Advanced Disposal, Cooper-Standard price; Community Health dives; funds lose $48 million

By Paul Deckelman and Paul A. Harris

New York, Oct. 27 – The high-yield primary market saw a pair of deals totaling $825 million come to market on Thursday – although that was down from Wednesday’s $1.78 billion of activity, also in the form of two deals.

Both of the day’s offerings were regularly scheduled forward calendar transactions, versus Wednesday’s pair of quickly shopped drive-by offerings.

Ponte Vedra, Fla.-based solid-waste-management company Advanced Disposal Services Inc. priced $425 million of eight-year notes.

Novi, Mich.-based automotive systems maker Cooper-Standard Holdings Inc. came to market with $400 million of 10-year notes.

Primaryside players meantime were looking forward to Friday’s expected pricing of movie theater operator AMC Entertainment Holdings Inc.’s two-part offering of dollar-denominated 10-year notes and sterling-denominated eight-year paper.

The traders meantime saw continued dealings in some of the new deals which priced earlier this week, including Centene Corp., Live Nation Entertainment Inc. and Rackspace Hosting, Inc. although on mostly reduced volume and easier levels, in line with an overall softer market.

Away from the new deals, one well-known junk name seen on the downside Thursday was Community Health Systems, Inc. after the big hospital operator released a disappointing third-quarter earnings preview.

Statistical market performance measures were lower across the board for a second consecutive session on Thursday; they had turned weaker on Wednesday after having been mixed on Tuesday and higher all around on Monday. However, it was still only the third time in the last 11 sessions that the indicators were universally weaker.

High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – stayed in negative territory for a third consecutive week, again registering a modest net outflow after posting two large weekly net inflows before that.

Some $48 million more left those weekly-reporting-only domestic funds in the form of investor redemptions than came into them during the reporting week ended Wednesday, on top of the $160.056 million cash loss reported last Thursday for the seven-day period ended Oct. 19 and before that, a $72 million outflow during the week ended Oct. 12 (see related story elsewhere in this issue).

Advanced Disposal prices tight

In Thursday’s primary market Advanced Disposal Services priced a $425 million issue of eight-year senior notes (Caa1/B-) at par to yield 5 5/8%.

The yield printed at the tight end of the 5 5/8% to 5 7/8% yield talk, sources said. Early guidance was in the low 6% area.

The deal was well oversubscribed, an investor said.

Deutsche Bank was the left bookrunner for the debt refinancing deal.

Cooper-Standard at tight end

Cooper-Standard Holdings priced a $400 million issue of 10-year senior notes (B2/B) at par to yield 5 5/8%.

The yield printed at the tight end of the 5 5/8% to 5 7/8% yield talk. Official talk was tight to the 5¾% to 6% initial guidance.

The deal was playing to $1.1 billion of orders on Thursday morning, an investor said.

BofA Merrill Lynch led the debt refinancing.

AMC talks two-parter

AMC Entertainment Holdings, Inc. shifted $60 million equivalent of proceeds to the dollar-denominated tranche from the sterling-denominated tranche of its proposed two-part offering of senior notes (B2/B+/B-) and set yield talk for both tranches.

An upsized $595 million tranche of 10-year notes, non-callable for five years, is talked to yield in the 6% area, on top of initial guidance. The tranche size is increased from $535 million.

A downsized £250 million tranche of eight-year notes, non-callable for three years, is talked to yield in the 6½% area. The tranche was downsized from £300 million.

Citigroup is on the left for both tranches.

Pricing is set for Friday.

MMI International roadshow

An international roadshow is underway for Singapore-based MMI International Ltd.’s $300 million offering of five-year senior secured notes (expected ratings B2/B+).

Goldman Sachs is the left bookrunner for the debt refinancing deal.

Owens-Illinois talk is 3% area

Owens-Illinois Group, Inc. guided its €600 million offering of senior bullet notes due 2024 (expected ratings Ba3/BB) in the 3% area.

Guidance comes wide of the mid-to-high 2% initial guidance.

The deal is set to price on Friday.

Global coordinator JP Morgan will bill and deliver. Credit Agricole CIB is also a global coordinator. BNP Paribas, BofA Merrill Lynch and Deutsche Bank are joint bookrunners.

The notes feature a par call three months prior to maturity but are otherwise non-callable.

The glass container manufacturer, which is headquartered in Perrysburg, Ohio and Scheiedam, Netherlands, plans to use the proceeds to repay its outstanding term loan B, which had $568 million outstanding as of Sept. 30, 2016, and for general corporate purposes.

BUT prices secured deal

BUT SAS priced €380 million of eight-year senior secured notes (B3/B/B+) at par to yield 5½%.

The yield printed at the tight end of the 5½% to 5¾% yield talk.

Joint bookrunner Goldman Sachs will bill and deliver for the debt refinancing and acquisition deal. BofA Merrill Lynch, Barclays, BNP Paribas, Deutsche Bank, ING and RBC Europe Ltd. were also joint bookrunners.

WIND Hellas sets talk

WIND Hellas Telecommunications SA, talked its €250 million offering of five-year senior secured notes (/B/B) with a coupon in the 10% area, with an original issue discount of 98.

The books close on Friday.

JPMorgan is running the books.

Recent issues easier

In the secondary market, traders did not immediately report any initial aftermarket dealings in the new Advanced Disposal Services and Cooper-Standard issues, both of which priced fairly late in the session.

They did see activity, at mostly lower volume and easier trading levels, in some of the recently priced new issues.

For instance, a trader declared that Centene’s 4¾% notes due January 2025 “haven’t really been trading well,” pegging them right around the par level at which the St. Louis-based managed care and specialty health care services provider had priced its $1.2 billion quick-to-market deal on Wednesday, after upsizing it from an originally announced $1 billion.

A second trader located the bonds in a 99¾ to 100¼ bid context, while a third also quoted them at par, which he called a drop of 5/8 point from Wednesday’s initial aftermarket levels.

He said that more than $50 million of the notes traded, up a little from Wednesday’s round-lot volume of over $48 million.

The trader meantime saw Live Nation’s 4 7/8% notes due 2024 dip to around 100¼ bid from 100 5/8 bid at the close on Wednesday, with volume falling to $25 million from over $78 million on Wednesday.

Two other traders also put the Los Angeles-based concert promotor and live-events ticket service’s new notes at that 100¼ mark.

Live Nation had priced a quickly shopped $575 million of the notes at par on Wednesday.

Rackspace Hosting’s 8 5/8% notes due 2024 were seen retreating to around 100 7/8 bid on Thursday. Volume was around $11 million, down from over $49 million on Wednesday and over $150 million on Tuesday, when the San Antonio, Texas-based managed cloud company priced its $1.2 billion regularly scheduled forward calendar offering at par via its Inception Merger Sub, Inc. special-purpose entity.

Those bonds had initially firmed to 101½ when they hit the aftermarket after pricing and pretty much held those levels on Wednesday, before retreating on Thursday.

Community Health on the slide

Away from the new or recently traded issues, a trader said that Community Health Systems’ whole capital structure “was down anywhere from 5 to 8 points,” after the Franklin, Tenn.-based hospital operator issued disappointing preliminary third-quarter results.

After releasing those results late Wednesday, Community Health Systems “got bamboozled,” as another trader put it, sinking several points on various notes.

The 7 1/8% notes due 2020 were down 8½ points to 83, a trader said.

The 6 7/8% notes due 2022 traded down 8½ points to 76¾, a trader said. Another trader said he saw similar activity.

The company’s 8% notes due 2019 traded down 7 7/8 points to 89 1/8, which was down from as high as a 96 handle on Wednesday, a trader said.

Rounding out the movements were the 5 1/8% notes due 2021, which were down 4¾ points to 94, a trader said. A market source had the notes down 5¼ points to 94.

The company saw a 10% decrease in operating revenue year-over-year to $4.38 billion from $4.85 billion, according to a release. The results were lower because of lower-than-expected volume – and therefore revenue – as well as increased costs in health insurance and other health-related expenses.

Quorum Health Corp., which fell 5 points during Wednesday’s trading, continued the downward trend on Thursday. Its 11 5/8% notes due 2023 were down 8 points to 72 on heavy volume, a market source said.

CenturyLink up on deal talk

A trader said that CenturyLink, Inc.’s paper “was active and higher” on the news that the Monroe, La.-based telecommunications company was in advanced merger talks with sector peer Level 3 Communications, Inc.

Century Link’s 7.65% long bonds due 2042 were up more than 7½ points to above the 96 bid level, while its 6¾% notes due 2023 were 1 point better at 107 bid.

However, he said that Broomfield, Colo.-based Level 3’s paper got no boost from the news, with its 5¼% notes due 2026 – “the only one that was really traded” – seen down ½ point on the day at 102¼ bid.

Indicators stay negative

Statistical market performance measures were lower across the board for a second consecutive session on Thursday; they had turned weaker on Wednesday after being mixed on Tuesday and higher all around on Monday. However, it was still only the third time in the last 11 sessions that the indicators were universally weaker.

The KDP High Yield Index plunged by 27 basis points on Thursday to end at 71.42, its third straight loss. On Wednesday, the index had fallen by 9 bps, on top of Tuesday’s 6 bps retreat. Those losses followed seven sessions in a row on the upside.

Its yield rose for a third consecutive session, widening by 9 basis points to 5.38%, after having increased by 1 bp on Tuesday and 3 bps on Wednesday. Those wider levels followed six straight days of narrowings.

The Markit Series 27 CDX Index lost more than ¼ of a point on Thursday to end at 103 27/32 bid, 103 7/8 offered, its third straight loss. It had edged down by 1/16 point on Wednesday, after dropping 11/32 point on Tuesday. Those losses follow two straight days of gains before that.

And the Merrill Lynch High Yield Index, retreated by 0.199%, its second successive setback; on Wednesday, it had been down by 0.237%, its first loss after two consecutive gains before that.

Thursday’s downturn cut the index’s year-to-date return to 16.26% from Wednesday’s 16.492%, which itself was down from Tuesday’s finish at 16.768% – the index’s second consecutive new 2016 peak cumulative level.

-Colin Hanner contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.