Upsized Crown and Extraction plus Arby’s price; new issues busy; funds plunge $3 billion

By Paul Deckelman and Paul A. Harris

New York, Jan. 18 – A pair of upsized dollar-denominated offering led the way Thursday, as the high-yield primary market saw yet another busy session.

Packaging maker Crown Holdings Inc. priced an upsized $850 million of eight-year notes as part of a three-part offering coming off the forward calendar that also included two tranches of euro-denominated paper.

Energy oil and natural gas producer Extraction Oil & Gas, Inc. did a quickly shopped $750 million of eight-year notes.

And Arby’s Restaurant Group, Inc. also came to market with eight-year paper, a regularly scheduled $485 million deal.

Traders said all three of the day’s deals moved up when they hit the aftermarket, particularly Arby’s and Crown.

And there was continued brisk trading in Wednesday’s new-deal line-up, including RCN Grande and Noble Corp.

Statistical market performance measures were lower across the board for a second consecutive session on Thursday.

Another statistical 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 – turned sharply negative this week for the first time in the New Year after two weeks on the plus side, according to numbers released on Thursday. Some $3.08 billion more left those weekly reporting-only domestic funds than came into them during the week ended Wednesday. The year’s first net outflow followed two straight weeks before that of net inflows totaling $2.84 billion which had opened the year (see related story elsewhere in this issue).

Extraction Oil & Gas upsizes

Extraction Oil & Gas priced an upsized $750 million issue of eight-year senior notes (B3/B) at par to yield 5 5/8% in a quick-to-market sale on Thursday.

The amount was increased from $600 million.

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

Credit Suisse Securities (USA) LLC, Barclays, Goldman Sachs & Co., SunTrust Robinson Humphrey and Wells Fargo Securities LLC were joint bookrunners.

The Denver-based oil and gas producer plans to use the proceeds to refinance its 7 7/8% senior notes due 2021.

Arby’s prices tight

IRB Holding Corp., also known as Arby’s Restaurant Group, priced a $485 million issue of eight-year senior notes (Caa1/CCC+) at par to yield 6¾%.

The yield printed at the tight end of the 6¾% to 7% yield talk.

Barclays was the left bookrunner. BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC were the joint bookrunners.

The Atlanta-based quick-service restaurant chain plans to use the proceeds, along with a $1.58 billion term loan, to help fund its pending acquisition of Buffalo Wild Wings Inc.

Meredith talks $1.4 billion

Meredith Corp. talked its $1.4 billion offering of eight-year senior notes (B3/B) to yield 7% to 7¼%.

Books closed Thursday for accounts on the East Coast of the United States only.

The offering is set to price Friday morning, New York time.

Credit Suisse Securities (USA) LLC is the lead bookrunner. RBC Capital Markets LLC, Barclays and Citigroup Global Markets Inc. are the joint bookrunners.

The Des Moines, Iowa-based media and marketing company plans to use the proceeds to help fund its purchase of Time Inc. and refinance existing debt.

Downstream authority roadshow

Downstream Development Authority plans to start a roadshow on Friday for a $265 million offering of five-year senior secured notes.

The deal is set to price during the Jan. 22 week.

Credit Suisse is the sole bookrunner.

The notes become callable after two years at par plus 50% of the coupon and feature a 101% poison put. The deal also comes with a 50% excess cash flow sweep.

Proceeds will be used to refinance the tribal gaming authority's entire capital structure.

Crown prices in dollars and euros

In the European market Crown Holdings priced a three-part offering of senior notes.

The deal included:

• An upsized $875 million of eight-year notes (Ba3/B+) issued by Crown Americas LLC and Crown Americas Capital Corp. that priced at par to yield 4¾%. The tranche was increased from $750 million. The yield printed at the tight end of yield talk that was set in the 4 7/8% area;

• €335 million five-year bullet notes (Ba2/BB) from Crown European Holdings SA that priced at par to yield 2¼%. The yield printed at the tight end of the 2 3/8% area yield talk; and

• A downsized €500 million of eight-year bullet notes (Ba2/BB) issued by Crown European Holdings that priced at par to yield 2 7/8%. The tranche was reduced from €600 million. The yield printed at the tight end of yield talk that was set in the 3% area.

Citigroup Global Markets Inc. was the left bookrunner. Deutsche Bank Securities Inc., BofA Merrill Lynch, BNP Paribas Securities Corp., Santander, Wells Fargo Securities LLC, Mizuho Securities, TD Securities and Scotia Capital were the joint bookrunners.

The Philadelphia-based manufacturer of packaging products for consumer marketing companies plans to use the proceeds, together with other available funds, to pay the cash consideration for its acquisition of Signode Industrial Group Holdings (Bermuda) Ltd. and to refinance Signode’s debt.

Matalan prices £480 million

Matalan Retail Ltd. priced £480 million of secured notes in two re-sized tranches.

The deal saw £20 million of proceeds shifted to the first-lien tranche from the second-lien tranche.

An upsized £350 million of five-year first-lien notes (B2/B-) priced at par to yield 6¾%. The tranche was increased from £330 million. The yield printed inside of guidance set in the 7% area.

The deal also included a downsized £130 million of six-year second-lien notes (Caa2/CCC) which priced at par to yield 9½%. The tranche was cut from £150 million. The yield printed inside of guidance in the 9 7/8% area.

Barclays, Lloyds and Morgan Stanley managed the sale.

The Preston, England-based fashion and homeware retailer plans to use the proceeds to refinance its existing secured notes.

Selecta talks four-part deal

Selecta Group BV set price talk on €1.3 billion equivalent of six-year senior secured notes (B3/B).

The deal includes: euro-denominated fixed-rate notes with two years of call protection, talked in the 6% area, Swiss franc-denominated fixed-rate notes with two years of call protection, talked in the 6% area, euro-denominated floating-rate notes with one year of call protection, talked in the Euribor plus 550 basis points area, and

Swedish krona-denominated floating-rate notes with two years of call protection, talked in the Stibor plus 575 bps area.

Tranche sizes remain to be announced, according to a market source who added that document changes were pending on Thursday.

Pricing is expected on Friday.

Credit Suisse will bill and deliver for the Swiss franc-denominated notes.

Goldman Sachs International will bill and deliver for the remaining three tranches.

Goldman Sachs, Credit Suisse and BNP Paribas are the joint global coordinators. Banca IMI, Credit Agricole CIB, Deutsche Bank, ING, KKR and UniCredit Bank are the joint bookrunners.

The Cham, Switzerland-based self-service coffee and convenience food provider plans to use the proceeds to redeem its existing notes, to repay its term loan, to pay off its revolving credit facility, to undertake a refinancing at Argenta Group, to repay an Argenta shareholder, to repay a Selecta minority investor and to put cash on its balance sheet.

Crown climbs after pricing

In the secondary market, traders said that there was a fair amount of trading in Crown Holdings’ new 4¾% notes due 2026, which priced relatively early in the session.

One trader saw those notes in a 101 to 101½ bid context.

A second trader pegged the bonds between 100 7/8 and 101¼ bid, while two others quoted them going home at 101 bid.

Arby’s up in aftermarket

A trader said that the new Arby’s 6¾% notes due 2026 were trading around 101 bid when the deal broke after pricing at par.

Later on in the session, another market source located the new bonds in a 102 to 102½ bid context going home.

Extraction gains modestly

The traders saw somewhat more restrained initial aftermarket gains in Extraction Oil & Gas’ new 5 5/8% notes due 2026.

One trader saw them in a par to 100½ bid context, up from their par issue price.

A second trader quoted the issue bid between par and 100 3/8.

Wednesday’s deals above issue

Traders said that there was considerable activity in the new deals that came to market on Wednesday, seeing the new paper from RCN Grande and Noble Corp. trading up from those credits’ respective issue prices.

One of the traders said that Noble Holding International Ltd.’s issue of 7 7/8% senior guaranteed notes due 2026 “was probably the most active name in the market,” trading around 101 bid.

A second trader also saw the offshore oil and natural gas drilling contractor’s issue at that 101 bid level.

Noting that a few new recent credits like Noble, RCN Grande and the new Crown Holdings and Arby paper were all trading around the 101 bid level once they were freed to trade in the aftermarket, he remarked that “101 is the magic number today.”

RCN Grande’s new 6 7/8% notes due 2023 moved around on Thursday between 100¼ and 101 bid, a trader said.

Others quoted the notes at 100½ bid and at 101 bid.

The Princeton, N.J.-based cable, telecom and internet services provider priced $300 million of the notes at par as a forward calendar offering.

Noble priced $750 million of its bonds at par after upsizing the quick to market offering from an originally announced $500 million.

Toll trades easier

One credit not seen having moved up was the new Toll Brothers Inc. 4.35% notes due 2028

The Horsham, Pa.-based homebuilder’s split-rated (Ba1/BB+/BBB-) drive-by offering was “trading around a bit” at 99¾ bid, a trader said, pronouncing that “right in that same wheelhouse” where the notes were trading on Wednesday.

It had priced $400 million of that paper at par, upsized from $300 million originally, but the new notes failed to get any better, instead trading in a 99½ to par bid context when they were freed for aftermarket dealings.

Recent deals steady

Among other recently priced issues, a trader saw Nabors Industries Inc.’s 5¾% notes due 2025 continuing to trade a little below its par issue price at 99 3/8 bid.

The onshore oil, natural gas and geothermal drilling contractor priced $800 million of those notes at par on Tuesday in a quick-to-market transaction upsized from $600 million originally.

The notes had pushed as high as 100 3/8 bid on initial volume of over $10 million, before dropping back on Wednesday to a sub-par level.

Olin Corp.’s 5% notes due 2030 were seen holding steady around 101 bid, where they had closed on Wednesday.

The Clayton, Mo.-based specialty chemicals and firearms ammunition manufacturer priced its $550 million quick-to-market offering at par on Tuesday after upsizing the deal from an originally announced $500 million.

A trader said that Dallas-based oil and natural gas exploration and production company Moss Creek Resources Holdings, Inc.’s 7½% notes due 2026 were “still trading around” in the 103 5//8 bid vicinity, “hanging right in there.”

On Friday, those bonds had shot up to 102¾ bid in late-session trading after the $700 million forward calendar offering – upsized from $650 million originally – had priced at par.

They continued to firm to 103¾ bid on Tuesday on volume of more than $26 million.

Frontier up on loan changes

Away from the new deals, a trader said that Stamford, Conn.-based wireline telecommunications provider Frontier Communications’ paper “had another up day – they were better again” by 1½ to 2 points.

It was the third straight session that its paper had gained multiple points.

“They were pretty active and traded up quite a bit,” another trader said, seeing the company’s 10½% notes due 2022 “up close to 3 points” as they ended at 80 5/8 bid.

He said the company’s 11% notes due 2025 “were probably not up as much,” ending around 77 bid.

“The short-dated ones were up a couple.”

He said that Frontier “continues to trade up after they filed an amendment to their credit facility to loosen the terms, making possible a potential raise of new debt.”

Frontier said in 8-Kfiling Wednesday with the Securities and Exchange Commission that it had launched amendments to its credit agreements with JPMorgan Chase Bank, NA and CoBank ACB in order to replace the existing leverage ratio maintenance test in the credit agreements with a first-lien net leverage ratio maintenance test.

The amendment applies to Frontier’s revolver, $1.5 billion term loan A and $1.5 billion term loan B.

In a presentation to its lenders, the company said it believes the modification will “remove the covenant overhang from the market and better position it to address upcoming senior note maturities.”

Frontier has $578 million of bonds due in the fourth quarter, $428 million due in 2019 and less than $1 billion due in 2020.

The company called the near-term maturity profile “manageable.”

The deadline for the amendment is 5 p.m. ET on Friday.

Indicators stay lower

Statistical market performance measures were lower across the board for a second consecutive session on Thursday. They had weakened all around on Wednesday after being mixed for two straight trading days and higher for one session before that.

The KDP High Yield Daily Index plunged by 10 basis points Thursday to end at 72.02, its second consecutive loss. It had lost 3 bps on Wednesday after having risen by 4 bps on Tuesday, which in turn had followed Friday’s 6 bps drop. The index was not published on Monday with the market officially closed for the Martin Luther King Day federal holiday.

Its yield rose by 4 bps to 5.24%, its second straight widening out. It had also risen 2 bps on Wednesday, after having come in by 2 bps on Tuesday and having risen by 1 bp on Friday.

The Markit CDX Series 29 index posted its fifth straight loss on Thursday, retreating by over 1/16 point to 108 13/32 bid, 108 7/16 offered. On Wednesday, it was off by 1/32 point, having also retreated by 3/32 point Tuesday.

And even the previously robust Merrill Lynch High Yield Index remained in the doldrums for a second session in a row on Thursday after rising over four straight days before that.

It was off by 0.108% Thursday and by 0.054% Wednesday, in contrast to gains of 0.05% on Tuesday, 0.051% on Monday, when the index was published despite the market close. It had also advanced by 0.019% on Friday and 0.114% on Thursday.

Thursday’s loss dropped the index’s year-to-date return to 0.674% from Wednesday’s finish at 0.783%.

It was down as well from last Monday, Jan. 8’s close at 0.862%, its peak cumulative level for the new year so far.

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