Bombardier, downsized Weight Watchers lead busy primary; new bonds active; Community Health notes off

By Paul Deckelman and Paul A. Harris

New York, Nov. 20 – The high-yield primary arena kept up its busy pace heading into the holiday-shortened Thanksgiving week, syndicate sources said on Monday, with half a dozen issuers combining to bring some $1.88 billion of new dollar-denominated and fully junk rated paper to market.

According to data compiled by Prospect News, it was the third straight big primary day as issuers rushed to get their deals done ahead of Thursday’s holiday break, following the $2.04 billion that priced in four tranches on Friday and $1.98 billion which got done in three tranches on Thursday.

Canadian aircraft manufacturer Bombardier Inc. flew by with an unscheduled and upsized $1 billion offering of seven-year notes, the day’s most actively traded aftermarket credit. Its existing paper also traded busily.

Diet food and services provider Weight Watchers International, Inc. brought a slimmed-down $300 million eight-year offering to market as a regularly scheduled forward calendar offering, while gaming technology provider Everi Payments, Inc. also priced a calendar deal, for $375 million of eight-year notes.

The session also saw a trio of add-ons to existing bonds.

Power generator Talen Energy Supply, LLC – which just priced a $500 million eight-year issue last week – came back with another $225 million of those notes on Monday in a regularly scheduled issue.

Heavy equipment manufacturing company H&E Equipment Services, Inc. brought a quickly shopped $200 million of its 2025 notes, while medical technology company Sotera Health Topco, Inc. did an upsized quick-to-market $75 million tap of its 2021 PIK toggle notes.

Besides Bombardier, Talen and H&E were seen to be active in the aftermarket, along with several other recently priced issues.

Away from the new deals, traders said that Community Health Systems, Inc.’s paper was mostly lower by several points, on news that it was in talks with bondholders on a possible debt exchange for its $2 billion of 2019 notes, although those particular bonds were higher on the news.

Statistical market performance measures turned higher on Monday, after having been mixed on Friday. They had also strengthened across the board on Thursday for the first time since Oct. 19, breaking a streak of seven consecutive losses.

Bombardier upsizes

As expected, news volume was heavy during the Monday primary market session, with dealers clearing out a major portion of a pre-holiday calendar.

In drive-by action Bombardier Inc. priced an upsized $1 billion issue of seven-year senior notes (Caa1/B-) at par to yield 7½%.

The issue size was increased from $900 million.

The yield printed in the middle of yield talk in the 7½% area.

JP Morgan, BNP Paribas, BofA Merrill Lynch, Citigroup, Commerz, Credit Agricole, Credit Suisse, Deutsche Bank, NatWest, NBC and UBS were the joint bookrunners.

The Montreal-based manufacturer of planes and trains plans to use the proceeds to fund a tender offer for $600 million of its 4¾% senior notes due 2019 and for general corporate purposes.

Everi Paymments atop talk

Everi Payments, Inc. priced a $375 million issue of eight-year senior notes (Caa1/CCC+) at par to yield 7½%.

The yield came on top of yield talk in the 7½%.

Jefferies was the left bookrunner for the debt refinancing deal. Macquarie was the joint bookrunner.

Weight Watchers downsized

Weight Watchers International, Inc. priced a downsized $300 million issue of eight-year senior notes (B3/CCC+) at par to yield 8 5/8%.

The issue size was decreased from $500 million.

The yield printed at the wide end of yield talk in the 8½% area.

Pricing moved significantly higher during the time that the debt refinancing deal was in the market, sources said. Late last week conversations took place at 7¾% to 8%. Initial guidance was in the 7% area.

There were covenant changes primarily regarding the manner in which the company may disburse cash.

Citigroup was the left bookrunner.

Talen taps 10½% notes

Talen Energy Supply, LLC priced an upsized $225 million add-on to its 10½% senior guaranteed notes due Jan. 15, 2026 (B1/B+) at 97.50 to yield 10.964% in a Monday drive-by.

The issue size was increased from $200 million after having been earlier increased from $100 million.

The reoffer price came on top of price talk.

Morgan Stanley, Deutsche Bank, BofA Merrill Lynch, Barclays, BNP Paribas, Credit Suisse, MUFG and RBC were the joint bookrunners.

The Allentown, Pa.-based independent power producer plans to use the proceeds, together with cash on hand, to refinance debt, including a portion of its senior notes due 2019, which it intends to refinance by means of a concurrent tender offer.

H&E Equipment comes rich

H&E Equipment Services, Inc. priced a $200 million add-on to its 5 5/8% senior notes due Sept. 1, 2025 (B2/BB-) at 104.25 to yield 4.958%.

The reoffer price came at the rich end of price talk in the 104 area.

BofA Merrill Lynch and Wells Fargo Securities were joint bookrunners for the quick-to-market deal.

The Baton Rouge, La.-based heavy equipment manufacturing and services company plans to use the proceeds to repay debt under its ABL credit facility, fund potential acquisitions in connection with its ongoing strategy of acquiring rental companies to complement its existing business and footprint, and for general corporate purposes.

Sotera tap upsized

Also coming with a drive-by, Sotera Health Topco, Inc., formerly known as Sterigenics-Nordion Topco, Inc., priced an upsized $75 million add-on to the Sterigenics-Nordrion 8 1/8%/8 7/8% HoldCo senior PIK toggle notes due Nov. 1, 2021 (Caa2/CCC+) at 100.75 to yield 7.897%.

The issue size was increased from $50 million.

The reoffer price came at the rich end of the 100.5 to 100.75 price talk.

Jefferies was the left bookrunner. Goldman Sachs was the joint bookrunner.

The notes offer came in conjunction with the launch of a $100 million add-on to the company's senior secured term loan due 2022.

The Deerfield, Ill.-based provider of sterilization and ionization services plans to use the proceeds from the notes and the loan to fund a distribution to shareholders.

Conus Real Estate €200 million

In the European market Consus Real Estate AG priced €200 million of 4% senior bonds due 2022.

The yield printed at the tight end of the 3¾% to 4% yield talk.

Proceeds will be used to fund the expansion of Consus’ real estate development business and the selective acquisition of commercial real estate, increase the company’s holding in CG group and for general corporate purposes.

Adler dual-tranche deal

Berlin-based property management firm Adler Real Estate AG plans to commence marketing of a euro-denominated dual-tranche offering of senior notes (S&P: BB+) on Thursday.

The company mandated Goldman Sachs International as the global coordinator and joint bookrunner. Deutsche Bank, JP Morgan, and Morgan Stanley are also joint bookrunners.

Bombardier bonds busy

In the secondary market, a trader initially quoted Bombardier’s new 7½% notes due 2024 having firmed to a 100 7/8-to-101 3/8 bid context, up from the upsized drive-by issue’s par pricing level.

However, a market source said later on that the bonds had come off their early peak levels and were finishing the day right around par.

He said that more than $44 million had changed hands, making the issue the busiest junk credit of the day.

Bombardier’s existing 7½% notes due 2025 were meantime seen down 1 point on the day at 100 5/8 bid, with over $25 million having traded.

But its 7¾% notes due 2020 firmed by ¼ point to 108 bid.

And its 4¾% notes due 2019 – which are being taken out via a tender offer funded with the new-deal proceeds jumped more than 1¼ points on the day, ending at 103½ bid.

Talen, H&E add-ons active

Talen Energy Supply’s 10½% senior guaranteed notes due in January of 2026 were seen at 99¾ bid, up from the 99.5 level at which the power generating company’s new add-on tranche priced, on volume of around $12 million.

But a market source noted that was down 3/8 point from the levels slightly above par at which the existing bonds had been trading at the end of last week.

Talen priced $400 million of those notes at 96.029, yielding 11.25%, in a quick-to-market transaction just last Tuesday.

A trader saw H&E Equipment Services’ 5 3/8% notes due in September 2025 moving around between 104 5/8 and 105 3/8 bid, after the unscheduled add-on deal had priced at 104.25. Volume was around $11 million.

However, at another desk a market source saw the bonds going out at 104¾ bid – up from the add-on’s issue price but still off from by around half point the pre-deal trading levels of the $750 million of existing bonds the company sold in August of this year.

Day’s other issues firm

Among the other new deals that came to market on Monday and then traded on somewhat less volume, a trader saw the Everi Payments 7½% notes due 2025 in a 100¼-to-101 bid context, versus their par issue price, while a second trader saw the Las Vegas based gaming technology company’s new deal finishing around 101¼ bid.

Weight Watchers’ new 8 5/8% notes due 2025 were seen by two different traders going home in a 100½-to-101 bid context, after pricing at par.

And a market source saw the Sotera Health Topco add-on to its existing $350 million of 8 1/8%/8 7/8% senior PIK toggle notes due 2021 ending between 101 and 102 bid, after having priced at 100.75.

Match moves up

Friday’s issue of 5% notes due 2027 from Dallas-based online dating and relationship services company Match Group “was trading quite a bit” Monday, a market source said, seeing these notes having firmed by 3/8 point to 100¼ bid, on turnover of more than $32 million.

The company had priced $450 million of those notes on Friday at 99.027 to yield 5 1/8%, and the scheduled forward calendar offering traded up to just under the 101 bid level when it hit the aftermarket following that pricing.

Community Health off on debt talks

Away from the new issues, a trader said that Community Health Systems’ bonds were “mostly down” by 2 to 3 points across the Franklin, Tenn.-based hospital operator’s capital structure, on the news that the company is in talks with a group of bondholders to extend approximately $2 billion in bonds coming due in 2019.

Its 6 7/8% notes due 2022 were down more than 3 points, at 59¼ bid, while its 7 1/8% paper due 2020 lost 2½ points to close at 73¼ bid, with over $37 million of each having traded.

However, the 8% notes due 2019 that may be extended in such a debt swap firmed by 5/8 point Monday to 89½ bid, on volume of more than $23 million.

The Wall Street Journal, quoting “people familiar with the matter,” said that the company – burdened by nearly $14 billion of debt – is in talks to swap the 2019 unsecured notes for debt secured by its assets.

The report said that CHS would need permission from its lenders to waive a credit facility covenant that limits the amount of new secured debt it can issue without such permission to about $1 billion.

Indicators turn firmer

Statistical market performance measures turned higher on Monday, after having been mixed on Friday. They had also strengthened across the board on Thursday for the first time since Oct. 19, breaking a streak of seven consecutive losses.

The KDP High Yield Daily Index firmed by3basis points on Monday to end at 71.55, its third straight gain after seven consecutive sessions before that on the downside.

It had risen by 10 bps on Friday and had jumped by 18 bps on Thursday, in contrast to Wednesday’s 28 bps freefall and Tuesday’s 16 bps nosedive.

Its yield was unchanged on the day at 5.41%, after having come in by 3 bps on Friday its second straight tightening. On Thursday, the yield had declined by 6 bps, after having widened out for eight successive sessions, including Wednesday’s 9 bps increase.

The Merrill Lynch North American High Yield Master II Index made it three straight gains on Monday, advancing by 0.111%, on top of Friday’s advance of 0.054% and Thursday’s 0.567% gain, which had been its first upturn after 10 straight setbacks before that.

The latest improvement lifted the index’s year-to date return to 6.747% from Friday’s 6.63% close, although the year-to-date return still remains well down from the 7.636% posted on Oct. 24 – the peak cumulative return for 2017 so far.

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