11 Mar, 2021
LCD News Today: March 11, 2021
By LCD News
Primary loan market
Swedish enterprise software group IFS launched a cross-border euro- and dollar-denominated deal with J.P. Morgan leading the dollar portion and Morgan Stanley the euro. The $720 million term loan is talked at L+400, with a 0.5% floor and an original issue discount of 99.5. Euro tranches totaling €520 million and €67 million are guided at E+400, with a 0% floor and a 99.5 OID. All have seven-year maturities, and the euro margins are subject a three-step ratchet of 25 basis points at 0.25x, while the dollars have two step-downs of 25 bps at 0.25x. The firm is backed by EQT and TA Associates.
Evoqua Water Technologies launched an amend-and-extend and repricing of its existing term loan B, which will be reduced to $560 million, from $817 million, in connection with the J.P. Morgan-led transaction. Price talk for the term loan due 2028 is L+225-250, with a 0% Libor floor and an issue price of 99.5. Lenders are offered six months of 101 soft call protection.
In another cross-border effort, Thor Industries Inc. is repricing its dollar- and euro-denominated term loans due February 2026 in a J.P. Morgan-led deal. The deal is split between a $942 million term loan at L+300-325 and a €503 million tranche at E+325-350. Both come with 0% floors and are offered at 99.875-100. The issuer seeks to trim 50-75 bps from margins on the loans at the time of original allocations in November 2018.
Lead arranger UBS launched a repricing of PS Logistics LLC's $298.2 million term loan B due March 2025, setting talk at L+400 with a 0.75% floor and a par issue price. There will be one margin step-down that is consistent with the existing deal, and there is no change to the leverage covenant. Existing pricing on the TLB is L+475 with a 1% floor and with a margin step-down to L+450 at 3.25x net first-lien leverage.
Sole lead arranger BofA Securities finalized pricing on US Farathane Corp.s $308 million term loan B at L+425 with a 1% Libor floor and an original issue discount of 99.5. The new facility will refinance the firm's existing $478 million term loan alongside a new $175 million privately placed second-lien term loan. With this transaction, the issuer pushes out the maturity of its existing facility out by three years to December 2024. The loan will amortize at 5% per annum and includes 12 months of 101 soft call protection.
Primary loan market stories/links
PS Logistics launches $298M term loan repricing; commitments due March 18
US Farathane finalizes pricing on $308M term loan, preps allocations
Wilsonart eyes A&E of $1.24B term loan; lender call March 12
ThoughtWorks sets price talk for $715M term loan; commitments due March 23
Win Waste Innovations accelerates deadline to March 16 for $1B term loan
Jadex places $20M add-on term loan for M&A; terms
Lumentum boosts TLB for Coherent acquisition to $3B
Secondary leveraged loan market
S&S Holdings also completed its $625 million first-lien term loan and $175 million second-lien term loan that backs the acquisition of S&S Activewear LLC by CD&R alongside current owners and management. Both tranches priced wide of initial talk, with the first-lien term loan due March 2028 (L+500, 0.50% Libor floor) clearing at an OID of 97 and the second-lien term loan due March 2029 (L+875, 0.50% Libor floor) priced at 96.5. The first-lien broke to a 97.25/98.25 market, while the second-lien was initially quoted at 96.5/97.5.
EG Group Ltd. also completed its cross-border term loan financing that included a $510 million first-lien term loan and a €610 million second-lien term loan that will be used to support acquisitions in Germany and the U.K. and will also take out in full EG's existing second-lien term loan. The dollar-denominated term loan due March 2026 (L+425, 0.50% Libor floor) priced at an OID of 99 after being upsized by $60 million.
In company news, The Wall Street Journal reported today that Grab Holdings Inc. is in talks to go public through a merger with a special purpose acquisition company that could value the company at up to $40 billion. The company issued a $1.75 billion, five-year first-lien term loan in January 2021 (L+450, 1% Libor floor), shortly followed by a $250 million fungible add-on that brought the tranche size to $2 billion. The term loan has a special IPO call for 12 months at 103. The term loan is quoted around a 100/100.5 level.
Secondary leveraged loan stories/links
American Airlines $3.5B term loan prices tight of talk; rises on break; terms
S&S Holdings wraps $625M 1st-lien, $175M 2nd-lien term loans for buyout; terms
EG Group allocates 1st-, 2nd-lien term loans; terms
Bad Boy Mowers completes $250M term loan B; terms
Apollo Commercial Real Estate wraps $300M incremental term loan; terms
Leveraged loan bids dip 5 bps as secondary prices soften marginally
Primary high-yield market
Endo's awaited pitch for $1 billion of eight-year secured first-lien bonds were talked in the 6.25% area. The B+/B2 rated issue supports the company's plans to refinance the company's $3.3 billion term loan due 2024. The notes and a new $2.295 billion TLB have been assigned B+/B2 ratings.
Entercom upsized its offering by $40 million, printing $540 million of senior secured second-lien notes due 2029 at the tight end of guidance, to yield 6.75%. Proceeds are earmarked to refinance all of the company's 7% notes due 2024, and due to the deal's upsize, the company will now also increase the amount of its credit facilities it will prepay. Ratings are B-/B3.
As mentioned, the full day's docket also includes notes for Scotts Miracle-Gro ($500 million) and Tempur Sealy ($800 million).
Additional supply remains on the current week's calendar. Pitney Bowes Inc. will close books tomorrow for an $800 million, two-part offering of senior notes. The six-year bonds are talked at 6.625%-6.875%, and the eight-year tranche at 7%-7.25%. Proceeds will be used to repay a portion of Pitney's term loan B and to refinance existing bonds.
Shelf Drilling Holdings Ltd. is also underway with a $300 million offering of three-year senior secured first-lien notes to repay debt and fund general corporate purposes.
Primary high-yield stories/links
Entercom Communications prints upsized bonds to yield 6.75%; terms
Pitney Bowes offers price guidance for $800M, 2-part notes deal
Scotts Miracle-Gro sets talk for $500M of 10-year senior notes
Tempur Sealy circulates guidance for $800M of senior notes
Endo International floats price talk for $1B, intraday bond offering
Secondary high-yield market
Bonds backing Transocean Ltd. rose across the stack today as oil prices advanced despite the U.S. Energy Information Administration reporting an inventory build of 13.8 million barrels for the week to March 5 on top of the prior week's 21 million-barrel build. Transocean's recent lackluster full-year results and industry-leading contract backlog made it the target of value seekers that pushed its longer-dated bonds 2-4 points higher on the day. The biggest gains came in the 7.5% senior notes due 2031, which set a new pandemic-era high at 55.375 after slumping into the low-teens in October.
Recent weak earnings also made NGL Energy Partners LP a target, and the company's bonds moved up to 2.375 points higher in today's trading. The NGL 6.125% senior unsecured notes due 2025 posted the biggest gains, trading at a post-downturn high of 87.75.
AMC Entertainment Holdings Inc. papered over the cracks of a $4.59 billion 2020 loss and plunging revenue with a positive outlook and a pledge to be cash flow breakeven by year-end. The borrower's bonds rose to fresh pandemic-era highs, the 10% cash/12% pay-in-kind second-lien secured notes due 2026 rising 2.5 points to trade at 86.5, while the 5.875% senior subordinated notes due 2026 were up half a point, at a one-year high of 65.
On the new-issue front, American Airlines Group Inc.s massive two-part offering of secured notes shot out of the gate, with traders reporting little selling against the well-telegraphed new bonds. The $3.5 billion of 5.5% notes traded up at 103.5, according to MarketAxess, while the $3 billion of 5.85% eight-year paper hit 105.75. The airline's outstanding 11.75% secured notes due 2025 hit an all-time high of 122.5 as President Joe Biden signed into law a much anticipated $1.9 trillion coronavirus relief package.
Secondary high-yield stories/links
AMC Entertainment bonds rise despite hefty 2020 losses
Verizon on Wednesday announced that it had spent nearly $53 billion at the FCC's auction for C-band assets, as the industry scrambles to stake claims in the land rush for 5G network dominance. It followed that eye-popping disclosure on Thursday with a $25 billion launch of bonds in nine parts, which followed on a $12 billion placement last November to back its grab for spectrum assets.
The debt-funded spectrum binge may be far from over. S&P Global Ratings last week revised the outlook for AT&T Inc.'s BBB issuer rating to negative, after the telecom company spent $23.4 billion in the C-band auction and an estimated $4 billion more for satellite relocation expense and incentive payments. The agency projects AT&T’s adjusted debt to EBITDA will increase to more than 4x in 2021, versus its downgrade threshold of 3.75x, and the recorded 3.65x level at year-end 2020.
T-Mobile US Inc. announced that it paid roughly $9.3 billion in the FCC auction, saying that its trailing investments had allowed it to be more "highly selective and strategic" in bidding for assets relative to its rivals. S&P Global Ratings characterized the company's auction spending, which includes another $1.6 billion in satellite incentive payments and relocation costs, as "somewhat lower" than the agency's original expectations, though it said the acquisitions would bolster T-Mobile's "mid-band spectrum advantage."
S&P Global Ratings stated that, while T-Mobile was less aggressive in the auction than its peers, its advantage stems from its estimated 150 MHz of spectrum in the 2.5 gigahertz band that it netted from its hard-won acquisition of Sprint. "Further, the majority of spectrum (180 MHz) made available through the auction won't come online until late 2023, which will give T-Mobile a head start as it deploys the 2.5 GHz licenses it owns. About 100 MHz of C-band spectrum will be made available by December 2021. Verizon acquired most of this spectrum and will be looking to accelerate its 5G deployments," Ratings noted.
High grade stories/links
Verizon launches $25B of notes in 9 parts amid 5G industry scramble
AerCap inks $24B bridge commitment for GECAS buy
Distressed news stories/links
Seadrill Partners seeks plan delay as it evaluates new servicing proposals
Bankrupt Abengoa in need of fresh funding
StandardAero affirmed at Caa1 by Moody's on cost, working capital reductions
Garrett Motion nets approval for Chapter 11 disclosure statement
Moby withdraws lawsuit against bondholders
CLO news stories/links
Natixis prices $35M refinancing of middle-market Golub Capital Partners CLO 34