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LCD News Today: Feb. 9, 2021


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LCD News Today: Feb. 9, 2021

Primary leveraged loan market
With the launch of a broad term loan financing today, Centerbridge Partners-backed National Mentor Holdings Inc. added its name to the list of issuers in market with transactions that will, at least in part, fund shareholder distributions. Opportunism is rampant in the 2021 loan market, backed by strong technicals, and dividend recapitalizations are trending upward. Year-to-date loan volume to finance sponsored dividend recaps stood at $4.7 billion through Feb. 8, the highest reading for any comparable period since 2017 ($10.6 billion) and the second-highest since LCD began tracking this data in 2000.

A Goldman Sachs-led arranger group launched financing for National Mentor that includes a $1.43 billion first-lien term loan, a $165 million delayed-draw first-lien term loan, a $50 million first-lien term loan C and a $250 million second-lien term loan. Price talk for the seven-year first-lien term loan is L+375-400, with a 0.75% Libor floor, offered at 99. The eight-year second-lien tranche is talked at L+750, with a 0.75% floor and an issue price of 98.5. Proceeds will be used to refinance existing debt and fund a shareholder distribution that S&P Global Ratings says will total $375 million.

Also launching today was the $620 million term loan B that will finance the acquisition of Domtar Personal Care by American Industrial Partners. A Deutsche Bank-led arranger group set talk for the seven-year covenant-lite TLB at L+450-475, with a 0.75% floor and an issue price of 99. AIP is acquiring the business from Domtar Corp. for $920 million.

A Morgan Stanley-led arranger group launched a $440 million non-fungible incremental first-lien term loan due December 2027 for Ivanti Software Inc. at L+425-450, with a 0.75% floor and an issue price of 99-99.5. Proceeds will be used to finance the company's acquisition of Cherwell. Ivanti's existing covenant-lite first-lien term loan due 2027 is priced at L+475, with a 1% floor. It was issued in November 2020 to back the acquisitions of MobileIron and Pulse Secure, and to refinance existing debt.

Primary leveraged loan market stories/links:

National Mentor launches 1st-lien, 2nd-lien term loans

Domtar Personal Care sets price talk on $620M term loan backing buyout

Internet Brands sets talk for $300M incremental term loan

Bombardier Recreational sets talk for $300M incremental term loan

DRW Holdings sets price talk for $500M term loan; commitments due Feb. 23

Ivanti Software sets talk for $440M add-on term loan; commitments due Feb. 18

Precision Medicine Group sets price talk for $75M add-on term loan

Schweitzer-Mauduit International launches $350M term loan for Scapa acquisition

ADS Tactical lines up $700M term loan to refinance debt, fund dividend

Avaya eyes $743M term loan B-2 refinancing; lender call Feb. 10

Infinite Electronics sets Feb. 11 call to launch buyout financing

Velocity Financial places $175M term loan for refinancing, new originations

Secondary leveraged loan market
The secondary loan market was relatively calm today after the S&P/LSTA Leveraged Loan Index returned 0.05% yesterday.

Party City Holdings Inc.Party City Holdings Inc.'s term loan B due August 2022 (L+275, 0.75% Libor floor) jumped to a 99.5/99.875 level today, from around 98.25/99.25 yesterday, after the issuer launched a $725 million offering of five-year secured first-lien notes that will be used to repay the borrower's term loan B in full. As a result of the refinancing, S&P Global Ratings upgraded the issuer's corporate rating to CCC+ with a positive outlook, from CCC and a negative outlook previously. The rating agency notes that the refinancing addresses the company's near-term maturities, but it would still need to improve performance materially for the capital structure to be viewed as sustainable.

In allocations today, Ziply Fiber completed its $500 million first-lien term loan due April 2027 (L+375, 0% Libor floor) that priced at an original issue discount of 99.75 via a Goldman Sachs-led arranger group before freeing to a 100.125/100.625 market. Proceeds will be used with a $300 million issue of 6% senior unsecured notes due February 2028 to refinance the issuer's existing first-lien term loan due April 2027 (L+550, 0% Libor floor) that totals approximately $787 million.

Herbalife International Inc. completed the repricing of its $733.1 million covenant-lite first-lien term loan due August 2025 that lowered the spread to L+250, with a 0% Libor floor, from L+275 previously. The term loan cleared at an issue price of par via a Jefferies-led arranger group and was quoted at a 100.125/100.375 level this afternoon.

Elsewhere, Ascend Performance Materials Operations LLC wrapped the repricing of its $1.086 billion term loan B due August 2026 that priced tight of talk at L+475, with a 0.75% Libor floor and an offer price of par, and lowers the spread from L+525, with a 1% floor. The term loan was quoted at 100.75/101 following allocations.

Kindred At HomeKindred At Home's repriced $2.253 billion first-lien term loan due July 2025 (L+275, 0% Libor floor) was quoted at 100.5/101.25 today. The term loan priced at an issue price of par via lead arranger J.P. Morgan and lowered the spread on the facility from L+325. The issuer is also making a $75 million prepayment on the term loan using cash on hand.

Secondary leveraged loan market stories/links

Ziply Fiber wraps $500M term loan for refinancing; terms

Herbalife $733.1M repriced term loan allocates; terms

Ascend Performance Materials completes $1.086B term loan repricing; terms

Kindred at Home completes $2.25B term loan repricing; terms

AppLovin allocates $600M add-on term loan; terms

Aptean $100M incremental term loan prices at talk, allocates; terms

Primary high-yield market
Yields have touched a new all-time low, setting the stage for further refinancing activity. Per the U.S. Issued High Yield Corporate Bond Index, the average yield to worst through Feb. 8 sat at 3.95%, and the average option-adjusted spread at T+332. Triple-C issuance continues to lead the market’s rally with a 2.79% year-to-date return, versus 1.03% for the overall index. To note, new prints in the ratings class account for nearly 22% of month-to-date complete supply, after wrapping January with a 16% share of the volume.

Party City Holdings Inc. today joined in on the refi-wave, offering five-year secured first-lien notes to repay its $720 million term loan B due August 2022 in full. Following an upsizing to the bond tranche to $750 million, from $725 million, the company will also use the proceeds to support general corporate purposes. The paper was launched at 8.75%, versus guidance in the 9% area, and initial price thoughts of 9.50%-10%. The debt raise to address its maturity profile sparked upgrade activity today at both S&P Global Ratings and Moody’s. The notes are rated CCC+/Caa1.

Cleveland-Cliffs Inc. was also in market with a $1 billion-total offering of senior unsecured guaranteed notes to refinance its 4.875% senior secured notes due 2024 and 6.375% senior guaranteed notes due 2025, and certain notes issued by AK Steel Corp., including its 7.625% senior notes due 2021, 7.50% senior notes due 2023 and 6.375% senior notes due 2025. Proceeds will also be used to reduce borrowings under the company's existing asset-based revolving credit facility. The included eight-year bonds were guided in the 4.75% and the 10-year tranche in the 5% area.

Including pricings for Ryman Hospitality Properties Inc. and Ziply Fiber, and an expected print for Constellium SE, intraday volume totals $3.15 billion. Month-to-date volume sits at $12.43 billion, and the year-to-date sum totals $64.42 billion, up 24% from one year prior.

Primary high-yield market stories/links

High-yield forward calendar

Party City launches $750M of secured notes at 8.75%

Ryman Hospitality Properties prints upsized senior notes to yield 4.50%; terms

Constellium SE guides sustainability-linked notes backing debt refi

Ziply Fiber prices senior notes at par to yield 6%; terms

Cleveland-Cliffs sets price talk for $1B, 2-part bond offering

Secondary high-yield market
The high-yield secondary market was quiet today after Monday’s busy session, with traders focusing on inflation, earnings and a handful of new issues. After six straight higher closes, the CDX HY 35 slipped a bit on Tuesday to readings just below 109.50. The close on Monday, at 109.60, marked a new pandemic-era high, from a 2021 low at 107.91 on Jan. 27.

TransDigm Group Inc. bonds were mixed in the wake of fiscal first-quarter earnings that lagged consensus estimates. The borrower’s 6.25% senior secured notes due 2026 and 5.5% senior subordinated notes due 2027 were fractionally higher on the day on decent volumes, the former testing 107 for the first time before the markets shut down. The company reiterated that it expects to use proceeds from its $1.2 billion Jan. 14 issue of 4.625% eight-year senior subordinated notes to redeem all of its 6.5% senior subordinated 2024 bonds, which moved fractionally lower, to 102.75, with senior subordinated TDG bonds maturing in 2025 and 2026 also slipping a touch.

Coty Inc.’s second-quarter earnings also were mixed, but a continued improvement in profit and debt reduction pushed bonds higher. The issuer’s 6.5% notes due 2026 garnered 0.625 points, bouncing off Jan. 29 lows of 95.25 to change hands at 98.25 on the highs.

The long end of the OneMain Holdings Inc. curve moved half a point higher after the company reported better-than-expected fourth-quarter earnings on lower loan loss provisions and credit charge offs. The borrower’s December offering of 4% senior notes due 2030 moved half a point higher, to probe 103, after dipping below 101 on Jan. 29. The 5.375% notes due 2029 edged up to 111.25 while remaining shy of year-end highs around 113.5.

Monday’s $2.26 billion of high-yield issuance slipped off yesterday’s highs under softer conditions, while remaining above their pricing levels. Northern Oil and Gas Inc.'s $550 million of 8.125% seven-year senior notes proved a relative outperformer, heading into the close at 101.625, after topping out at 102.5. On the other end of the performance scale, traders reported bids for Great Western Petroleum, LLC's closely held $235 million of 4.5-year senior secured second-lien notes at their 99.5 OID after the bonds priced at an all-in yield of 12.73% and with a downsize and reduced tenor.

Secondary high-yield market stories/links

Monday's high-yield bond offerings trade mixed in muted market

High-grade market
Issuance today totaled $3.75 billion from four issuers, boosting issuance for the week to $10.45 billion. While refinancing efforts remain the primary driver of deals to the marketplace, M&A continues to creep into the primary-market conversation as issuers exit earnings blackouts. Electronic Arts Inc. today completed a $1.5 billion offering of 10- and 30-year senior notes backing its recent acquisition plays, including a $2.1 billion deal it announced this week for Glu Mobile Inc., and a deal announced in December for Codemasters Group Holdings PLC. As well, Citrix Systems Inc. printed $750 million of new five-year notes to fund a portion of the aggregate cash consideration for its $2.25 billion acquisition of Silicon Valley-based work-management platform company Wrike Inc.

Meantime, issuers continue to term out near-term exposures at low costs.

National Fuel Gas Co. today completed a $500 million offering of 2.95% 10-year notes due March 1, 2031 at T+180, or well through initial whispers in the T+237.5 area, as the company looked to repurchase and/or redeem all of the company’s outstanding $500 million of higher-coupon 4.90% notes due in December 2021.

With ESG trends broadly in the spotlight for 2021, JPMorgan Chase & Co. today followed on a $5 billion placement in January with a $1 billion offering today of 0.563% four-year (non-call three), fixed-to-floating notes due Feb. 16, 2025 at T+37, the proceeds of which the bank will use to fund eligible social projects under its social bond principles, as updated last June.

Issuers continue to tread firm ground on the primary market, against stable risk premiums. The CDX HY 35 today edged up about half a basis point, to mark the first flinch wider for the index after six straight tighter closes. Trades in new issues priced yesterday were generally narrowly at either side of pricing levels today, with the notable exception of another big leg tighter for the new Kennametal Inc. 2.8% 10-year notes, which traded today from T+147-150, from pricing at T+165. The offering — the issuer's first since 2018, as it looked to take out a 2022 maturity — was priced through the tight end of talk, and today's substantially lower trading levels compare with early whispers for the new notes Monday morning in the T+220 area.

High-grade market stories/links

Citrix places $750M of 2026 notes for Wrike acquisition

Electronic Arts prices $1.5B of notes backing M&A efforts

National Fuel Gas targets 2021 notes with new offering

JPMorgan Chase adds to social bond issuance with new 2025 notes

Distressed news stories/links

Valaris nets lender agreement on plan, sets confirmation hearing for March 3

Peabody Energy raised to CCC+ by S&P Global Ratings after exchange

CBL & Associates again extends mediation as revised plan seems within reach

Bardin Hill closes on $600M credit fund targeting smaller companies

CLO stories/links

RBC prices $381M Madison Park L CLO for CSAM