Aircastle and Olin drive-by issues plus Vermilion price; calendar swells; new Blue Line, CyrusOne busy

By Paul Deckelman and Paul A. Harris

New York, March 6 – The high-yield primary market continued churning out new deals on Monday, maintaining the busy momentum seen at the tail end of last week.

Syndicate sources said that some $1.3 billion of U.S. dollar-denominated and fully junk-rated paper from domestic or industrialized-country borrowers priced in three single-tranche issues – although that was off somewhat from the $2.1 billion which got done in four tranches during Friday’s session and well down from Thursday’s sizzling $4.2 billion in six tranches.

There were a pair of $500 million quick-to-market offerings, as aircraft leasing company Aircastle Ltd. flew in with a seven-year deal and chemical maker and firearms ammunition manufacturer Olin Corp. priced a tranche of 10.5-year notes.

There was also a regularly scheduled forward calendar offering – oil operator Vermilion Energy Inc.’s $300 million of eight-year notes.

But in addition to the deals actually pricing, the forward calendar was growing appreciably.

Several names- Rain Carbon Inc., Imagold Corp., New Home Co. and New Enterprise Stone & Lime Co., Inc. – were heard to have begun roadshows to market deals to investors.

Cott Corp. was also heard to be shopping a deal around, while American Axle & Manufacturing Inc. announced plans for a $1.2 billion deal. Valeant Pharmaceuticals International Inc. also plans an upcoming bond issue.

In the secondary arena, traders saw busy activity in recently priced issues from CyrusOne Inc. and Blue Line Rental.

Statistical indicators of market performance were lower across the board on Monday, after having been mixed on Friday.

Aircastle prices tight

Three issuers raised a combined total of $1.3 billion during a news-heavy Monday session.

Aircastle priced a $500 million issue of senior notes due May 1, 2024 (Ba1/BB+) at par to yield 4 1/8%.

The yield printed at the tight end of the 4 1/8% to 4¼% yield talk. Initial guidance was 4¼% to 4½%.

Citigroup was the left bookrunner. BNP Paribas, Credit Agricole, Deutsche Bank, Goldman Sachs, J.P. Morgan, MUFG and RBC were the joint bookrunners.

The Stamford, Conn.-based commercial jet aircraft lessor plans to use the proceeds for general corporate purposes including debt redemption.

Olin drives by

Olin priced a $500 million issue of 10.5-year senior notes (Ba1/BB) at par to yield 5 1/8%.

The yield printed on top of yield talk in the 5 1/8% area, and at the tight end of the 5 1/8% to 5 3/8% initial guidance.

BofA Merrill Lynch, J.P. Morgan, Wells Fargo, Citigroup, SMBC, PNC, Scotiabank and MUFG were the bookrunners.

Proceeds will be used to prepay some of the loans outstanding under the Sumitomo credit facility, which was used to refinance then-existing Blue Cube debt, as well as to pay fees and expenses in connection with the acquisition of the DCP business and for general corporate purposes.

Vermilion Energy through talk

Vermilion Energy priced a $300 million issue of eight-year senior notes (B2/BB-) at par to yield 5 5/8%.

The yield came through the 5¾% to 6% yield talk.

JP Morgan, BofA Merrill Lynch, TD, Scotia, BMO, CIBC, National Bank of Canada and RBC Capital were the joint bookrunners.

The Calgary, Alta.-based energy producer intends to use the proceeds to repay a portion of the debt outstanding on its revolving credit facility.

Rain Carbon roadshow

Rain Carbon started a roadshow on Monday for a $1.05 billion offering of eight-year senior notes (B1).

Citigroup Global Markets is the left bookrunner. Deutsche Bank Securities Inc. and Goldman Sachs & Co. are the joint bookrunners for the debt refinancing deal.

Cott to price $650 million

Cott is expected to price a $650 million offering of eight-year senior notes in the middle part of the present week.

Deutsche Bank, JP Morgan, SunTrust, BofA Merrill Lynch and Wells Fargo are the joint bookrunners for the debt refinancing.

Iamgold starts roadshow

Iamgold started a roadshow on Monday for a $500 million offering of eight-year senior notes.

The roadshow wraps up on Wednesday.

Citigroup is the left bookrunner for the debt refinancing deal. Morgan Stanley, Deutsche Bank, National Bank of Canada and RBC are the joint bookrunners.

New Home on roadshow

New Home started a roadshow for a $250 million offering of five-year senior notes.

Credit Suisse, Citigroup, JP Morgan and US Bank are the joint bookrunners.

The Aliso Viejo, Calif.-based homebuilder plans to use the proceeds to repay its existing revolving credit facility and for general corporate purposes.

New Enterprise roadshows five-year deal

New Enterprise Stone & Lime plans to sell $200 million of five-year notes in a deal expected to price on Thursday.

Goldman Sachs is the sole bookrunner for the debt refinancing.

In addition, American Axle & Manufacturing. announced plans to sell $1.2 billion of senior notes in a private offering.

The company expected to put in place a $2.45 billion credit facility that is being arranged by JP Morgan LLC.

Proceeds will be used to fund the acquisition of Metaldyne Performance Group Inc., as well as to refinance debt under American Axle's existing senior secured revolving credit facility and certain existing Metaldyne debt, with the remainder, if any, to be used for general corporate purposes.

And Valeant Pharmaceuticals International plans to issue new secured debt securities as part of a debt refinancing effort.

The refinancing also includes a $3.06 billion term loan, via Barclays and Goldman Sachs & Co., was scheduled to launch at a Monday bank meeting.

Monday was a busy start to what is expected to be a busy week, a debt capital markets banker said.

Nokia upsizes

In the European market Nokia Corp. launched and priced €1.25 billion of senior notes (Ba1/BB+) in an upsized two-part deal on Monday.

The debt refinancing deal included €500 million of 1% four-year notes that priced at mid-swaps plus 95 basis points. Guidance was mid-swaps plus 125 bps.

An upsized €750 million amount of 2% seven-year notes priced at mid-swaps plus 165 bps. The tranche was upsized from €500 million. Guidance was mid-swaps plus 195 bps.

The overall deal size was increased from €1 billion.

BofA Merrill Lynch, Citigroup, Deutsche Bank and Nordea managed the sale.

Deutsche Bank will bill and deliver.

Look for two to three more deals to come this week in the European primary market, sellside sources said on Monday.

At least one is expected to roadshow, a banker said.

None of the expected business appears to be notably large, sources said.

Big ETF outflows on Friday

The daily cash flows of the dedicated high-yield bond funds were mixed on Friday, the most recent session for which data was available at press time, a trader said.

High yield ETFs sustained a whopping $463 million of outflows on the day.

Meanwhile actively managed funds saw $20 million of inflows on Friday.

In the secondary realm, a trader said that for a third consecutive session, “the new issues were the focus.”

One of those deals was Olin’s 5 1/8% notes due in September of 2027, which were seen by a trader in a 100½ to 100¾ bid range.

That was up from the par level at which the Clayton, Mo.-based chemical producer and firearms ammunition maker had priced its quickly shopped $500 million issue.

Aircastle steady near issue

On the other hand, traders saw the new Aircastle 4 1/8% notes due in May of 2024 holding steady around their par issue price.

One quoted the bonds in a 99¾ to 100¼ bid context, while two others at different shops saw those notes around par to 100 1/8 bid.

One of the traders remarked that “this is just scary,” referring to Aircastle’s spread over comparable Treasuries of 181 basis points – around 200 bps tighter than the average junk bond spread these days.

“It’s unheard of,” he said, and from a secondary trading perspective, “totally unattractive.”

Blue Line comes in

Going back to some of the deals that priced last week, traders saw the new Blue Line Rental 9¼% senior secured notes due 2024 having continued to come from the hefty gains initially seen when those bonds started to trade after pricing at par on Thursday, after the regularly scheduled forward calendar offering had been upsized from an originally announced $1.025 billion.

One trader quoted the bonds at 101 bid – down 1 full point from where they had finished on Friday.

And Friday had seen the bonds come down to around the 102 bid level, after having initially moved as high as 103 bid.

As was the case on Friday, the Shippensburg, Pa.-based construction equipment rental company’s $1.1 billion offering was high up on the day’s Most Actives list, though not quite at the top as it had been on Friday, when more than $100 million had changed hands; a market source estimated Monday’s volume at around $26 million.

Cyrus deal seen firm and busy

In contrast to Blue Line, traders said that both halves of Friday’s new CyrusOne deal held onto their initial aftermarket gains in busy trading on Monday.

The Dallas-based data-centers REIT’s 5% notes due 2024 firmed by ¼ point to 101½ bid, with over $17 million traded, while its 5 3/8% notes due 2027 held steady at 101 3/8 bid, on volume of over $12 million.

Indicators turn lower

Statistical market performance measures turned lower across the board on Monday, after having been mixed on Friday for a second straight session and higher across the board Wednesday.

The KDP High Yield Daily index eased by 9 basis points on Monday to close at 72.61, its second loss in a row; it had declined by 2 bps on Friday after having risen by 6 bps on Thursday, its second straight advance.

Its yield rose by 3 bps, to 4.95%, its second consecutive widening; on Friday it had moved up by 1 bp – its first such widening in nearly a month, since Feb. 8. On Thursday, it had come in by 2 bps for a second consecutive narrowing; several other recent sessions saw the yield unchanged.

The Markit CDX Series 27 High Yield index lost more than 9/32 point on Monday, ending at 107 25/32 bid, 107 13/16 offered, its second loss in the last three sessions. On Friday, it had edged up by around 1/32 point.

The Merrill Lynch High Yield index also ended on the downside, its third straight loss. It was down by 0.178% on Monday, after having retreated by 0.137% on Friday and by 0.047% on Thursday. Those were the first downturns after eight straight gains.

The loss lowered its year-to-date return to 2.817% from an even 3.00% on Friday.

Those levels were down from last Wednesday’s 3.19%, which had been its eighth straight new peak level for 2017, as well as the first time so far this year that the year-to-date gain had topped the 3% mark.

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