Drive-by parade continues with Avis, CNH and Clean Harbors deals; recent issues hold gains

By Paul Deckelman and Paul A. Harris

New York, March 14 – The junk bond juggernaut continued to roll on as the new week opened on Monday.

High yield syndicate sources saw a pair of quick-to-market transactions get done just hours after those deals had first surfaced in the market.

The big deal of the day came from a U.S. financing unit of international truck and agricultural machinery maker CNH Industrial NV, which brought $500 million of five-year notes to market. The issue priced too late in the session for any real aftermarket activity, the sources said.

Earlier in the session, Avis Budget Car Rental, LLC, drove by with an upsized $350 million of eight-year notes. The No. 2 car rental company’s new paper firmed slightly, on brisk volume.

And environmental, energy and industrial services provider Clean Harbors, Inc. did an upsized $250 million offering to its existing 2021 notes.

The new add-on was quoted a little firmer from the bonds’ issue price.

Traders meantime saw last week’s new deals from Extended Stay America, Inc., Lease Plan Corp NV, Sinclair Broadcast Group, Inc. and First Data Corp. essentially holding their own at the levels to which they had firmed last week.

Statistical market performance measures turned mixed on Monday, after having finished higher across the board for two consecutive sessions on Thursday and Friday. It was their second mixed session in the last four trading days.

CHH drives by

The primary market burst to life on Monday, as market watchers predicted it would.

A trio of junk-rated drive-by deals cleared, generating $498 million of proceeds, as three issuers brought one tranche apiece.

Two of the three upsized.

CNH Industrial Capital LLC, a wholly owned subsidiary of CNH Industrial NV priced a $500 million issue of 4 7/8% non-callable five-year senior notes (expected ratings Ba1/BB) at 99.447 to yield 5%.

The yield printed on top of guidance.

J.P. Morgan, BofA Merrill Lynch, SG CIB and Wells Fargo were the joint bookrunners.

Proceeds will be used for working capital and general corporate purposes including, among other things, the purchase of receivables or other assets, and possibly to repay CNH Industrial Capital LLC debt.

Avis Budget upsized and tight

Avis Budget Car Rental, LLC and Avis Budget Finance, Inc. priced an upsized $350 million issue of eight-year senior notes (B1/B+) at par to yield 6 3/8%.

The issue size was increased from $300 million.

The yield printed at the tight end of yield talk as well as initial guidance in the 6½% area.

The buzz in the market had the deal five-times oversubscribed, a trader said.

Citigroup was the left bookrunner. Credit Agricole, Deutsche Bank and J.P. Morgan were the joint bookrunners.

The Parsippany, N.J.-based provider of vehicle rental services plans to use the proceeds for general corporate purposes including the redemption of its 4 7/8% senior notes due 2017. The additional $50 million of proceeds resulting from the upsizing of the bond deal will be used for general corporate purposes.

Clean Harbors upsized and rich

Clean Harbors, Inc. priced an upsized $250 million add-on to its 5 1/8% senior notes due June 1, 2021 (Ba2/BB+) at 100.25 to yield 5.068%.

The issue size was increased from $200 million.

The reoffer price came at the rich end of price talk in the par area, or par plus or minus ¼ point.

Goldman Sachs was the sole bookrunner.

The Norwell, Mass., environmental, energy and industrial services provider plans to use the proceeds to finance potential future acquisitions and for general corporate purposes.

Radian to price Tuesday

Aside from Monday's trio of drive-by deals, there was one deal announcement in the dollar-denominated market.

Radian Group Inc. plans to price a $325 million offering of senior notes due 2021 on Tuesday.

Look for price talk Tuesday morning, a market source said.

Deutsche Bank, BofA Merrill Lynch, Goldman Sachs and Morgan Stanley are the joint bookrunners.

The Philadelphia-based provider of private mortgage insurance, risk management products and real estate services to financial institutions plans to use the proceeds, together with shares of its common stock, to purchase its 2019 convertible notes and for general corporate purposes which may include repurchases of common stock and 2017 convertible notes.

Faurecia brings €500 million

The European new issue market also generated news on Monday.

Faurecia SA plans to price a €500 million offering of senior notes due June 15, 2023 this week.

An investor roadshow is set to take place on Tuesday and Wednesday.

Global coordinator Citigroup will bill and deliver. Credit Agricole and HSBC are also global coordinators.

JPMorgan and MUFG are joint bookrunners.

The Nanterre, France-based automotive equipment supplier plans to use the proceeds to redeem its 9 3/8% notes due 2016.

Parex brings FRN

ParexGroup plans to run a Tuesday-Wednesday roadshow for a €150 million offering of seven-year senior secured floating-rate notes (expected ratings B1/B).

Joint bookrunner Deutsche Bank will bill and deliver. BNP Paribas and Credit Suisse are also joint bookrunners.

Proceeds, together with cash on balance sheet, will be used to partially repay shareholder loans.

Avis issue improves

When the new Avis 6 3/8% notes due 2024 were freed for aftermarket dealings, traders saw robust activity in the company’s bonds, which firmed slightly from their par issue price.

One quoted them at 100¼ bid, while a second saw them up 3/8 point, at 100 3/8 bid.

He said that over $59 million of the new notes had changed hands, making the issue the most heavily traded purely junk credit of the day.

A third trader pegged the Avis bonds at 100½ bid, 100¾ offered.

Clean Harbors climbs

A trader said that the new Clean Harbors, Inc. add-on to its existing 5 1/8% notes due in June of 2021 was moving around between 100¾ and 101¼ bid.

That was up from the 100.25 level at which the upsized add-on had priced to yield 5.068%

Traders meantime said that they had not seen any initial aftermarket activity in the new CNH Industrial 4 7/8% notes due 2021, which had priced at 99.481 to yield 5%

London-based global heavy equipment manufacturer CNH priced the issue late in the session via CNH Industrial Capital LLC, a Racine, Wis.-based captive finance company.

Recent deals hold steady

Among the new deals that came to market last week, traders saw the new Extended Stay 5¼% add-on notes due in May of 2025 trading around 98½ bid, which they said was about unchanged from where the issue had traded on Friday.

One of the traders saw volume of more than $31 million on Monday, putting the issue high up on the Most Actives list.

The Charlotte, N.C.-based lodging industry real estate investment trust and its ESH Hospitality, Inc. subsidiary priced $800 million on the notes at 98.5 in a quick-to-market transaction yielding 5.46%, after the deal was upsized from an originally planned $500 million.

Meanwhile, LeasePlan Corp.’s 7 3/8% senior secured notes due 2021 were seen by a trader having firmed ¼ point on Monday, to 103¼ bid, 103¾ offered.

On Friday, those bonds had gained more than 1 point, moving up to around the 103 bid level.

LeasePlan, a Netherlands-based vehicle leasing company, suddenly appeared in the market on Thursday with a restructured €1.55 billion equivalent dollar- and euro-denominated offering that had been shopped around to junk investors in February, only to have been postponed at that time because of the intense market volatility.

Helped by favorable developments in the macroeconomic sphere, with the European Central Bank having unveiled a big stimulus package that included lower interest rates and bond purchases earlier that day, LeasePlan dusted off its postponed deal, tinkered around with it a little bit, dropping a planned seven-year euro notes, and then brought it to market via its Lincoln Finance Ltd. subsidiary.

It priced the $400 million of dollar bonds at par, as well as €1.25 billion of 6 7/8% five-year secured notes, which also came at par.

A trader quoted the new dollar bonds late in the day on Thursday at 102 bid, 103 offered, setting the stage for Friday’s gains.

The traders also said Monday that last week’s new issues from First Data Corp. and Sinclair Broadcast Group were about unchanged from their Friday levels.

A trader said that First Data Corp’s add-on to its existing $1 billion of 5% senior secured notes due in January of 2024 was trading at around 101½ bid, unchanged on the session.

On Friday, they had risen by around 1 point.

The Atlanta-based electronic transactions processor’s quickly shopped new deal had priced at 99.5 on Wednesday to yield 5.076%, after it was upsized to $900 million from an originally planned $500 million.

After trading close to the 101 bid level early Thursday, the bonds retreated from that peak, ending the session at around 100½ bid, setting the stage for Friday’s sizable advance.

Wednesday’s other offering, from Baltimore-based television station group owner Sinclair, via its Sinclair Television Group, Inc. subsidiary, was likewise about unchanged on Monday, quoted around a 102¼-to-102¾ bid context.

They had also been unchanged on Friday, after posting impressive gains earlier in the week.

Sinclair had priced its quick-to-market $350 million offering of 5 7/8% notes due 2026 on Wednesday at par.

The bonds priced early enough in the day to see considerable aftermarket activity during Wednesday’s session, zooming by 1½ points from their issue price, with over $66 million having traded, the day’s busiest Junkbondland credit.

They continued to climb in Thursday’s trading, up another 7/8 points to end around 102¼, on volume of over $29 million.

The bonds were little changed during Friday’s dealings and again on Monday.

Market firm but quiet

One of the traders opined that “the market in general was fairly muted, as far as trading activity and volatility goes.”

He saw most credits – existing as well as new – largely unchanged versus Friday.

“I don’t know if everyone is just taking a step back, with the Fed meeting this week – that could be a part of it.”

The U.S. central bank’s policy-setting Federal Open Market Committee is scheduled to meet on Tuesday and Wednesday, with market-watchers wondering whether recent signs of economic progress might encourage the Fed to resume its previously announced plans to gradually raise interest rates.

The trader also suggested that “the markets have had a good run over the past two weeks” and might be pausing to digest those gains.

“Cash may not have come in today” – but at the same time, he did not see any significant amounts of cash leaving the market either.

And overall, he said, “there’s an underlying bid to the market, at this point in time.”

Indicators turn mixed

Statistical market performance measures turned mixed on Monday, after having finished higher across the board for two consecutive sessions on Thursday and Friday. It was their second mixed session in the last four trading days.

The KDP High Yield Daily Index rose by 12 basis points on Monday to end at 65.58, its third straight gain after two consecutive losses and its 11th gain in the last 13 sessions, including an eight-session winning streak before the losses.

On Friday, it had jumped by 37 bps.

Its yield came in by 3 bps on Monday, to 6.71%, after having tightened by 8 bps on Friday, which followed Thursday’s unchanged session. Monday was the index’s 10th narrowing in the last 13 sessions.

However, the Markit Series 25 CDX North American High Yield Index lost 9/32 point on Monday to finish at 102 5/16 bid, 102 11/32 offered.

It was the index’s first loss after three straight sessions on the upside, including Friday, when the index zoomed by1 3/32 points, and its second loss in the last five sessions.

But the Merrill Lynch North American High Yield Master II Index posted its third straight advance on Monday, rising by 0.264%, on top of Friday’s 0.774% gain and Thursday’s 0.326% rise. Those gains followed two straight losses, but eight wins in a row before that.

Monday’s improvement raised the index’s year-to-date return to 2.788% – its third consecutive new peak level for the year, surpassing the old mark of 2.518%, which had been set on Friday and which had been the first time so far this year that the index’s cumulative return had moved above 2%.

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