10 Mar, 2021
LCD News Today: March 10, 2021
By LCD News
Primary leveraged loan market
Precisely, formerly known as Syncsort Inc., plans to issue $1.645 billion of first-lien and $445 million of second-lien term loans to support the sponsor-to-sponsor sale of the company with Clearlake Capital and TA Associates becoming the new majority owners. Price talk for the seven-year first-lien term loan is L+400-425, with a 0.75% Libor floor and an issue price of 99.5. The eight-year second-lien term loan is talked at L+700-725, with a 0.75% floor and an original issue discount of 99. J.P. Morgan is leading the transaction.
A Deutsche Bank-led arranger group set price talk on the $750 million incremental term loan B for Trinseo that will be used to finance the company's acquisition of Arkema's polymethyl methacrylates and activated methyl methacrylates businesses in an all-cash deal valued at roughly $1.36 billion. Pro forma secured net leverage is 2.2x and total net leverage is 4.1x. Price talk for the seven-year covenant-lite TLB is L+275, with a 0% floor, offered at 99.5.
The TLB being issued by American Airlines Group Inc. and Aadvantage Loyalty IP Ltd. was upsized by $1 billion, to $3.5 billion, as pricing was tightened. Talk for the seven-year TLB was revised to L+475, with a 0.75% floor and an issue price in the range of 98.5-99, from guidance at launch of L+500-525, with a 1% floor and an original issue discount of 98. The facility is non-callable for three years and then callable at 104 and 102 in the following two years. Additionally, it will be interest only for the first two years and then will amortize at 20% per annum beginning in year three. Barclays is left lead on the deal.
Primary leveraged loan stories/links
Precisely launches $1.645B 1st-lien, $445M 2nd-lien term loans for buyout
Trinseo floats price talk for $750M term loan; commitments due March 18
PODS outlines price talk for $1.165B term loan; commitments due March 24
Galderma launches $2.53B term loan B repricing, $400M add-on
ThoughtWorks to launch $715M term loan for dividend recap; lender call today
Empire Today offers price talk for $410M term loan; commitments due March 24
SiteOne Landscape Supply launches $300M term loan; commitments due March 18
American Medical Technologies launches $280M term loan for RestorixHealth deal
First Brands sets call to launch $1.425B 1st-lien, $540M 2nd-lien term loans
IFS sets lender call for SEK11.8B cross-border term loan recap
Thor lays out cross-border term loan repricing ahead of lender call
American Airlines upsizes term loan to $3.5B, tightens pricing
Ankura Consulting sets final terms for $465M 1st-lien, $150M 2nd-lien TLs
EG Group upsizes dollar 1st-lien term loan to $510M, firms pricing
S&S Holdings revises term loan tranche sizes, finalizes pricing
PS Logistics slates March 11 lender call for repricing transaction
ANI Pharmaceuticals eyes $300M TLB for Novitium Pharma buy
Secondary leveraged loan market
In allocations, Alkermes PLC completed its $300 million, five-year covenant-lite first-lien term loan (L+250, 0.50% Libor floor) that priced at the tight end of talk at an original issue discount of 99.75 via sole lead arranger Morgan Stanley before freeing to a 100/101 market. The term loan will be used to refinance the issuer's existing $276 million first-lien term loan due March 2023 (L+225, 0% Libor floor).
Additionally, Canada Goose Holdings Inc. completed the repricing of its $300 million covenant-lite term loan B due October 2027. The transaction lowered the spread on the term loan to L+350, with a 0.75% Libor floor, from L+425, with a 0.75% floor. The term loan priced at par via lead arranger Credit Suisse and was quoted at 100/100.75 in the secondary.
Elsewhere, U.S. Silica Holdings Inc.'s first-lien term loan due April 2025 (L+400, 1% Libor floor) continued to climb in today's market after its term loan and issuer rating were upgraded to B3, from Caa1, by Moody's. The term loan ticked up to a 96.5/97 level today, from 95/96 previously. The rating agency upgraded the issuer as the recovering U.S. economy and improving dynamics of the oil and gas industry have helped the company’s credit profile. The rating agency maintained its stable outlook.
In earnings, Lifetime Brands Inc.'s due February 2025 (L+350, 1% Libor floor) ticked up to around a 99.25/100.5 context, from 98.5/100 previously, after the company reported better-than-expected fiscal fourth-quarter results today. The company reported adjusted EBITDA of $32.5 million on revenue of $249.2 million, versus the consensus estimates compiled by S&P Capital IQ of $29.5 million and $237.1 million, respectively. The company noted in its earnings press release that it was able to de-leverage to its target levels as a results of higher cash flow from operations and more disciplined approach to managing its balance sheet.
Secondary leveraged loan stories/links
Alkermes wraps $300M term loan for refinancing at tight end of talk; terms
Canada Goose wraps $300M term loan repricing; terms
Primary high-yield market
The $3.5 billion of shorter tenor bonds, upsized from $2.5 billion, were launched at 5.5%, versus 5.75% area guidance. The eight-year portion was increased to $3 billion, from $2.5 billion, with final pricing expected at 5.75%. Price talk had circulated in the 6% area for the notes. The company will also place a $3.5 billion (upsized from $2.5 billion), seven-year term loan B. The debt will be secured by a first-priority security interest in American's AAdvantage loyalty program. Moody's and Fitch have assigned issue-level ratings of Ba2/BB to the new bonds.
VTR Comunicaciones SpA printed $410 million of 4.375% secured notes due 2029. Proceeds will be used to repay in full an existing term loan due 2023, to partially redeem its 5.125% secured notes due 2028 and for general corporate purposes. The bonds garnered B+/Ba3/BB+ ratings.
Churchill Downs Inc. was also on tap with a $200 million add-on to its existing 4.75% senior notes due January 2028 to repay debt and enhance liquidity.
Primary high-yield stories/links
VTR prices $410M of secured notes at par to yield 4.375%; terms
American Airlines firms pricing for $6.5B, 2-part secured bond offering
Churchill Downs offers $200M add-on to 4.75% senior notes due 2028
Secondary high-yield market
The biggest price swings came at the distressed end of the curve, with Mallinckrodt bonds surging after lenders holding some $1.3 billion of its first-lien term loans agreed to back the company’s restructuring support agreement. The MNK 5.75% senior notes due 2022 were active throughout the session on two-way flows and ended the day 5.25 points higher, at a new pandemic-era high of 60.75.
Bonds backing Diamond Sports Group LLC continued to rise following Monday’s Moody’s downgrade, the most active 6.625% senior notes due 2027 were trading at 55.75 on the highs today, versus an Oct. 27 nadir at 37 after S&P Global Ratings placed the company's BB- rating on Credit Watch Negative. The latter delivered its downgrade on Jan. 27. The DSPORT 5.375% secured notes due 2026 hit high trades at 71.5, versus 67.5 before the Moody’s cut.
Outstanding American Airlines bonds were active and fractionally higher as traders and investors waited for the borrower to price some $6.5 billion of new bonds. The AAL 5% senior unsecured notes due June 2022 hit a new post-downturn high of 98.375, versus January lows just south of 88. The carrier’s 11.75% secured notes due 2025 also were active on two-way flows, edging up 0.625 points, to probe 120, versus March 4 highs around 120.5.
Four of Tuesday’s five tranches of new paper ended the day with a par handle as the market faced a deluge of supply on top of the recent steady flow of deals. Avis Budget Group Inc.’s new $500 million offering of 4.75% seven-year senior unsecured notes nudged to 102, while Mattel Inc.’s eight-year bonds and a refinancing from Synaptics Inc. ended the session around 100.625. The longer-dated Mattel paper was a quarter of a point lower, while Crocs Inc.'s debut bond offering was holding at par.
Secondary high-yield stories/links
New high yield deals struggle to make gains in sluggish secondary
High-grade market
The Tuesday docket included a Swedbank AB (publ) deal tailored during marketing to drop an initially proposed offering of six-year (non-call five) senior non-preferred notes. It priced the remaining $750 million of 0.85% 2024 callable senior preferred issue in line with initial whispers, at T+55.
Reflecting the double-digit spread concessions commanded by investors across other issues yesterday, the new Appalachian Power Co. 2.70% notes due 2031 gapped 10-11 basis points tighter on the break today, changing hands today at a weighted average at T+109, from T+120 at pricing, or just 5 bps through initial whispers yesterday morning.
Pricing for the W. R. Berkley Corp. 3.55% senior notes due 2052, at T+130, was just 15 bps through early whispers, and some 12-15 bps wide of comparable secondary marks. That issue changed hands today at a weighted average 9 bps through pricing.
Today’s lull brought into sharp relief the $24 billion of bridge financing (from Citi and Goldman Sachs) that AerCap Holdings NV announced today backing its acquisition of GE Capital Aviation Services Inc. from General Electric Co., in a deal valued at more than $30 billion. AerCap will look to term out that bridge with long-term debt as the transaction plays out over the next 10-12 months.
The $24 billion figure represents the cash portion of the transaction price to be paid to GE for an initial round of deleveraging, as GE Capital debt will be consolidated on GE’s balance sheet post the separation. S&P Global Ratings today said that it would review GE’s BBB+ rating for a potential one-notch cut to reflect the resulting higher leverage, but initial commentary from ratings appears to suggest that both GE and AerCap will retain the rough proportions of their triple-B borrowing profiles through the material business shift.
High-grade stories/links
General Electric bonds shrug off ratings risk related to AerCap deal
Distressed news stories/links
AMC Entertainment extends covenant suspension period
Just Energy nets CCAA protection in Canada as Texas storm fallout spreads
Mallinckrodt nets deal with first-lien lender group for plan support
Buena Vista Gaming raised by S&P Global Ratings to CCC+ on improved EBITDA
US Silica upgraded by Moody's to B3 on improving oil and gas industry
Sundance Energy files Chapter 11
Diamond Sports bonds continue to rise on second ratings downgrade
CLO market stories/links
Wells Fargo prices $707M reset of GoldenTree Loan Management US CLO 1