American Woodmark, upsized Scientific Games price to close $23 billion month; new Western Digital soars

By Paul Deckelman and Paul A. Harris

New York, Jan. 31 – The domestic high-yield market saw a pair of new issues get done on Wednesday, with lottery and casino technology company Scientific Games Corp. leading the way with an upsized $900 million add-on to its existing October 2025 bonds that the company sold last fall.

Also pricing was kitchen and bathroom cabinet maker American Woodmark Corp.’s quick-to-market million eight-year issue.

Traders saw brisk aftermarket activity in both credits, a little bit above their respective par issue prices.

The two deals closed out the first month of 2018, which saw some $23.03 billion of dollar-denominated and fully junk-rated issues price in 38 issues, running well ahead of the pace seen last January.

Out of the emerging markets space, the day saw Dubai-based oilfield services company Shelf Drilling Holdings Ltd. brought in an upsized, regularly-scheduled eight-year issue to market. Traders reported heavy aftermarket activity at better levels in that credit.

Tuesday’s new deal from Western Digital Corp. was by far the most actively traded name in Junkbondland on Wednesday, with strong gains seen.

The downside movement in Wynn Las Vegas LLC continued for a third straight session on Thursday, with investors wary of the casino resort operator’s paper in the wake of sexual abuse allegations against the company founder and CEO, Steve Wynn.

Statistical market performance measures turned mixed on Wednesday after having been lower across the board for on Monday and again on Tuesday. The indicators had also been mixed last Friday after having strengthened all around last Thursday.

Scientific Games upsizes

In Wednesday's primary market session Scientific Games Corp. priced notes in an upsized three-part transaction.

The debt refinancing deal featured an upsized $900 million add-on to the Scientific Games International Inc. 5% senior secured notes due Oct. 15, 2025 (Ba3/B+), which priced at par, with a 4.999% yield to maturity. The tranche was upsized from $500 million. The reoffer price came at the rich end of the 99.5 to par price talk.

JP Morgan, Deutsche Bank, BofA Merrill Lynch, Fifth Third, Credit Suisse, Citigroup, PNC, Macquarie and Goldman Sachs were the joint bookrunners.

Also issuing via the Scientific Games International entity, the company priced a pair of euro-denominated tranches.

These included €325 million of eight-year senior secured notes (Ba3/B+), which priced at par to yield 3 3/8%. The yield printed at the tight end of yield talk in the 3½% area.

In an unsecured tranche, the company also price €250 million of eight-year senior notes (Caa1/B-) at par to yield 5½%. The yield printed in the middle of yield talk in the 5½% area.

Bookrunners Deutsche Bank will bill and deliver for the euro-denominated notes. JP Morgan, BofA Merrill Lynch, Fifth Third, Credit Suisse, Citizens, PNC, Macquarie and Goldman Sachs were also joint bookrunners.

Shelf Drilling upsized and tight

Dubai-based Shelf Drilling Holdings, Ltd. priced an upsized $600 million issue of seven-year senior notes (B2/B-) at par to yield 8¼%.

The issue size was increased from $550 million.

The yield printed at the tight end of the 8¼% to 8½% yield talk, which came in line with initial guidance in the low to mid 8% area, market sources say.

Credit Suisse was the lead bookrunner. RBC and J.P. Morgan were the joint bookrunners.

The offshore jackup rig operator plans to use the proceeds to repay outstanding notes maturing in 2018 and 2020.

American Woodmark prices tight

American Woodmark Corp. priced a $350 million issue of eight-year senior notes (Ba3/BB) at par to yield 4 7/8%.

The yield printed at the tight end of yield talk 5% area.

Wells Fargo was the sole active bookrunner.

The Winchester, Va.-based manufacturer of interior furnishings plans to use the proceeds to partially refinance RSI Home Products Inc.’s existing 6½% senior secured second-lien notes due 2023 in connection with late 2017 merger of American Woodmark and RSI.

TransMontaigne launches $300 million

TransMontaigne Partners LP and Finance-Co. launched a $300 million offering of eight-year senior notes.

A roadshow is set to get underway on Thursday.

A global investor call is planned for Monday.

The public offer is set to price on Wednesday, Feb. 7 or Thursday, Feb. 8.

Joint bookrunner RBC will bill and deliver. The Denver-based refined petroleum products marketing and distribution company plans to use the proceeds to repay debt and for general partnership purposes.

Algeco rejiggers, extends roadshow

Algeco Scotsman rejiggered its €1,415,000,000 equivalent offering of high-yield notes, paring a proposed unsecured euro-denominated tranche, according to market sources.

The roadshow for the deal – now coming in four tranches instead of the five that were included when marketing got underway – extends into the week ahead with a newly planned Friday stop on the West Coast of the United States.

Meanwhile stops in Amsterdam and Milan, which had been scheduled for Friday, are now scheduled to take place on Monday, and the deal is expected to price in the Feb. 5 week, sources say.

The secured portions remain unchanged. They include €1.12 billion equivalent in three tranches of senior secured notes (B2/B-/B+) from affiliate Algeco Scotsman Global Finance plc: dollar- and euro-denominated fixed rate notes which become callable after two years at par plus 50% of the respective coupons, and euro-denominated floating-rate notes, which become callable after one year at 101.

However the €295 million equivalent of 5.5-year senior unsecured fixed-rate notes (Caa1/CCC/CCC+) from affiliate Algeco Scotsman Global Finance 2 plc are expected to be issued in dollars only. A planned euro-denominated unsecured tranche has been abandoned.

The unsecured notes become callable after two years at par plus 50% of the coupons.

All four tranche sizes remain to be determined.

Global coordinator BofA Merrill Lynch will bill and deliver for the dollar-denominated secured notes. Global coordinator Deutsche Bank will bill and deliver for both tranches of unsecured notes. Global coordinator Goldman Sachs will bill and deliver for both tranches of euro-denominated secured notes. Barclays, Credit Suisse and ING are also joint global coordinators.

Proceeds from the Rule 144A and Regulation S deal, together with proceeds from an equity contribution, borrowings under a new ABL facility and cash on hand, will be used, among other things, to repay debt, including all debt outstanding under Algeco Scotsman's existing ABL facilities agreement, existing senior secured notes and existing senior unsecured notes.

Bonds being taken out with the proceeds of the new deal have been among the most active issues in the market, traders say.

Elis mandate

France-based Elis SA mandated a group of investment banks to arrange meetings with fixed income investors commencing Monday, ahead of a possible benchmark euro-denominated offering of senior notes, pending market conditions.

The notes would come with maturities of five to eight years, and be sold in one or two tranches.

BNP Paribas, Credit Agricole CIB and HSBC are the global coordinators. ING, Natixis and SG CIB are active joint bookrunners. BBVA, Commerzbank, Mediobanca and MUFG are passive bookrunners.

Proceeds from the deal would be used to refinance the bridge loan put in place for the acquisition of Berendsen plc, and for general corporate purposes which may include the refinancing of existing debt.

A busy January

Wednesday’s new deals from American Woodmark and Scientific Games closed the books on January, when a total of $23.03 billion of new U.S. dollar-denominated and fully junk-rated paper had come to market in 38 tranches brought by domestic or industrialized-country issuers, according to data compiled by Prospect News.

That was up from the $18.52 billion that had gotten done in 39 tranches in December 2017.

It was the most issuance of any month since last November, when $30.08 billion had priced in 56 tranches.

January’s issuance was running some 9.5% ahead of the pace seen last year, when $21.03 billion of such paper had priced in 39 tranches.

This month was the strongest January issuance since 2013, when $30.49 billion had priced in 64 tranches, the data indicated.

Day’s issues trade actively

In the secondary market, Scientific Games’ 5% senior secured notes due in October of 2025 were seen among the busiest junk credits of the day, with over $40 million having changed hands after they had priced at par.

One trader saw the add-on to the Las Vegas-based gaming and lottery technology company’s existing $350 million of those notes in a par-to-100¼ bid context, while a second saw them between par and 100½ bid.

At another desk, a market source saw the paper going home at 100 1/8 bid – which he said was down some 3/8 point from levels around 100½ at which the existing 2025s had traded before the new deal had priced.

American Woodmark’s 4 7/8% notes due in March of 2026 traded between 100½ and 101 offered, although he saw most of the day’s trading activity in a narrower 100½-to-100¾ bid context.

He said that turnover in the new issue was more than $22 million.

A second trader pegged the new notes between 100¾ and 101¼ bid

And a third saw them at 100 ¾ bid, versus the notes’ par issue price.

Shelf notes climb

Traders meantime said that Shelf Drilling Holdings’ new 8¼% notes due 2025 jumped above 101 bid after having priced at par, with one trader estimating that as many as $163 million on the new notes may have traded; both traditional junk investors and emerging markets accounts were interested in the Dubai-based oilfield services company’s paper.

One trader saw the bonds get as good as a 101 3/8-to-101¾ bid environment, while a second trader saw the notes even better than that, with bid levels seen between 101½ and 102 bid.

At another desk, a trader said that “Shelf was all over the place,” trading at various times between par and 102 bid.

He said that while the bonds had firmed smartly initially, “most of the activity took place between 101 and 101 5/8 bid – and by the end of the day, the last prints were going out between 100¼ and 100 5/8 bid.

Western Digital trades up

A trader said that the new Western Digital Corp. 4¾% notes due 2026 “were pretty active,” seeing the new megadeal ending at 101 3/8 bid.

A second trader noted that more than $200 million of the new paper had traded in a 100 1/8-to-102 1/8 bid range, before the issue settled into a 101¼-to-101 5/8 bid context.

Another source saw the notes ending at 101 3/8 bid, calling them up by 5/8 point.

The San Jose, Calif.-based high tech manufacturer had priced its $2.3 billion behemoth of a bond deal at par on Tuesday off the forward calendar.

One of the traders also said that the company’s 10½% notes due 2024 “were pretty busy as well,” locating them right around the tender price at just under 117 at which those bonds are to be taken out.; the new-deal proceeds will fund that tender offer.

Wynn retreat continues

Wynn Las Vegas LLC bonds were showing losses for a third consecutive session on Wednesday amid the sexual abuse allegations dogging company founder and CEO Steve Wynn, although the decline was considerably less than Monday’s sharp drop, and on lesser volume.

Wynn has denied the allegations.

The Wynn Las Vegas 5½% notes due 2025 were off by another ½ point on Wednesday, a trader said, seeing them finish at 101¼ bid, with over $33 million changing hands.

Its 5¼% notes due 2027 dropped nearly 7/8 point, to 98¼ bid, with over $14 million traded.

Indicators turn mixed

Statistical market performance measures turned mixed on Wednesday after having been lower across the board for on Monday and again on Tuesday. The indicators had also been mixed last Friday after having strengthened all around last Thursday.

The KDP High Yield Daily Index ended down 5 basis points on the session Wednesday at 71.57, its fourth consecutive loss; it had plunged by 24 bps on Tuesday and 11 bps on Monday after easing by 2 bps last Friday, its first loss after two straight gains before that.

Its yield rose by 1 bps to 5.39%, its third straight widening out; on Tuesday, it had ballooned upward by 9 bps to 5.38%, after having risen by 5 bps on Monday. It had been unchanged for two sessions before that.

The Markit CDX Series 29 index, however, edged marginally higher, closing at 108 11/32 bid, 108 13/32 offered, after having come down by 7/32 point on both Monday and again on Tuesday. It had been up for two straight sessions before that.

And the Merrill Lynch High Yield Index also improved on Wednesday after having declined on Monday and Tuesday; it ended up 0.123%, after having fallen back by 0.294% on Tuesday and by 0.121% on Monday, the index’s first losses after five straight gains before that.

Wednesday’s advance raised the index’s year-to-date return to 0.641% from Tuesday’s close at 0.518%, although it remained well down from the 0.936% seen on Friday, which had been the third consecutive new peak YTD level for the year so far.

© 2015 Prospect News.
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