Gogo, Vizient, Adient on tap; Mineral Resources trades up; Advanced Disposal jumps

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 15 – While no new deals priced on Monday, the forward calendar for both the domestic and European high-yield primary market grew with activity expected despite a truncated holiday week.

Gogo Inc. kicked off a $900 million offering of five-year senior secured first-lien notes and Vizient, Inc. started a roadshow for a $300 million offering of eight-year senior notes.

Both deals are expected to price on Wednesday.

Adient announced a $750 million offering of senior secured notes due 2026 with the deal expected to launch in the April 22 week.

In the European primary market, Europcar Mobility Group began a roadshow for a €450 million offering of seven-year senior notes (expected ratings B3/B).

Meanwhile, the secondary space remained firm on Monday although volume was light.

Mineral Resources Ltd.’s newly priced 8 1/8% senior notes due 2027 (B+) were putting in a strong performance in the secondary space with the notes trading at a large premium to their issue price.

Adient’s 4 7/8% senior notes due 2026 were in focus and trading up on news of a new deal in the works.

Advanced Disposal Services, Inc.’s 5 5/8% senior notes due 2024 jumped in active trading on news the company would be bought out by Waste Management.

Gogo’s secured deal

Gogo kicked off a $900 million offering of five-year senior secured first-lien notes.

Initial talk has the deal coming to yield in the high 9% to 10% area.

Morgan Stanley and JP Morgan are leading the debt refinancing.

Vizient starts roadshow

Vizient started a roadshow on Monday for a $300 million offering of eight-year senior notes.

Initial guidance is in the high 6% area.

JP Morgan is the lead.

The notes come with three years of call protection.

The Irving, Texas-based member-driven health care performance company plans to use the proceeds, along with proceeds from its $500 million term loan, which also launched Monday, to refinance debt.

Like Gogo, Vizient is expected to price on Wednesday.

Elsewhere, Adient announced a $750 million offering of senior secured notes due 2026.

That deal is expected to be launched in the market during the April 22 week, according to market sources.

BofA Merrill Lynch is expected to lead the debt refinancing.

Europcar roadshow

In the European primary market session, Europcar Mobility Group began a roadshow on Monday for a €450 million offering of seven-year senior notes (expected ratings B3/B).

The roadshow wraps up on Wednesday, and the notes are set to price thereafter.

Joint global coordinator BNP Paribas is the sole physical bookrunner.

BofA Merrill Lynch, Credit Agricole CIB and HSBC are joint global coordinators.

The Paris-based vehicle rental services provider plans to use the proceeds, along with a €150 million draw on its revolving credit facility, to refinance part or all of its €600 million 5¾% notes due 2022 that are outstanding.

New issue activity

Monday's action set the stage for what is expected to be a comparatively moderate deal volume in the run-up to Easter, a debt capital markets banker said.

In the United States, the week ahead will be abbreviated by the Good Friday market holiday, the banker said.

That holiday will be extended in Europe where Easter Monday will be a holiday, the source added.

Earnings blackouts will also serve to crimp new-issue activity, as a full 10% of the S&P 500 is entering earnings intervals.

May should be busier, the banker said.

However, 2019 first quarter merger and acquisition activity was the lowest in three years.

And the maturity wall of bonds due 2019 through 2021 is not formidable, the banker said.

Some issuers have been addressing 2022 and 2023 maturities, of late, the source conceded.

However, the case for addressing intermediate-ranged maturities is less compelling than it was in the 2015 through 2017 timeframe, when issuers were able to refinance rates in the 7%, 8% and even 9% range with new bonds bearing interest in the 4%, 5% and 6% context.

Now, with that lower coupon paper in place, the motivation to take it out is not as great as it was earlier in the decade, the banker said.

Mineral Resources trades up

Mineral Resources’ newly priced 8 1/8% senior notes due 2027 jumped in active trading on Monday. The notes rose another 3/8 point after a strong start out of the gate, sources said.

The 8 1/8% notes were quoted at par ¾ bid, 101½ offered early in the session.

They were trading hands at 101 3/8 in the late afternoon, according to a market source.

More than $31 million of the bonds were on the tape during Monday’s session, making them among the most actively traded issues in the secondary space.

The notes were off to a strong start after pricing and closed Friday up 1 point, a source said.

Mineral Resources priced a downsized $700 million issue of the 8 1/8% notes at par on Friday.

The notes priced wide of initial guidance in the 7¾% to 8% area.

The issue size was decreased from $750 million.

Adient active

Adient’s 4 7/8% senior notes due 2026 were on the rise in active trading on Monday following the announcement of a new refinancing deal.

The 4 7/8% notes climbed ¾ point to close Monday at 80¼.

With more than $27 million in reported volume, the bonds were among the most actively traded during the session, according to a market source.

In addition to the new offering in the works, Adient released preliminary second-quarter results.

While revenue of $4.2 billion was slightly below analyst expectations for revenue of $4.24 billion, the company’s estimated EBITDA of $185 million to $195 million beat expectations for EBITDA of $178.1 million.

Advanced Disposal’s buyout

Advanced Disposal’s 5 5/8% senior notes due 2024 jumped on Monday following news Waste Management would buy out the company.

The 5 5/8% notes rose 3¼ point to 105 5/8 with the yield on the notes just north of 3%, according to a market source.

The credit spread on the notes tightened about 180 bps on the news.

News broke on Monday that Waste Management, an investment-grade company, would acquire Advanced Disposal for $4.9 billion including debt, which is about 11x its estimated adjusted EBITDA for 2019, according to a market source.

The deal is expected to close in the first quarter of 2020.

Indexes gain

Indexes launched the week as they closed the last – with gains.

The KDP High Yield Daily index rose 5 bps to close Monday at 70.59 with the yield now 5.72%.

The index saw a cumulative gain of 18 bps on the week last week.

The ICE BofAML US High Yield index was up 1.9 bps with the year-to-date return now 8.594%.

The index saw a cumulative gain of 69.4 bps.

The index shot past 8% year-to-date returns on April 8 after only recently surpassing the 7% threshold on March 26 and passing 6% year-to-date returns on March 11.

The CDX High Yield 30 index rose 4 bps to close Monday at 107.73. The index saw cumulative gains of 68 bps on the week.

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