Primary marks record new deal volume of 2019, prices $6.73 billion; funds add $573 million

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 18 – The domestic high-yield primary market saw its largest day for new deal volume year to date with five issuers pricing $6.73 billion over five tranches.

Sinclair Broadcast Group Inc. was responsible for the bulk of the volume and priced its $4,875,000,000 two-tranche offering on Thursday.

Acrisure, LLC priced an upsized $400 million issue of seven-year senior notes (Caa2/CCC+) at par to yield 10 1/8%.

Aberdeen-based Ithaca Energy Ltd. priced a downsized $500 million issue of five-year senior notes (B3/B/B+) at par to yield 9 3/8%.

In drive-by action, Hertz Corp. priced a $500 million issue of seven-year senior notes (B3/B-) at par to yield 7 1/8% in a quick-to-market trade.

And Taylor Morrison Communities, Inc. priced an upsized $450 million issue of 8.5-year senior bullet notes (Ba3/BB) at par to yield 5¾%.

The new deal activity will continue into Friday’s session with Trivium Packaging Finance BV set to price its $2.85 billon equivalent four-part offering.

While the new deal activity cleared most of the forward calendar, one new deal hopped on board.

Citgo Holding, Inc. (Caa1/B-/CCC+) plans to start a roadshow for a $1.37 billion offering of five-year senior secured notes on Monday.

Meanwhile, the secondary space was soft on Thursday with the overall market down ¼ point as energy names sold off alongside crude oil futures, sources said.

While the overall market was down, several of the issues to price during Thursday’s session saw a strong start out of the gate.

Sinclair Broadcasting’s two tranches dominated trading activity in the secondary space with the notes skyrocketing after breaking for trade.

Acrisure’s new notes were also trading well above their issue price.

While the notes were flat on Thursday, Medical Properties Trust Inc.’s recently priced 4 5/8% senior notes due 2029 (existing ratings Ba1/BBB-) continued to trade at a slight premium.

Outside of the new paper, Exela Technologies Inc.’s 10% senior notes due 2023 were on the rise on news an investor group had expressed interest in buying out the company.

Meanwhile, the streak of inflows continued with high-yield mutual funds and exchange-traded funds adding $573 million for the week ended Wednesday.

The inflow marks the sixth consecutive week of inflows.

Big Thursday

The new-issue market made significant progress chopping its way through a formidable $10 billion late-week calendar on Thursday, with five issuers bringing a combined six tranches of notes, pricing $6.73 billion.

That is the largest amount of daily issuance thus far in 2019.

The only other day that topped the $6 billion mark thus far this year was Feb. 7, which saw $6.24 billion price.

Sinclair prices megadeal

Sinclair Broadcast Group Inc. brought the lion's share on Thursday, pricing $4,875,000,000 of notes in two tranches, shifting $500 million to the secured tranche from the unsecured tranche.

The Baltimore-based broadcaster priced an upsized $3.05 billion amount of seven-year senior secured notes (Ba2/BB) at par to yield 5 3/8%. The tranche size was increased from $2.55 billion. The yield printed at the tight end of yield talk in the 5½% area.

A $1,825,000,000 tranche of eight-year unsecured notes (B2/B) priced at par to yield 6 5/8%. The tranche size was decreased from $2,325,000,000. The yield printed 12.5 basis points inside of the 6¾% to 7% price talk.

Hertz prices tight

Two of Thursday's issuers showed up with drive-by deals.

Hertz Corp. priced a $500 million issue of seven-year senior notes (B3/B-) at par to yield 7 1/8% in a quick-to-market trade.

The yield printed at the tight end of yield talk in the 7¼% area. Initial talk was in the 7 3/8% area.

Goldman Sachs & Co. LLC was the left bookrunner for the debt refinancing deal.

Downsized Ithaca Energy

Aberdeen-based Ithaca Energy Ltd. priced a downsized $500 million issue of five-year senior notes (B3/B/B+) at par to yield 9 3/8%.

The issue was downsized from $700 million.

The yield printed in the middle of the 9¼% to 9½% yield talk.

There are covenant changes bearing primarily upon how the company may disburse cash and incur additional debt.

The deal engendered considerable pushback, according to a market source.

The oil and gas exploration and production company plans to use the proceeds to help fund its acquisition of Chevron North Sea Ltd. and to repay debt.

The $200 million downsize of the notes offering will be made up by means of an equity contribution in the form of common equity and/or subordinated shareholder loans, the source said.

Ithaca Energy is a subsidiary of Israel-based Delek Group Ltd.

Taylor Morrison upsizes

The second of Thursday's two drive-by deals came from Taylor Morrison Communities, Inc. pricing of an upsized $450 million issue of 8.5-year senior bullet notes (Ba3/BB) at par to yield 5¾%.

The issue size was increased from $425 million.

The yield printed at the tight end of yield talk in the 5 7/8% area. Initial price talk was 5 7/8% to 6%.

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

Acrisure upsized

Acrisure, LLC priced an upsized $400 million issue of seven-year senior notes (Caa2/CCC+) at par to yield 10 1/8%.

The issue size was increased from $300 million.

J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBC Capital Markets LLC and SunTrust Robinson Humphrey Inc. were the joint bookrunners.

Trivium launches for Friday

Another megadeal pushed into the on-deck circle for a Friday execution.

Trivium Packaging Finance BV launched its upsized $2.85 billon equivalent four-part offering of high-yield notes late Thursday, with all tranches launching tight to, or inside of, talk.

The deal launched as follows:

• $700 million equivalent of euro-denominated seven-year senior secured fixed rate notes (B2) at 3¾%, 12.5 basis points tighter than talk in the 4% area,

• $400 million equivalent of euro-denominated seven-year senior secured floating-rate notes (B2) at Euribor plus 375 bps, tight to the Euribor plus 375 to 400 bps talk,

• An upsized $1.05 billion amount of seven-year senior secured fixed-rate notes (B2) at 5½%, 25 bps below the low end of the 5¾% to 6% talk, upsized from $900 million, and

• An upsized $700 million amount of eight-year senior unsecured fixed-rate notes (Caa2) at 8½%, 25 bps below the tight end of the 8¾% to 9% talk, upsized from $600 million.

The euro-denominated portion of the deal was downsized to $1.1 billion equivalent from $1.25 billion equivalent, with proceeds shifted to the dollar-denominated senior secured fixed-rate notes.

The unsecured tranche was upsized to $700 million from $600 million, resulting in the overall deal upsizing to $2.85 billion equivalent from $2.75 billion equivalent.

Joint bookrunner Citigroup Global Markets Inc. will bill and deliver.

Citgo starts Monday

Citgo Holding, Inc. (Caa1/B-/CCC+) plans to start a roadshow on Monday for a $1.37 billion offering of five-year senior secured notes.

Jefferies and Houlihan Lokey are the joint bookrunners.

The notes come with two years of call protection.

The Houston-based refiner plans to use the proceeds, along with proceeds from a $500 million term loan and cash on hand, to pay off its $1.87 billion 10¾% senior secured notes due 2020 that are outstanding.

GEMS starts roadshow

GEMS Education started an international roadshow on Thursday for $800 million equivalent of seven-year senior secured notes (B2/B/B+).

The deal is coming in tranches sized at $500 million and $300 million equivalent of euro-denominated notes.

Global coordinator Goldman Sachs is the sole physical bookrunner.

The Dubai-based provider of private K-12 education plans to use the proceeds, along with proceeds from its term loan B, to pay off its existing senior facilities, as well as to finance the acquisition of Bellevue Education, repurchase certain school leases in Qatar, to fund distribution to holding companies and shareholders and for general corporate purposes.

Sinclair in focus

Sinclair’s two tranches of senior notes were in focus in the secondary space with the notes posting large gains after breaking for trade.

The 5 3/8% senior notes due 2026 were changing hands at 102 shortly before the market close. There was more than $223 million in reported volume by the late afternoon.

The 6 5/8% senior notes climbed to 102¾, according to a market source. The bonds saw more than $200 million in play by the late afternoon.

Acrisure trades up

Acrisure’s 10 1/8% senior notes due 2026 also shot up out of the gate on Thursday.

The notes traded up to 101¾ by the late afternoon, according to a market source.

More than $30 million of the bonds were on the tape by the late afternoon.

Medical Properties holds

While largely flat on Thursday, Medical Properties’ recently priced 4 5/8% senior notes due 2029 were holding on to their slight premium in the secondary space.

The notes were pegged at 99 5/8 bid, par 1/8 offered by one source.

They were changing hands around 99 7/8, largely flat from Wednesday’s close, in the late afternoon, another source said.

More than $82 million of the bonds were on the tape by the late afternoon.

Medical Properties priced an upsized $900 million issue of the 4 5/8% notes at 99.50 to yield 4.688%.

The issue size was increased from $750 million.

Exela on the rise

While focus was on the new paper, Exela’s 10% senior notes due 2023 also saw active trading on Thursday with the notes posting gains.

The 10% notes rose 3 points to close the day at 84¾, a market source said.

The notes saw more than $30 million in reported volume during Thursday’s session.

The notes were in focus after news broke that a group of investors had proposed buying all outstanding shares of the company, according to a market source.

Indexes mixed

Indexes were again mixed on Thursday as they have been for much of the week.

The KDP High Yield Daily index dropped 18 basis points to close Thursday at 71.52 with the yield now 5.49%.

The index was down 8 bps on Wednesday, 4 bps on Tuesday and shaved off 1 bp on Monday.

The ICE BofAML US High Yield index dropped 23.4 bps with the year-to-date return now 10.103%.

The index was down 7.7 bps on Wednesday after rising 0.8 bps on Tuesday and 8.1 bps on Monday.

The CDX High Yield 30 index gained 13 bps to close Thursday at 107.16.

The index was down 22 bps on Wednesday, 20 bps on Tuesday and 8 bps on Monday.

© 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.