8 Mar, 2021
LCD News Today: March 8, 2021
By LCD News
Primary leveraged loan market
The opening session of the week featured the launch of the leveraged buyout financing for Triton Water Holdings Inc. and financing for American Airlines Group Inc. via its customer loyalty program, AAdvantage. Several new deals were also added to the calendar for Cambium Learning Group Inc., Convergint Technologies LLC and MBCC Group, among others.
Financing for the $4.3 billion buyout of Nestlé's North American bottled water business by One Rock Capital Partners and Metropoulos & Co. includes a $1.8 billion term loan B with Triton Water as borrower, which launched today via a Morgan Stanley-led arranger group. The seven-year covenant-lite TLB is talked at L+375, with a 0.5% Libor floor and an original issue discount, or OID, in the range of 99-99.5. There is one 25-basis-point margin step-down at 0.5x inside closing first-lien net leverage and one 25 bps step-down upon the consummation of a qualifying IPO. Debt financing for the acquisition also includes a $350 million asset-based loan facility, $750 million of other secured debt and $670 million of unsecured debt.
American Airlines and AAdvantage Loyalty IP Ltd. are the borrowers on a new $2.5 billion, seven-year term loan B that is being guided at L+500-525, with a 1% floor and an OID of 98. The TLB is non-callable for three years and then at 104 and 102 in the following two years. Additionally, the loan 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 that will, along with $5 billion of secured notes, repay all amounts outstanding under the airline's Treasury term loan facility, fund reserve accounts for the loan and notes, and provide funds for general corporate purposes.
Pricing was flexed wider on the $600 million first-lien and $200 million second-lien term loan financing backing the buyout of apparel company S&S Activewear LLC by CD&R. Price talk for the seven-year first-lien term loan is now L+500, with a 0.5% floor and an issue price in the range of 97-97.5. That is revised from guidance at launch of L+425-450 at 99. Also, the 101 soft call protection was extended to 12 months, from six months. The eight-year second-lien term loan is now talked at L+875, with a 0.5% floor and an issue price of 96.5. It had launched at L+825, offered at 98-98.5.
Primary leveraged loan market stories/links:
Triton Water sets price talk for $1.8B LBO term loan; commitments due March 18
American Airlines sets price talk for $2.5B term loan; commits due March 11
S&S Holdings widens price talk on $600M 1st-lien, $200M 2nd-lien term loans
Convergint readies launch of 1st-lien, 2nd-lien term loan financing
MBCC sets call for €1.1B loan repricing plus new $570M term loan B
AdThrive sets March 9 lender call to launch $385M term loan
Cambium Learning sets March 9 call to launch $350M add-on term loan
American Medical Technologies, RestorixHealth merger loan to launch March 10
Canada Goose accelerates deadline to today for $300M term loan repricing
Symphony Technology Group to acquire McAfee enterprise business for $4B
Secondary leveraged loan market
The secondary loan market held relatively steady in today's session after the S&P/LSTA Leveraged Loan Index notched a negative 0.06% return last week.
In company news today, DuPont de Nemours Inc. agreed to acquire Laird PLC from Advent International for $2.3 billion in cash. The transaction will be funded with existing cash balances and is expected to close in the third quarter of 2021. Laird currently has a covenant-lite first-lien term loan due July 2025 (L+450, 0% Libor floor) that totaled $750 million when it was issued in May 2018 to back the buyout of the company by Advent. The loan was quoted in a 100/100.5 context today.
Berlin Packaging LLC's $500 million first-lien term loan due March 2025 (L+325, 0.50% floor) ticked down to a 99.5/100 level today after breaking at 99.75/100.25 on Friday. The loan priced in line with talk at an original issue discount of 99.5 via a Morgan Stanley-led arranger group. The loan, which is split between a $400 million funded tranche and a $100 million delayed-draw tranche, will be used to refinance the issuer's euro-denominated first-lien term loan, refinance a portion of its second-lien term loan and fund cash to the balance sheet.
Meanwhile, ION Corporate's $910 million dollar-denominated first-lien term loan due March 2028 (L+375, 0% floor) held at its break price of 100/100.5 after pricing tight of talk at an OID of 99.75 on Friday via lead arranger Credit Suisse. The loan, which was part of a cross-border term loan financing that also included a €1.01B euro-denominated first-lien term loan due March 2028 (E+375, 0% floor), will be used to refinance debt and fund a dividend. The borrowers were Helios Software Holdings Inc. and ION Corporate Solutions Finance SARL.
Elsewhere, investors received allocations of High Liner Foods Inc.'s $265 million repriced first-lien term loan due October 2026 (L+375, 0.75% floor) that priced in line with talk at an issue price of par via lead arranger RBC Capital Markets. The transaction lowered the spread on the term loan from L+425, with a 1% floor. The loan is governed by a total net leverage covenant.
Secondary leveraged loan stories/links
DuPont to acquire Laird from Advent International for $2.3B in cash
Berlin Packaging completes $500M term loan at talk; terms
ION Corporate wraps $2.1B-equivalent cross-border term loan financing; terms
High Liner Foods $265M repriced term loan allocates; terms
Daseke wraps $400M term loan for refinancing tight to talk; terms
Primary high-yield market
The current week's pipeline began stacking up today with newly proposed bond deals for American Airlines Group Inc., Alcoa Nederland Holding BV and Crocs Inc. Pro forma volume for the five-day period ending March 12 is currently projected at $7.5 billion.
American Airlines accounts for a hefty portion of that sum after commencing marketing today for $5 billion of secured notes. The debt will be evenly split across five- and eight-year tranches and will be secured by a first-priority security interest in American's AAdvantage loyalty program. Pricing is expected later this week. Issue ratings are Ba2/BB (Moody's/Fitch). Proceeds of the bonds and a $2.5 billion term loan B in part will be used to fully repay the $550 million outstanding under a Treasury term loan facility and for general corporate purposes.
American Airlines previously completed a pandemic-era print in June 2020, placing $2.5 billion of 11.75% senior secured notes due 2025 at 99% of par, to yield 12.013%. Those bonds are secured by a first-priority lien on certain slots, route authorities and airport gate leasehold rights for scheduled services from U.S. airports to certain specified airports.
The offering from Crocs will add bonds to the company's capital structure via $300 million of eight-year senior unsecured notes. The casual lifestyle footwear company has earmarked the proceeds to repay revolving credit facility drawings and for general corporate purposes. As of Dec. 31, 2020, there was $180 million outstanding under a revolver due July 2024. Issue ratings are BB-/B1.
More near-term, year-to-date volume was slated to total $102.4 billion at Monday's close, for a 43% increase year to year. Alcoa and Charles River Laboratories Inc. today were expected to price a combined $1.5 billion of notes.
Primary high-yield stories/links
Alcoa Nederland Holding circulates price guidance for $500M bond offering
Charles River shops $1B bond offering to refinance debt, fund M&A
American Airlines preps $5B, 2-part secured notes offering
Crocs out to market with $300M of 8-year (NC3) unsecured notes
Synaptics launches $400M of bonds due June 2029
Ahlstrom-Munksjo sets lender call for €650M cross-border bond deal
High-yield secondary market
The high-yield secondary started the week on a soft note today, with prices generally down half a point or more amid selling from exchange-traded funds. What little activity there was focused on a handful of new deals and a couple of newsier names.
AMC Entertainment Holdings Inc. bonds jumped after Wedbush analyst Michael Pachter doubled his price target for the company's stock to $5. The borrower's July 2020 placement of 12% pay-in-kind, or PIK, notes due 2026 and concurrent 10.5% first-lien secured notes due 2026 each advanced to fresh highs, with the former moving to 81 on a 2.5-point gain and the latter testing 105 compared to November trades in the low-50s.
Bonds backing American Airlines traded mixed as the carrier hit the road with a massive bond-and-loan package. The borrower's most active 5% senior unsecured notes due June 2022 spent the day oscillating between 95.75 and 96.875, ending the session 1.25 points higher at the top end of that range. Having started the day with a 1-point gain, the American Airlines 3.75% senior unsecured notes due 2025 closed a point lower at 84, 3.5 points off a pandemic-era high of March 3.
DISH Network bonds slipped across the board after the satellite television provider agreed to acquire cell carrier Republic Wireless for an undisclosed sum. The deal was unveiled as the company strives to build out a 5G network that it plans to launch later this year. The borrower's 7.75% senior unsecured notes due 2026 were most active of the stack, shedding half a point on the day to trade at a four-month low of 109.5. The bonds slipped by a similar amount in August in the wake of DISH's Ting Mobile acquisition.
Playtika Holding Corp.'s $600 million placement of 4.25% eight-year senior notes, Friday's sole new print, was trading actively at 101. Also trading briskly were the two $500 million tranches of Twilio Inc. paper inked on March 4. The Twilio 3.625% eight-year bonds rose a quarter of a point on the session, to a fresh high of 102.75, while the company's 3.875% 10-year notes were trading slightly above Friday's close at 103.125.
High-yield secondary stories/links
Volatile AMC Entertainment bonds jump on equity upgrade
Friday's sole high-yield offering holds on to gains in sideways market
High-grade market
Issuance continued at a fevered pitch today as underlying rates continued higher and the yield slope steepened, with 11 issuers combining to print $22.2 billion of new supply, or already more than half syndicate projections for total issuance this week in the low $40 billion range. Issuance for the short month to date swelled to nearly $86 billion, when excluding SAS and hybrid deals from the count.
For reference, the Monday session one week ago produced $24.4 billion of new supply from 13 issuers, on the way to a $63.4 billion total for the full week, or the seventh-highest weekly total on record, under LCD criteria.
M&A-driven issuance continues to mount, with Teledyne Technologies Inc. today placing $3 billion of notes in five parts, on top of a $1 billion term loan it disclosed last week, all backing its $8 billion acquisition of FLIR Systems Inc. Other big prints today came from Bank of America Corp. ($5.5 billion), Anthem Inc. ($4 billion), ONE Gas Inc. ($2.5 billion), Pacific Gas and Electric Co. ($2.4 billion), Santander UK Group Holdings PLC ($2 billion), CenterPoint Energy Houston Electric LLC ($1.1 billion) and AmFam Holdings Inc. ($1 billion).
Notably, the ONE Gas and Centerpoint deals followed on Entergy Louisiana LLC's $1 billion print last week as a swath of energy companies scramble to finance the unprecedented costs attendant to extreme winter weather last month.
General Electric Co. bonds gapped tighter on the secondary market today after news surfaced of a possible deal to combine its troubled aircraft leasing division with AerCap Holdings NV in a bid to lessen headwinds to the conglomerate's rebounding free cash flow.
High-grade market stories/links
ONE Gas places $2.5B offering to back winter storm costs
Teledyne shops 5-part deal backing $8B FLIR acquisition
Southwestern Electric places 2026 notes at 1.652%
Eversource Energy places $350M of notes for refinancing
General Electric bonds rally on reports of talks with AerCap
Distressed news stories/links
Boart Longyear cut by S&P Global Ratings to CC on likely restructuring
GTT hires Akin Gump's Maynard as general counsel
Garrett Motion $1.25B-equivalent cross-border term loan allocates; terms
CLO market stories/links
JP Morgan prices $465M reset of HPS Loan Management 14-2019