9 Mar, 2021

LCD News Today: March 9, 2021

Primary leveraged loan market

Dividend recapitalizations are beginning to gather as Convergint Technologies LLC launched its deal today while transactions for PODS LLC and Empire Today LLC were added to the calendar. Other deals launching today included refinancings for Cambium Learning, MBCC Group and Win Waste Innovations.

Convergint launched its $1.11 billion first-lien and $305 million second-lien covenant-lite term loan financing via a Credit Suisse-led arranger group. The first-lien term loan is comprised of a $930 million funded tranche and a $180 million delayed-draw term loan. Price talk on the seven-year term loan is L+375, with a 0.75% Libor floor and an issue price of 99.5. The eight-year second-lien term loan is talked at L+675, with a 0.75% floor and an issue price of 99.5.

Macquarie Infrastructure Partners is consolidating two portfolio companies — Wheelabrator Technologies Holdings Inc. and Tunnel Hill Partners LP — to form Win Waste Innovations. A new $1 billion term loan B will refinance debt and fund a distribution in connection with the merging of the two entities, according to S&P Global Ratings, which assigned corporate and issue-level ratings of B+. The seven-year covenant-lite TLB is talked at L+325, with a 0.5% floor and an issue price of 99.5.

Arrangers were circulating price talk on the $570 million TLB for MBCC Group that will be used to refinance the issuer's existing dollar-denominated facility. Price talk for the covenant-lite TLB due September 2027 is L+375-400, with a 0.75% floor and an original issue discount of 99. This deal will refinance a dollar facility that was privately placed in July 2020 to support the buyout of the company by Lone Star alongside a syndicated deal. MBCC is concurrently repricing the €1.1 billion euro-denominated TLB. Barclays and Deutsche Bank are leading a group as active bookrunners on the euros, while Deutsche Bank is active bookrunner on the dollars.

Primary leveraged loan market stories/links

Win Waste Innovations launches $1B term loan; lender call today

Convergint Technologies offers price talk for 1st-lien, 2nd-lien term loans

Cambium Learning sets talk for $350M add-on term loan; commits due March 16

SiteOne Landscape Supply preps launch of $300M term loan for refinancing

MBCC Group outlines price talk for $570M term loan; commitments due March 18

Neenah launches $450M term loan for acquisition, refinancing

American Airlines accelerates deadline for $2.5B term loan to March 10

PODS preps March 10 launch of $1.165B term loan for refinancing, dividend

Trinseo sets March 10 call to launch $750M term loan for acquisition

Empire Today lines up $410M term loan for dividend recap; lender call March 10

Hubbard Radio sets lender call to launch amendment for $318M term loan

ThoughtWorks schedules lender call for March 10

Pitney Bowes proposes term loan A&E, repricing; commitments due March 12

Cubic obtains loan package commitment letter for buyout

Secondary leveraged loan market

The secondary loan market was a bit firmer in today's session after the S&P/LSTA Leveraged Loan Index returned just 0.01% yesterday.

National CineMedia LLC's $263.3 million first-lien term loan due June 2025 (L+300, 1% Libor floor) ticked up to a 91.5/93 level today, from 91/92.5 previously, after the company reported better-than-expected earnings and disclosed that it has extended its waiver of noncompliance with its total net and net secured leverage covenants. The waiver was extended to June 30, 2022, from the previous end date of July 1, 2021. The company reported adjusted EBITDA of negative $9.9 million on revenue of $15.7 million, compared to the consensus estimates compiled by S&P Capital IQ of negative $10.6 million and $12.47 million, respectively.

In ratings news, S&P Global Ratings has downgraded Kestrel Acquisition LLC's first-lien term loan rating to B, from B+ while maintaining its 2 recovery rating as a result of continued underperformance and the expectation that the company will carry higher debt balances than previously expected through 2025. The issuer currently has a first-lien term loan due May 2025 (L+425, 1% Libor floor) that was issued in May 2018 to back the buyout of the Hunterstown generation facility by Platinum Equity. The term loan, which totaled $400 million when it was issued, is quoted at a 92/93 level.

Meanwhile, Moody's has upgraded U.S. Silica Holdings Inc.'s issuer and senior secured ratings to B3, from Caa1, while maintaining its stable outlook on the issuer as the rating agency expects continued improvement in the company's performance. The report notes that the stable outlook reflects, "Moody's expectation that US Silica will steadily grow revenue organically, improve profitability, and improve its credit metrics." The issue currently has a first-lien term loan due April 2025 (L+400, 1% Libor floor) that was quoted around 95/96 context today.

Daseke Inc.'s new $400 million, seven-year covenant-lite term loan B (L+400, 0.75% Libor floor) ticked up to a 99.875/100.375 after breaking to a 99.75/100.5 market yesterday. The term loan priced tight of talk at L+400, with a 0.75% Libor floor and an original issue discount of 99.5 via lead arranger J.P. Morgan. Proceeds will be used to refinance the company's existing debt.

Secondary leveraged loan stories/links

National CineMedia extends waiver period via amendment

Daseke wraps $400M term loan for refinancing tight to talk; terms

Primary high-yield market

The U.S. high-yield market eyed an additional $2.5 billion in volume today with refi-driven deals for Avis Budget Car Rental LLC, Mattel Inc., Crocs Inc. and Synaptics Inc. positioned to clear the finish line by the close. Month to date, new paper placed to repay existing debt exceeds 91% of completed issuance. Following today's slate of deal, year-to-date volume will total $104.9 billion, for a 46% increase year over year.

Post recent ratings lifts and a better-than-expected earnings report in February, toymaker Mattel launched a $1.2 billion, two-part offering of senior notes to redeem $1.225 billion in aggregate principal amount of the company's outstanding 6.75% senior notes due 2025. The 2025 bonds were initially placed as a $1 billion tranche in December 2017, with an additional $500 million tacked on in May 2018. According to market sources, price talk was revised tighter for both tranches. The five-year paper was initially guided at 3.50%-3.625% and the eight-year tranche at 3.875%-4%.

The new issue is rated BB/Ba2/BB, reflective of upgrades for the company and its debt on March 8 at S&P Global Ratings and Moody's, and March 3 at Fitch. The company in February reported its latest financial results, noting net sales improved 10% in Q4'20 versus Q4'19, while full-year net sales rose 2% year over year.

Crocs completed its debut bond offering, printing $350 million (upsized by $50 million) of 4.25% senior notes at par. Proceeds of the eight-year paper will be used to repay revolver borrowings and for general corporate purposes. Issue ratings are BB-/B1.

Additional deals remain on this week’s calendar, including a pitch $5 billion, two-part offering of secured notes for American Airlines. The debt is backed by a first-priority security interest in American's AAdvantage loyalty program. Issue ratings are Ba2/BB (Moody's/Fitch). Proceeds will be used toward the repayment of the $550 million outstanding under a Treasury term loan facility and for general corporate purposes.

Primary high-yield stories/links

High-yield forward calendar

Synaptics places 8.25-year senior notes at par to yield 4%; terms

Crocs prints upsized senior notes at par to yield 4.25%; terms

Avis Budget sets price talk for $350M of 7-year bonds

Mattel guides $1.2B, 2-part bond offering backing debt refinancing

Pitney Bowes sets Wednesday call for $800M, 2-part notes offering

High-yield secondary market

After a run of muted sessions, the high-yield market showed signs of life this afternoon with buyers venturing off the sidelines amid the biggest stock-market rally since November. The CDX HY 35 edged up to the 108.25 area, after yesterday's approach to the low end of the 2021 range, defined by 107.91 at the low on Jan. 27 and the crisis-era high at 109.60 on Feb. 8.

Energy bonds slipped as oil prices took a breather following last week's rally, with Brent Crude dipping back below $68 per barrel. Cheniere Energy Partners LP's 4.5% senior secured notes due 2029 dropped just over a point to a five-month low of 103, while its $1.5 billion June offering of 4% 10-year senior unsecured notes shed almost 1.5 points, to trade around 100.25 on the lows, after breaking above 102 on March 5. Occidental Petroleum Corp. bonds were down about a point across the stack, with the most actively traded 6.125% senior notes due 2031 slipping to trades at 111.25, after testing 113 last week.

Pharmaceutical and healthcare bonds continued yesterday's slide amid continued ETF selling. Particularly active were Bausch Health Cos. Inc. 5% senior unsecured notes due 2028, which were a point lower on the day, at 100.25, versus 104 on Feb. 8. Fractional intraday losses pushed HCA Healthcare Inc.'s 5.375% senior notes due 2025 to a five-month low at 110.

A 20% surge in Tesla Inc. bonds arrested a weeklong decline in the company's 5.3% senior notes due 2025 as buyers scooped up shares at a significant discount to their recent highs. The bonds headed into the close at 103.75 after a light session.

Trading action in Monday's new issues picked up over the course of the session, allowing all three $500 million tranches to establish themselves above par issuance. Charles River Laboratories Inc.'s 4% 10-year bonds were bracketing 101 throughout the afternoon while the concurrent placement of eight-year notes was at 100.75 after topping out at 101. After a subpar start to the session, Alcoa Nederland Holding BV's offering of 4.125% eight-year unsecured notes gained traction above par in late morning action, ending the day at 100.5, from 100.875 on the highs.

High-yield secondary stories/links

Newest high-yield bonds on the rise after breaking into soft secondary

High-grade market

Issuance moderated to $5.15 billion from six issuers today, lifting volume for the week to $27.4 billion. The downshift perhaps came at an opportune time, as yesterday's heavy $22.2 billion slate of deals met with mixed reception on today's secondary market, as underlying yields waver. The weighted average of trades across the $3.5 billion of new-issue notes backing Anthem Inc. was in line with pricing spreads for the 2023, 2026 and 2031 issues, and 2 basis points through issuance for the 2051 bonds. Trades were 2-4 bps through issuance for new deals backing CenterPoint Energy Houston Electric LLC, Piedmont Natural Gas Co. Inc. and Southwestern Electric Power Co., and trades were at either side of pricing for deals for Teledyne Technologies Inc., ONE Gas Inc., Eversource Energy and Santander UK Group Holdings PLC.

At the index level, the T+93 spread for the S&P U.S. Investment Grade Corporate Bond Index as of the March 8 close marked the widest level since Feb. 2, versus an interim low at T+87 on Feb. 25. The 2.16% yield for the index on Monday was a high since mid-June last year and up 13 bps for the month and 43 bps from the pandemic-era low set in early January.

Indeed, issuance today underscored the rapid retracement higher for long-term borrowing costs. Entergy Mississippi LLC today tapped its existing 3.50% first-mortgage bonds, or FMBs, due June 1, 2051, for an additional $200 million at T+115, netting a reoffer yield only narrowly through the coupon rate, at 3.426%. The notes changed hands at the end of January at yields in the 3% area.

Today's docket also included deals for JPMorgan Chase & Co. ($3 billion), Swedbank AB (publ) ($750 million), W. R. Berkley Corp. ($400 million), Appalachian Power Co. ($400 million) and Blackstone Secured Lending Fund ($400 million).

High-grade market stories/links

JPMorgan Chase returns with $3B of 2024 notes in 2 parts

Appalachian Power prints 2031 notes for refi purposes

Swedbank returns with 2024 senior preferred notes

Entergy Mississippi adds to 2051 FMBs at lower levels

W.R. Berkley shops 2052 bonds to prefund brace of 2022 maturities

Distressed news stories/links

Deep Dive update: Some airlines see daily cash burn runways shorten

Vericast outlook lowered to negative at S&P Global Ratings after refis canceled

Tervita on CreditWatch positive by S&P Global Ratings after merger announcement

Ferrellgas reorganization plan nets confirmation

CLO market stories/links