8 Feb, 2021

LCD News Today: Feb. 8, 2021

Primary leveraged loan market

It was a busy start to the week for the primary market as a flurry of new deals were unveiled and revisions were outlined for several others. On the M&A front, launches were scheduled for deals for Peraton Corp., Ivanti Software Inc. and the carve-out of Domtar's personal care business by American Industrial Partners.

Veritas Capital-backed Peraton has lined up a $2.145 billion first-lien term loan that is part of the financing for its $3.4 billion acquisition of the federal IT and mission support services business of Northrop Grumman. The company also plans to refinance existing debt. J.P. Morgan is leading the transaction, which launches Feb. 10, and KKR Capital Markets, Barclays, Goldman Sachs, UBS, Macquarie and RBC Capital Markets are joint lead arrangers.

Ivanti has scheduled a Tuesday call to launch a $440 million add-on term loan B for its Cherwell Software acquisition. The company in November 2020 placed a covenant-lite TLB due 2027 to finance a pair of acquisitions and refinance debt. Pricing on the loan is L+475, with a 1% floor. Morgan Stanley is on the left.

Also for Tuesday, a Deutsche Bank-led arranger group is prepping the launch of a $620 million, seven-year covenant-lite TLB to finance the acquisition of Domtar Personal Care by AIP. Domtar Corp. announced on Jan. 8 that it was selling its personal care business to AIP for $920 million.

Asplundh Tree Expert LLC and Bombardier Recreational Products Inc. are the latest to step into the market to address pricing on loans they placed in 2020. Asplundh (BBB-/Ba1) is looking to reprice its $1.995 billion TLB due 2027 via Well Fargo to either L+175 or L+200, with a leverage-based step-down. That loan was placed in August of last year at L+250, with a 0% floor. Bombardier Recreational is upsizing its term loan B-1 due May 2027 (L+200, 0% floor) by $300 million and will use the proceeds, together with cash on hand, to take out a $600 million term loan B-2 that was issued in May 2020 at pricing of L+500, with a 1% floor.

In a deal launched last week, AppLovin Corp. intended to add on to an incremental loan placed in April 2020 for acquisition financing. Instead, a J.P. Morgan-led arranger group this morning rolled out changes to the deal that will include repricing the loan from last year to make it fungible with an existing $1.2 billion TLB due April 2025. Including the new add-on, which is now offered at L+375 with an issue price of par, the existing tranche will total $1.8 billion.

Primary leveraged loan market stories/links:

Dell Technologies launches $3.143B term loan repricing; commitments due Feb. 11

National Mentor schedules lender call to launch 1st-lien, 2nd-lien term loans

Precision Medicine Group sets Feb. 9 lender call to launch $75M add-on term loan

AmWINS sets price talk on $1.995B term loan; commitments due Feb. 16

Enterprise Development Authority sets talk for $475M term loan

DRW Holdings sets Feb. 9 lender call to launch $500M term loan

AppLovin adds repricing, revises deal to $600M fungible add-on term loan

Bombardier Recreational sets Feb. 9 call to launch $300M add-on TLB-1

American Trailer World sets price talk for $750M term loan for refinancing

Ensemble Health Partners accelerates deadline for $685M add-on to Feb. 9

Peraton sets Feb. 10 lender call to launch $2.145B term loan for acquisition

Ivanti Software sets Feb. 9 lender call to launch $440M add-on term loan

SCP Health sets price talk for $530M term loan; commitments due Feb. 17

GrafTech to reprice $794M term loan

Asplundh Tree Expert eyes $1.995B term loan repricing

Ravago set to launch $325M term loan with lender call on Feb. 9

Resideo Technologies upsizes term loan to $950M

Ontic accelerates commitment deadline for $551M term loan repricing

Domtar Personal Care preps launch of $620M term loan to back buyout by AIP

TIME Manufacturing upsizes add-on term loan to $150M, revises pricing

CoreLogic outlines financing for LBO by StonePoint, Insight Partners

Secondary leveraged loan market

The secondary loan market was a touch firmer in today's session after the S&P/LSTA Leveraged Loan Index returned 0.06% on Friday.

S&P Global Ratings today upgraded GrafTech International Ltd.'s first-lien term loan rating to BB, from BB-, while revising its recovery rating to 2, from 3, as the company launched a repricing of its first-lien term loan due February 2025 and said it will prepay $150 million of the term loan as part of the transaction. The term loan, which will total about $794 million pro forma for the paydown, is currently priced at L+350, with a 1% Libor floor, and it includes a 25-basis-point margin step-down upon achieving corporate ratings of BB-/Ba3. The issuer also reported better-than-expected quarterly earnings on Feb. 5, with adjusted EBITDA of $175.5 million on revenue of $338 million, compared to the consensus estimates from S&P Capital IQ of $166.4 million and $313.9 million, respectively. The term loan was quoted around a 100/100.5 level today.

Investors on Friday received allocations of Qlik Technologies Inc.'s repriced $1.418 billion term loan due April 2024 that lowered the spread to L+400 with a 0% floor and consolidated its $960.2 million TLB-1 and $458 million TLB-2 into a single tranche. The loan was quoted at a 100/100.75 level from par pricing via lead arrangers Morgan Stanley and Goldman Sachs.

NielsenIQ's dollar-denominated $950 million, seven-year term loan B (L+400, 0% floor) quickly ticked up to a 100.25/100.625 level after breaking at 100.125/100.5 on Friday. The loan, which is part of a cross-border financing will be used to back the buyout of the company by Advent International, priced tight of talk at an original issue discount of 99.5 via a BofA Securities-led arranger group. Nielsen Holdings PLC announced in November 2020 that it was selling its Nielsen Global Connect business to Advent for $2.7 billion.

Elsewhere, Energizer Holdings Inc. topped expectations for its fiscal 2021 first-quarter results today, reporting adjusted EBITDA of $192.4 million on revenue of $848.6 million, compared to the consensus estimates compiled by S&P Capital IQ of $167.7 million and $790.1 million, respectively. The company also raised its full-year fiscal 2021 guidance for adjusted earnings per share to $3.10-$ 3.40. The company completed a loan transaction during the quarter, issuing a $1.2 billion term loan B due December 2027 (L+225, 0.50% floor) that was used to refinance debt, including its $277 million TLA due 2022 and its $194 million TLB due 2025 (L+225, 0% floor). The term loan was quoted today at a 100/100.5 level.

Secondary leveraged loan market stories/links

Qlik completes $1.418B term loan repricing; terms

NielsenIQ wraps $950M dollar-denominated term loan for buyout; terms

Primary high-yield market

The primary market calendar is steadily building for another active week of U.S. high-yield issuance. Six additional borrowers were added to the near-term calendar, as the refinancing wave continues. The average yield-to-worst declined 102 basis points last week, to 3.97% on Feb. 5, the S&P U.S. Issued High Yield Corporate Bond Index shows.

Year-to-date volume was poised to total $61.3 billion at Monday's close, reflecting an 18% increase year to year.

U.S. Steel Corp. was on tap today to print $750 million of senior notes due 2029 at 6.875%, reflecting a $250 million boost to the tranche. Earlier this month, the company completed the sale of 42 million shares of common stock, with gross proceeds of approximately $699 million. Funds were used to redeem 35% of its 12% senior secured notes due 2025. Today's bond deal was launched to redeem the remaining $687 million of the 2025 notes. The new issue is rated Caa2 at Moody's.

PennyMac Financial Services moved the timing up by one day for its eight-year unsecured notes and upsized the tranche to $750 million, from $500 million. Pricing was expected at the tight end of talk, for a 4.25% yield, sources say. Proceeds will be used for general corporate purposes, including the repayment of secured warehouse borrowings.

Northern Oil and Gas Inc. set talk for its $550 million offering of seven-year senior notes at 8.25%-8.50%. The deal — upsized by $50 million — will support the company's acquisition of natural gas assets and the repayment of fixed- and floating-rate debt. The company's plans to address its debt stack garnered positive ratings revisions last week at S&P Global Ratings and Moody's.

Elsewhere, Akumin Inc. today cleared a $75 million add-on to its 7% secured notes due 2025 and Great Western Petroleum was slated to wrap a lingering, downsized secured second-lien bond deal.

Pitches remain underway for Ziply Fiber, Spanish Broadcasting System Inc., Bristow Group Inc. and Adtalem Global Education Inc.

Primary high-yield market stories/links

High-yield forward calendar

Adtalem Global Education launches $650M of bonds for Walden University takeover

Bristow Group sets call for $400M offering of secured notes

Northern Oil and Gas circulates price guidance for senior notes offering

High-yield monthly: January jumpstarts 2021 issuance with record volume

Akumin places add-on to 7% secured notes due 2025 at 105; terms

US Steel launches upsized unsecured bonds offering at 6.875%

Secondary high-yield market

The high-yield market started the week on an optimistic note after U.S. Treasury Secretary Janet Yellen said on Sunday that if Congress approves the Biden administration's $1.9 trillion stimulus plan, the country could get back to full employment next year. The secondary traded actively and 0.25-0.5 points higher as equities hit new highs for the fourth straight session. Trading volumes were spread across a raft of newsy movers in the absence of any Friday issuance.

U.S. Steel Corp.'s 12% secured notes due 2025 drove late-morning trading action after the issuer inked $750 million of new unsecured bonds to redeem its outstanding $687 million of 2025 notes. After slipping on last week's stock sale news, the targeted notes rose 2.25 points today, to a hit fresh high of 118.5, while the company's 6.25% senior unsecured bonds due 2026 moved a point higher, to trade at 99.25 on the highs.

HCA Inc. long bonds also were active, extending gains as last week's consensus-beating earnings and rosy 2021 guidance fueled upgrade hopes. The HCA 5.5% senior notes due 2047 added another 1.25 points, to test 131 for the first time in a month.

Airline bonds moved higher on the hopes that more federal funding would stave off job losses when the second round of government payroll support expires March 31. United Airlines Holdings Inc.'s 4.875% senior unsecured notes due 2025 advanced 1.375 points, to end the day close to pandemic-era highs at 99.375, while American Airlines Group Inc.'s 5% senior unsecured notes due June 2022 established a new post-slump high at 95. Both carriers last week warned of more furloughs to come in April as demand for air travel remains low.

AMC Entertainment Holdings Inc. bonds ended the session 0.25-0.875 of a point lower after another major shareholder converted its shares in the cinema operator in order to sell them at the current valuation. The borrower's actively traded 12% pay-in-kind, or PIK, notes due 2026 shed nearly a point, to trade at 64.25, from a 74.5 high on Feb. 1.

Tesla Inc.'s $1.8 billion of 5.3% senior notes due 2025 slipped a quarter of a point off recent highs after the company revealed it bought $1.5 billion of bitcoin and said it would soon accept the cryptocurrency as a form of payment. The bonds were fractionally lower on the day at 104.375, still within the 103.5-104.75 range seen since late July.

Secondary high-yield market stories/links

AMC shareholder Wanda converts its class B common stock to class A common

Hexcel bonds seen trading in high yield after Friday downgrade by S&P Global

High-grade market

Issuance patterns today conformed to syndicate projections for the week, which called for a higher number of individual offerings relative to last week but with a lower dollar volume. The $6.7 billion of pricings for the session was across six offerings, which compares with a five-deal docket last Monday, totaling $21.65 billion (including a $14 billion deal for Apple Inc., and a $5.5 billion print for Altria Group Inc.)

Today's largest input came from Crown Castle International Corp., which placed $3.25 billion of notes in three parts, representing its third pandemic-era placement targeting near-term debt maturities in a bid to extend its funding curve at incrementally lower costs.

Indeed, refinancing efforts motivated all of today's bond placements. McCormick & Co. Inc. today placed $1 billion of notes to repay commercial paper borrowings it incurred to fund a brace of M&A plays in recent months. Becton Dickinson and Co. completed a $1 billion offering as it eyed a same-sized maturity in November 2021 and Kinder Morgan Inc. inked $750 million of notes as the same amount of its debt rolls off next week. Kennametal Inc. placed $300 million to refinance a same-sized deal due next year and UltraTech Cement Ltd. looked to refinance secured debt with a $400 million of sustainability-linked notes.

The pricing outcomes underscored ongoing scope for refinancing, despite the recent material steepening along the underlying curve. The 1.86% yield average for the S&P U.S. Investment Grade Corporate Bond Index coming into this week marked a high reading since mid-November, but remained well below the 2.57% level at this same point last year, ahead of the declaration of the global pandemic.

High-grade market stories/links

Crown Castle places $3.25B deal to further extend maturities

McCormick prints $1B offering to pay down M&A debt

Kennametal places $300M deal to take out 2022 maturity

Becton Dickinson targets 2021 maturities with new 2031 notes

Kinder Morgan prints long bonds ahead of maturity

UltraTech Cement adds to sustainability-linked issuance

Distressed news stories/links

Alpha Media disclosure statement hearing set for March 11

AMC shareholder Wanda converts its class B common stock to class A common

Form Technologies downgraded by S&P Global Ratings to CC on recapitalization

Five Seadrill Ltd. offshore drilling units file for Chapter 11 in Texas