).

ViaSat upsizes

A busy Thursday session in the primary market saw four issuers price $2 billion of junk in four tranches.

Three of the four deals were drive-bys.

ViaSat priced an upsized $700 million of issue of eight-year senior notes (B3/BB-) at par to yield 5 5/8%.

The amount was increased from $600 million.

The yield printed in the middle of the 5½% to 5¾% yield talk.

The deal, the session’s only dollar-denominated junk offer to clear the market following a roadshow, was playing to $1.1 billion of orders on Thursday morning, a trader said.

BofA Merrill Lynch was the lead for the debt refinancing.

Station prices inside talk

Station Casinos priced a $550 million issue of eight-year senior notes (B3/B-) at par to yield 5%.

The yield printed 12.5 basis points inside of yield talk that had been set in the 5¼% area.

BofA Merrill Lynch, Goldman Sachs, Citigroup, Citizens Bank, Credit Suisse, Deutsche Bank, Fifth Third, JP Morgan, Macquarie, SunTrust, UBS and Wells Fargo were the joint bookrunners.

The Las Vegas-based gaming company plans to use the proceeds to repay debt.

LPL taps 5¾% notes

LPL Holdings priced a $400 million add-on to its 5¾% senior notes due Sept. 15, 2025 (B2/B+) at 103 for a 5.115% yield to worst.

The reoffer price came on top of final price talk that was fixed in the 103 area. Initial price talk was 102.875 to 103.125.

Morgan Stanley, JP Morgan, Goldman Sachs, Wells Fargo, BofA Merrill Lynch, Citigroup, Citizens Bank, Credit Suisse and SunTrust were the joint bookrunners.

The San Diego-based retail financial adviser plans to use the proceeds for general corporate purposes including repayment of a portion of its term loan B, as well as to fund the contingent payment related to the acquisition of National Planning Holdings if any amount becomes payable.

MGM Growth brings bullet

MGM Growth Properties priced $350 million of 10-year senior bullet notes (B1/BB-) at par to yield 4½% in a quick-to-market trade.

The yield printed on top of yield talk that was announced in the 4½% area. Early guidance was 4½% to 4 5/8% JP Morgan was the lead.

Medical Properties’ crossover

In the crossover market, Medical Properties Trust priced an upsized $1.4 billion of split-rated 10-year senior notes (Ba1/BBB-) at par to yield 5%.

The acquisition deal, via JP Morgan and Barclays, was increased from $1 billion.

Initial guidance was 5% to 5¼%.

JPW to roadshow

Elsewhere JPW Industries, Inc. plans to start a roadshow on Monday in New York for a $220 million offering of seven-year senior secured notes.

Goldman Sachs is the left bookrunner. BMO and BNP Paribas are the joint bookrunners.

Proceeds, together with an equity investment, will be used to repay existing credit facilities and fund the buyout of JPW Industries by Gamut Capital Management LP from Tenex Capital Management.

Iceland smaller, restructured

In the euro-denominated market, Iceland Foods Ltd. priced a downsized, restructured £550 million issue of 7.5-year senior secured notes (B2/B+) at par to yield 4 5/8%.

A proposed £200 million tranche of 10-year notes was withdrawn and £120 million of the proceeds was shifted to the 7.5-year notes tranche, increasing it to £550 million from £430 million.

The overall amount of issuance was decreased to £550 million from £630 million.

The yield printed at the tight end of the 4¾% area yield talk.

Bookrunner HSBC will bill and deliver for the debt refinancing deal. Goldman Sachs was also a bookrunner.

Cortefiel sells two-parter

With the release of a terms sheet pending, Madrid-based fashion retailer Grupo Cortefiel released final pricing information for its €600 million two-part offering of seven-year senior secured notes (B2/B) on Thursday, according to a market source.

Pricing for a €275 million tranche of fixed-rate notes was set at par to yield 5%. The tranche size was decreased from €300 million. The yield printed 12.5 basis points below the tight end of talk for a yield in the 5¼% area.

Pricing for a €325 million tranche of floating-rate notes was set at Euribor plus 525 basis points, with a reoffer price of par. The amount was increased from €300 million.

The spread came at the tight end of the Euribor plus 525 to 550 bps spread talk.

Joint bookrunner Credit Suisse will bill and deliver. Credit Agricole and SG are also joint bookrunners.

Proceeds will be used to pay off the company’s senior facilities.

Day’s issues trade actively

In the secondary realm, traders said that the new issues were the dominant force on Thursday.

MGM Growth Properties’ new 4½% notes due January 2028 were seen by a trader in a 100½ to 101 bid context after pricing at par while a second saw the Las Vegas-based gaming and hospitality REIT’S paper trading between par and 100 7/8 bid before narrowing to a range of 100 5/8 to 100¾.

And yet another market source saw the bonds ending at 100¾ bid, with over $24 million changing hands.

The market source also saw brisk activity in LPL Holdings’ new 5¾% notes due September 2025, with over $14 million of volume.

He saw the add-on to the company’s existing $500 million of those notes about unchanged from its 103 issue price.

A trader said that ViaSat’s 5 5/8% notes due 2025 traded between 100 3/8 and 101¼ bid after that upsized deal priced at par. Late in the session, he saw the notes going home in a 100½ to 101 bid context.

A second trader saw that new deal from the Carlsbad, Calif.-based provider of satellite and other wireless networking systems moving up to 101 bid going out.

Split-rated deal firmer

A trader said that the split-rated offering of 5% notes due 2027 from Birmingham, Ala.-based healthcare-oriented REIT Medical Properties Trust ended the day trading between 100¼ and 100½ bid, after having priced at par.

But he saw only around $3 million having traded up to that point.

Wednesday deals hold small gains

Among the issues which priced on Wednesday – the junk market’s first new deals since mid-August – a market source said that Iron Mountain’s 4 7/8% notes due 2027 proved to be enormously popular with investors, topping the day’s Most Actives list with over $51 million traded.

He saw the notes at 100 5/8 bid, up 1/8 point from the gains notched during initial aftermarket dealings following the issue’s pricing.

The Boston-based records and document storage company had priced a quickly shopped $1 billion of that paper at par on Wednesday after upsizing the deal from an originally announced $750 million.

It moved up by around ½ point in initial dealings, pretty much holding those gains on Thursday.

Steel Dynamics’ 4 1/8% notes due 2025 were also up 1/8 point at 100 5/8 bid on volume of over $28 million.

The Fort Wayne, Ind.-based steel producer and metals recycler had priced $350 million of the notes at par Wednesday in a quick-to-market transaction and the notes moved up to 100½ bid by the close of that session.

Toys ‘R’ Us troubles continue

Away from the new issues, a trader noted that Toys ‘R’ Us paper “was off pretty significantly” from recent levels, seeing the notes down around 20 points from where they had begun the week.

He said the bonds fell “on bankruptcy talk” following the Wayne, N.J.-based specialty retailer’s having hired the law firm of Kirkland & Ellis to aid in its restructuring of $400 million of bond debt coming due next year, with some investors fearing the underperforming company might opt to do so via Chapter 11.

Toys’ 7 3/8% notes due 2018 were seen ending Thursday’s session at 76¾ bid on volume of around $10 million.

On Wednesday, those notes had swooned to around the 78 bid level at the close, down some 19 points on the day, although trading was almost exclusively in numerous small odd-lot transactions.

Tenet trades off

A trader said Tenet Healthcare’s notes were moving lower – he said investors “may be worried about the company’s Florida exposure,” with Hurricane Irma set to roar into the not-so-sunny Sunshine State this weekend.

The Dallas-based hospital operator has 10 of its 77 healthcare properties there.

Its 8 1/8% notes due 2022 were seen down 1 1/8 points on the day, ending at 103¾, with nearly $30 million traded.

Its 6¾% notes due 2023 likewise fell by more than 1¼ points to end at 97½ bid, with about $12 million traded.

Sector peer HCA’s 5½% bonds due 2047 eased by 1/8 point to 103½ bid on around $10 million of volume.

Indicators turn mixed

Statistical market performance measures turned mixed on Thursday after improving across the board on Wednesday. It was the second mixed session in the past three trading days.

The KDP Daily High Yield Index gained 2 basis points on Thursday to end at 72.27, its 11th consecutive gain after five straight losses. The index had also been up by 5 bps on Wednesday and by 8 bps on Tuesday.

For a second session in a row, its yield was unchanged at 5.16%. Before that it had come in by 3 bps on Tuesday, its sixth straight narrowing.

However, the Markit CDX Series 28 High Yield Index eased by around 1/16 point Thursday to close at 107 bid, 107 1/32 offered; it had edged up marginally on Wednesday, after losing nearly 11/32 point Tuesday, its second successive loss after three gains in a row.

But the Merrill Lynch North American High Yield Index made it seven straight sessions on the upside on Thursday, firming by 0.019% on top of its 0.111% rise on Wednesday. Those seven straight gains follow one loss and six advances before that.

Thursday’s upturn raised the index’s year-to-date return to 6.343% from Wednesday’s close at 6.323%, establishing a second consecutive new year-to-date peak level.

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