Amsted Industries, Taylor Morrison price; Mallinckrodt craters; First Quantum drops

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 21 – The domestic high-yield primary market was active on Tuesday with four deals and one add-on pricing and the forward calendar growing.

Taylor Morrison Communities Inc. priced an upsized $500 million issue of eight-year senior bullet notes (Ba3/BB) at par to yield 5 7/8% in a Tuesday drive-by.

Amsted Industries Inc. priced a $400 million issue of eight-year senior notes (Ba3/BB) at par to yield 5 5/8% in a quick-to-market Tuesday trade.

CNG Holdings, Inc. priced a $310 million issue of 12½% five-year senior secured notes (B3/B) at 96.50 to yield 13.478%.

Eldorado Gold Corp. priced a $300 million issue of 9½% five-year senior secured second-lien notes (Caa1/B) at 98.00 to yield 10.02%.

Carvana Co. priced a $250 million add-on to its 8 7/8% senior notes due Oct. 1, 2023 (Caa2/CCC+) at 100.5 to yield 8.693%.

Looking to Wednesday’s session, IHO Verwaltungs GmbH, the holding company whose interests include manufacturer Schaeffler AG, is expected to price its €2.05 billion equivalent four-tranche offering of senior secured PIK toggle notes (expected ratings Ba1/BB+/BB+).

And Builders FirstSource Inc. plans to roadshow a $300 million offering of eight-year senior secured notes through Wednesday.

Meanwhile, the secondary space firmed on Tuesday. New paper remained in focus with the deals to price during Tuesday’s session trading at a premium in the secondary space.

While the overall market was strong on Tuesday, headline news pushed several outstanding issues lower.

Mallinckrodt plc’s junk bonds cratered after the pharmaceutical company filed suit against a recent decision by government agencies to change the price used to calculate the rebate for one of its products.

First Quantum Minerals Ltd.’s junk bonds also dropped in high-volume activity on Tuesday after the mining company’s equity was downgraded due to its exposure to Zambia.

And Tesla Inc.’s 5.3% senior notes due 2025 remained under pressure with the notes reaching their lowest level in intraday trading since pricing in August 2017.

Taylor Morrison upsized and tight

In drive-by action on Tuesday, Taylor Morrison Communities priced an upsized $500 million issue of eight-year senior bullet notes (Ba3/BB) at par to yield 5 7/8%.

The issue size increased from $475 million.

The yield printed at the tight end of yield talk in the 6% area. Initial talk was in the low 6% area.

Citigroup was the lead left bookrunner for the debt refinancing deal.

Amsted on the tight end

Amsted Industries priced a $400 million issue of eight-year senior notes (Ba3/BB) at par to yield 5 5/8% in a quick-to-market Tuesday trade.

The yield printed at the tight end of yield talk in the 5¾% area, which was also the initial guidance.

Wells Fargo was the left bookrunner.

The Chicago-based manufacturer of highly engineered industrial components plans to use the proceeds to refinance its existing senior notes due 2022 and for general corporate purposes.

Big discount from CNG

CNG Holdings priced a $310 million issue of 12½% five-year senior secured notes (B3/B) at 96.50 to yield 13.478%.

The deal priced in line with price talk that specified a 12 ½% coupon at 96.50 to yield around 13½%.

Jefferies ran the books for the debt refinancing deal.

Eldorado at a discount

Eldorado Gold Corp. priced a $300 million issue of 9½% five-year senior secured second-lien notes (Caa1/B) at 98.00 to yield 10.02%.

The debt refinancing deal came in line with talk that specified a yield in the 10% area, including a discount.

There were also structural and document changes.

BofA was the left bookrunner.

Carvana taps 2023 notes

Carvana priced a $250 million add-on to its 8 7/8% senior notes due Oct. 1, 2023 (Caa2/CCC+) at 100.5 to yield 8.693%.

The reoffer price came in the middle of price talk in the 100.5 area.

Wells Fargo was the left bookrunner.

The Tempe, Ariz.-based eCommerce used car platform operator plans to use the proceeds for general corporate purposes.

IHO/Schaeffler for Wednesday

Looking to the Wednesday session, IHO Verwaltungs, the holding company whose interests include manufacturer Schaeffler AG, is in the market with €2.05 billion equivalent of senior secured PIK toggle notes (expected ratings Ba1/BB+/BB+) in four tranches.

The deal includes two euro-denominated tranches: six-year notes and eight-year notes. Joint global coordinator Deutsche Bank is the left lead and will bill and deliver for the euro-denominated notes.

The deal also includes two dollar-denominated tranches: eight-year notes and 10-year notes. Joint global coordinator Citigroup Global Markets Inc. is the left lead and will bill and deliver for the dollar-denominated notes.

The dollar-denominated eight-year notes are talked in the 6% area, while the 10-year notes are talked in the 6 3/8% area, both on top of initial guidance.

The deal was shopped by means of Tuesday investor conference calls and is expected to price no later than noon ET Wednesday.

BofA Securities and HSBC are the joint bookrunners.

The Herzogenaurach, Germany-based company plans to use the proceeds, together with cash on hand, to fully redeem dollar- and euro-denominated notes due in 2021 and 2023, as well as to repay €150 million under the issuer term facility, and to close out cross-currency hedging arrangements related to certain of the redeemed notes.

Builders’ brief roadshow

Builders FirstSource plans to roadshow a $300 million offering of eight-year senior secured notes through Wednesday.

Credit Suisse is the sole bookrunner.

The Dallas-based building products manufacturer and distributor plans to use the proceeds to pay down its term loan due 2024.

New paper

The paper to price during Tuesday’s session was performing well after breaking for trade.

Amsted Industries 5 5/8% senior notes due 2027 traded as high as 101½ out of the gate.

However, the majority of prints were between par ½ and 101, a market source said.

More than $33 million of the bonds were on the tape by the late afternoon.

Taylor Morrison’s 5 7/8% senior notes due 2027 traded as high as 101 after breaking for trade.

However, the majority of prints were between par ¼ to par 3/8.

More than $51 million of the bonds were on the tape by the late afternoon.

While new paper from Amsted Industries and Taylor Morrison was in focus in the secondary space, CNG Holdings 12½% senior notes due 2024 were slow to trade.

With the large coupon, the initial purchasers of the notes most likely bought them to hold them, as opposed to flip them, a source said.

The new paper from CNG is not expected to see much trading activity.

Mallinckrodt craters

Mallinckrodt’s junk bonds cratered on Tuesday after the pharmaceutical company announced it was challenging a recent decision by government agencies related to the pricing of its Acthar gel.

The capital structure shaved off between 6 and 9 points

Mallinckrodt’s 5 5/8% senior notes due 2023 dropped 9 points to close Tuesday at 71, sources said.

More than $25 million of the bonds were on the tape by the late afternoon.

The 5¾% senior notes due 2022 dropped 8 7/8 point to 84½ in the late afternoon, according to a market source.

More than $21 million of the bonds were in play during Tuesday’s session.

The 5½% senior notes due 2025 were down 6 3/8 point to 67¼ with more than $20 million of the bonds on the tape.

Mallinckrodt’s capital structure cratered after the pharmaceutical company announced it was filing suit against the U.S. Department of Health and Human Services and Centers for Medicare and Medicaid Services.

The suit challenged the recent decision by the government agencies requiring Mallinckrodt to change the manufacturer price used to calculate Medicaid rebates for the Acthar gel, according to a company news release.

Mallinckrodt’s junk bonds were previously under pressure after a whistleblower lawsuit was unsealed in late April.

The lawsuit alleges Questcor Pharmaceuticals Inc., which Mallinckrodt acquired in 2014, bribed doctors to increase sales of Acthar.

First Quantum drops

First Quantum’s junk bonds were trending lower on Tuesday after an analyst downgrade of the company’s equity due to its exposure to Zambia, a market source said.

The 6 7/8% senior notes due 2026 were down ¼ point to 88 in high-volume activity on Tuesday.

The bonds saw more than $45.5 million in reported volume.

The 7½% senior notes due 2025 were also down ¼ point to 92¼.

The 6½% senior notes due 2024 were down 2¾ points to 91 with more than $21 million on the tape by the late afternoon.

Zambia’s president recently took control of Vedanta Resources Ltd.’s copper mining operations in the company with concern operations from other mining companies may be next.

Tesla’s new low

Tesla’s 5.3% senior notes due 2025 hit a new low in intraday trading on Tuesday.

The notes traded down to 81½ early in the session, their lowest price since hitting the market in August 2017, a market source said.

The notes rallied into the afternoon to close the day at 82 5/8, according to a market source.

More than $63.5 million of the bonds were on the tape during Tuesday’s session.

After initially receiving a boost from Tesla’s $2.7 billion capital raise in early May, Tesla’s stock and bonds have experienced a sell-off in recent days as investors lose confidence in the struggling electric car manufacturer.

Mixed Monday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Monday, the most recent session for which data was available at press time, according to a trader.

High-yield ETFs saw $51 million of inflows on the day.

However, actively managed high yield funds sustained $40 million of outflows on Monday, the trader said.

Indexes improve

Indexes posted gains on Tuesday after opening the week with losses.

The KDP High Yield Daily index rose 3 basis points to close Tuesday at 69.98 with the yield now 5.83%.

The index slid 3 bps on Monday after a cumulative loss of 10 bps on the week last week.

The ICE BofAML US High Yield index gained 20.5 bps with the year-to-date return now 8.439%.

The index shaved off 1.3 bps on Monday after a 6.1 bps loss on the week last week.

The CDX High Yield 30 index gained 29 bps to close Tuesday at 106.47. The index dropped 20 bps on Monday after posting a cumulative loss of 126 bps on the week last week.

© 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.