Ahern, Global Cash remarketing price, rise in trading; iHeart up; funds lose $859.1 million

By Paul Deckelman

New York, April 30 – The high-yield primary arena closed out the month of April on a busy note on Thursday, with pricings on two dollar-denominated and fully junk-rated deals totaling $900 million principal amount – though only $870 million of proceeds. Meanwhile, price talk emerged on several other deals being shopped around that are expected to price on Friday.

Ahern Rentals, Inc. priced an upsized $550 million of eight-year secured notes in a regularly scheduled offering off the forward calendar. The heavy equipment rental and leasing company’s new issue was the most heavily traded issue of the day in Junkbondland, rising modestly.

Global Cash Access Inc.’s 10% notes due 2022 were being remarketed by dealers, with no proceeds accruing to the company, which got its money when it originally sold the bonds. After pricing at a steep discount to par – and below where the bonds had priced on their first go-around – the notes firmed smartly in busy aftermarket trading.

Price talk circulated on a trio of deals that are expected to get done on Friday to close out the week: Quicken Loans’ $1.25 billion split-rated offering plus the purely junk-rated offerings from PrimeSource Building Products and from Extended Stay America Inc.

Away from the new deals, traders saw brisk activity in Intelsat SA’s bonds and in iHeart Media Inc.’s paper as well; both were up on investor response to the companies’ respective quarterly earnings.

Overall, though, traders saw the junk market heavier on the day, in line with stocks’ sell-off.

Statistical measures of market performance were trending lower for a third consecutive session.

And another numerical marker – flows of money into and out of high-yield mutual funds and exchange-traded funds, considered a reliable gauge of overall junk market liquidity trends – saw their second consecutive weekly outflow. In the week ended Wednesday, $859.1 million more left the funds than came into them.

Upsized Ahern prices

The big deal of the day was Ahern Rentals’ upsized $550 million offering of eight-year senior secured second-lien notes (B3/B).

High-yield syndicate sources said that the notes priced at par to yield 7 3/8% after the deal was enlarged from an originally planned $500 million.

It came to market in line with price talk envisioning a yield in the 7 3/8% area, which in turn had tightened from initial guidance of a yield in the mid-7% area.

The Rule 144A and Regulation S for life deal got done via joint bookrunners BofA Merrill Lynch and J.P. Morgan Securities LLC, with MUFG, BBVA Securities Inc., RBS Securities Inc., SunTrust Robinson Humphrey, Inc. and Regions Securities LLC acting as co-managers.

The deal surfaced last week and was shopped around to potential investors via a roadshow.

The privately held Eugene, Ore.-based heavy construction rental equipment company plans to use the proceeds from its new bond deal to redeem its existing 9% notes due 2018, to pay down a portion of its outstanding asset-based loan facility and to repay a shareholder contribution.

Ahearn’s new bonds were actively traded after their mid-afternoon (ET) pricing.

One trader pegged them at 100½ bid, while a second located them in a 100¼-to 100¾ bid context.

At another desk, a trader also saw the bonds going out ½ point better than their par issue price. He said that over $70 million of the notes had changed hands by the close, making Ahern easily the busiest junk issue of the day.

Global Cash Access remarkets

The day’s other pricing involved the remarketing by dealers of Global Cash Access’ $350 million of 10% senior notes due Jan. 1, 2022 (Caa1/CCC+). A high-yield market source said that those bonds priced at 91.457, for a yield to maturity of 11 7/8% – actually tighter than the price talk that had circulated on Wednesday envisioning a yield in the 12% area at a discount to par of about 9 points.

BofA Merrill Lynch was the left bookrunner for the remarketing effort, while Deutsche Bank Securities Inc. was the joint bookrunner.

The notes were being offered to investors under Rule 144A with registration rights.

The issue originally priced on Dec. 18 at 98.921 to yield 10.21% as part of a $700 million two-part offering, the other half of which was not involved in the remarketing.

The company, a provider of integrated cash access solutions and related services to the gaming industry – will not receive any proceeds from the remarketing.

Proceeds from the initial transaction back in December, along with cash on hand and bank facility borrowings, were used to fund the roughly $1.2 billion all-cash acquisition of Multimedia Games Holding Co. Inc., an Austin, Texas-based gaming technology developer.

When the remarketed bonds hit the aftermarket, a trader said he saw “prints around the 95½ level,” well up from where the deal had taken place.

A market source at another desk estimated the bonds were around 94¾ bid, with over $32 million having traded.

Closing out a busy month

Two deals brought April’s issuance of new dollar denominated and fully junk-rated paper from domestic or industrialized-country borrowers up to $38.99 billion in 64 tranches, according to data compiled by Prospect News.

April was a busy month, but it still lagged March’s new-issuance volume of $39.66 billion in 56 tranches as well as last April’s $39.68 billion in 62 tranches.

April’s issuance raised the year-to-date total to $128.01 billion in 194 tranches, running about 18.6% ahead of the pace seen a year ago, when $107.89 billion had priced in 203 tranches by this time on the calendar.

Market awaits Quicken Loans

Looking ahead to Friday’s session, investors will be looking for Quicken Loans’ pending $1.25 billion split-rated (Ba2/BBB-) offering of 10-year senior notes.

High-yield syndicate sources said that those notes are expected to yield 5¾% to 6%, according to market price talk that circulated on Thursday.

The sources said that the order books on the Detroit-based online lender’s big deal are scheduled to close at 11 a.m. ET on Friday, with pricing expected sometime thereafter.

Credit Suisse Securities (USA) LLC is the lead left bookrunner for the Rule 144A and Regulation S for life offering, while JPMorgan is the joint bookrunner.

The company plans to use the proceeds from the note sale to fund a distribution to Rock Holdings, its parent, and for general corporate purposes.

Extended Stay around 5 3/8%

Price talk was heard on Extended Stay America’s $500 million offering of 10-year senior notes (expected ratings B3/BB-). The notes are expected to come to market yielding somewhere in the 5 3/8% area, syndicate sources said.

Books were scheduled to close at the end of the day Thursday, with pricing expected Friday morning.

Deutsche Bank is the left bookrunner for the Rule 144A and Regulation S for life offering. Citigroup Global Markets Inc., Goldman Sachs & Co., JPMorgan, Barclays and Credit Suisse are the joint bookrunners. Lebenthal & Co., LLC is the co-manager.

The issuing entity will be subsidiary ESH Hospitality, Inc.

The Charlotte, N.C.-based owner and operator of company-branded hotels plans to use the proceeds to repay mortgage debt.

Prime Source talked around 9%

Price talk also emerged on the $230 million offering of eight-year senior notes (Caa1/CCC+) being done by PriSo Acquisition Corp., which does business as PrimeSource Building Products.

Syndicate sources said talk was set in the 9% area.

The books on the deal were scheduled to close at 5 p.m. ET on Thursday, with allocations expected on Friday morning.

Deutsche Bank, BMO Capital Markets Corp., Credit Suisse, Goldman Sachs and Nomura Securities International, Inc. are the bookrunners for the Rule 144A and Regulation S for life offering.

Proceeds will be used to fund the leveraged buyout of PrimeSource by Platinum Equity LLC, a Beverly Hills, Calif.-based private equity company.

The financing also includes a $300 million asset-based revolving credit facility and a $325 million term loan.

PrimeSource Building Products is a Dallas-based two-step building products distributor.

Intelsat up on earnings

Away from the new deals, a trader said that Intelsat’s paper “was one busy name.”

He saw the Bermuda-based communications satellite company’s 7¾% notes due 2021 push as high as 93½ to 94 bid, well up from Wednesday’s levels around 91½, although he later saw the bonds “back off a little” from those peaks to end at 92.

Another market source saw those bonds at the 92 level, calling them up ¼ point, on busy trading of over $43 million.

Its 5½% notes due 2023 jumped 1¾ points on the day to end at 95¾ bid, on volume of over $12 million.

Its bonds firmed along with its shares, which gained altitude after the company reported first-quarter earnings of $54.7 million, or 69 cents per share on an adjusted basis, topping analysts’ expectations of around 45 to 50 cents per share.

Revenues of $602.3 million also beat Wall Street’s revenue expectations of about $600 million.

iHeart cuts losses

Quarterly results also helped iHeart Media, formerly known as Clear Channel Communications, which reported a narrower quarterly loss, resulting in gains for the San Antonio, Texas-based broadcasting company’s debt.

A trader deemed the 14% notes due 2021 a point better at 80 and placed the 10% notes due 2018 in an 87¼ to 88 context.

Revenue improved just under 1% during the quarter, coming to $1.34 billion. That figure came in just below analysts’ expectations of $1.26 billion.

Net loss was $385 million, versus $424 million the year before.

The Clear Channel Outdoor Holdings Inc. unit also reported a better quarter. Net loss was $33.5 million, compared with $97 million for the first quarter of 2014.

However, due to a strong dollar, revenue slipped 3% to $615 million.

Analysts polled by Thomson Reuters had forecast revenue of $637 million.

Indicators trend lower

Statistical indicators of junk market performance were mostly lower for a third consecutive session on Thursday. They had first turned lower on Tuesday after having been mixed on Monday for a third session in the previous four and after having been mostly better on Friday.

The KDP High Yield Daily index fell by 7 basis points on Thursday to end at 71.66, its third straight loss, having also been down by 9 bps on Wednesday.

Its yield rose by 2 bps to 5.18%, its second straight widening, after having risen by 3 bps on Wednesday. It had been unchanged at 5.13% on Tuesday – its third steady yield in the previous four sessions – after having come in by 1 bp on Monday.

The Markit Series 24 CDX North American High Yield index dropped by 5/32 point on Thursday to 107 3/32 bid, 107 5/32 offered. Thursday’s downturn was its fourth straight and its fifth loss in the last six sessions, with the index having also been off by 3/16 point on Wednesday.

Stephanie N. Rotondo contributed to this review

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