Downsized 21st Century Oncology prices; new Micron and ZF Friedrichshafen active; MDC slides

By Paul A. Harris and Paul Deckelman

New York, April 28 – 21st Century Oncology, Inc. priced a downsized $360 million offering of new eight-year notes on Tuesday, high-yield syndicate sources said.

The health-care provider’s regularly scheduled forward calendar offering arrived too late in the session for any meaningful aftermarket activity, traders said.

The day’s primaryside volume was down from the $1 billion of new dollar-denominated, junk-rated paper that had come to market on Monday in two tranches, or Friday’s $4.31 billion in six tranches, according to data compiled by Prospect News.

Monday’s new two-part $1 billion drive-by issue from semiconductor manufacturer Micron Technology, Inc. and Friday’s huge three-part forward calendar deal from German auto-parts maker ZF Friedrichshafen AG, which accounted for most of that session’s busy volume, were among the most active credits on Tuesday, along with the recent scheduled megadeal offering from Fiat Chrysler Automobiles NV.

Away from the deals that have actually priced, the syndicate sources said that offerings from Prime Source Building Products, Ahern Rentals, Inc. and Extended Stay America, Inc. were being shopped around.

Away from the new-deal realm, MDC Partners Inc.’s bonds slid badly in busy trading, along with the company’s shares, on the news that the Securities and Exchange Commission is investigating the marketing and advertising company’s accounting practices and its chief executive officer’s expenses.

Statistical indicators of junk market performance turned lower on Tuesday after having been mixed on Monday for a third session in the previous four, and after having been mostly better on Friday.

21st Century Oncology downsizes

A quiet primary market saw just one single-tranche dollar-denominated deal completed during the Tuesday session.

Trailing a marketing period that lasted longer than expected, 21st Century Oncology priced a downsized $360 million issue of eight-year senior notes (Caa2) at par to yield 11%.

The deal was downsized from $400 million, with $40 million of proceeds shifted to the concurrent seven-year first-lien term loan B, upsizing it to $610 million from $570 million.

The coupon and reoffer price came on top of price talk that was increased from earlier talk in the 10½% area. The earlier talk surfaced last Friday, at which time the order books were scheduled to close Monday. However, the offer ultimately remained in the market until Tuesday.

The deal also underwent covenant changes.

Morgan Stanley, Deutsche Bank, KeyBanc and HSBC were the joint bookrunners.

The Fort Meyers, Fla.-based provider of cancer treatment services plans to use the proceeds, together with cash on hand and new credit facilities, to repay its existing term loan, to redeem or repurchase its existing notes and for general corporate purposes.

A quiet April

After a booming first quarter of 2014, things have gone quiet in April, a trader remarked on Tuesday.

In fact, things are not only quiet in the primary market, but in the secondary market as well, the source remarked.

“At the beginning of the month, a lot of people were just returning from spring break with their families, and things were expected to pick up after that,” the trader said.

“But it just didn't happen.”

Earnings blackouts and the Federal Open Market Committee meeting that got underway on Tuesday are the excuses du jour, the trader said.

At Tuesday's close, the active calendar contained $3 billion of dollar-denominated business slated to price late this week or next week.

None of the deals on that calendar have been officially talked. However there is price chatter in the market, sources say.

PrimeSource Building Products is marketing $230 million of eight-year senior notes (Caa1/CCC+) with early guidance in the low 9s.

Ahern Rentals, Inc. gave preliminary guidance in the mid-7% area for its $500 million offering of eight-year senior secured second-lien notes (B3/B).

Extended Stay America, Inc. is roadshowing a $500 million offering of 10-year senior notes (expected B3/confirmed BB-), which are guided in the high 5s.

In a deal expected to price next week, Petra Diamonds Ltd. is planning to sell $300 million of five-year senior secured second-lien notes (B2/B+), with early guidance in the mid 8s.

In a split-rated deal, Quicken Loans Inc. is marketing a $1.25 billion offering of 10-year senior notes (Ba2/BBB-) that are being guided in the 6% area.

And in a re-marketing effort, dealers are pricing Global Cash Access Inc.’s $350 million of 10% senior notes due Jan. 1, 2022 (Caa1/CCC+) to move, a trader said on Tuesday.

Early discussions have the deal shaping up in the 12% area, the source added.

The original issue priced at 98.921 to yield 10.21% on Dec. 18, 2014.

Outflows

Recent flows to the dedicated high-yield funds have been negative, sources said.

High-yield exchange-traded funds saw $61 million of outflows on Monday, the most recent session for which data was available at press time.

Actively managed funds saw $5 million of outflows on Monday.

For the week to Monday's close, the market was tracking $331 million of aggregate outflows, a trader said.

Turning to bank loans, dedicated bank loan funds saw $30 million of outflows on Monday, according to a buyside source.

Crown prices tight

The European primary market generated slightly more news than its American counterpart on Tuesday.

As in the United States, however, things have been quiet, a London-based debt capital markets banker said, adding that as many as three deal announcements that were expected heading into the present week, have not materialized.

On Tuesday, Crown European Holdings SA priced a €600 million issue of 10-year senior notes (Ba2/BB) at par to yield 3 3/8%.

The bullet deal yielded at the tight end of the 3 3/8% to 3½% yield talk.

Joint physical bookrunner BNP Paribas will bill and deliver for the debt refinancing deal. BofA Merrill Lynch was also a joint physical bookrunner.

BBVA, Credit Agricole CIB, Deutsche Bank, HSBC Bank, Banco Santander, UniCredit and Wells Fargo were joint bookrunners.

Cirsa at a discount

Cirsa Funding Luxembourg, SA priced a €500 million issue of 5 7/8% eight-year senior notes (B3/B+) at 99.211 to yield 6%.

The yield printed at the tight end of the 6% to 6¼% yield talk.

However, the new Cirsa Funding 5 7/8% notes due 2023 were not doing well out of the gate, according to a New York-based investor who watches the euro-denominated market and who spotted the new Cirsa paper at 98¼ bid, 98¾ offered.

Deutsche Bank ran the books for the debt refinancing deal.

It was a sideways market in the morning, but things were better in the afternoon, the investor commented.

21st Century a late arrival

In the secondary arena, traders did not see an initial aftermarket activity in 21st Century Oncology’s 11% notes due 2023, citing the relative lateness of the hour at which the new issue was priced.

One market source, however, noting that the deal proceeds are mostly going to go to repaying or redeeming existing bank and bond debt, opined that the investor base “is going to be a big roll [out of the existing debt]. I can’t imagine that there would be a tremendous amount of new add-on buyers.”

Before the deal finally did price – requiring a fatter interest rate than originally talked around – he suggested that “it’s a little bit tricky,” and was “having some difficulties.” But he correctly predicted that the deal would in fact get done.

Micron, Friedrichshafen active

A trader said that both halves of Monday’s big deal from Micron Technology initially traded below issue, but by the end of the day, “were wrapped around par,” in a 99¾-to-par context.

Another trader said that the Boise, Idaho-based semiconductor manufacturer’s 5 5/8% notes due 2026 were the most active issue of the day in Junkbondland. He called them down more than ½ point, at 99¾ bid, with over $39 million changing hands.

Its 5¼% notes due 2024 ended at 99 13/16 bid, down nearly ½ point, with over $34 million traded.

Micron priced $1 billion of the notes as a drive-by offering, upsizing the 5¼s to $550 million and downsizing the 5 7/8s to $450 million, both from $500 million originally. Both tranches priced at par.

Another active name on Tuesday was Friday’s big three-part offering from German auto mapmaker ZF Friedrichshafen, which priced a total of $3.5 billion in a regularly scheduled forward calendar deal.

One of the traders said that “they were all trading around 100½” bid.

Another trader saw the company’s 4¾% notes due 2025 at 100½, calling them down 3/16 on the day, with over $27 million having traded. Some $1.5 billion of the notes priced on Friday at 99.02 to yield 4 7/8%.

He saw its 4% notes due 2020 unchanged at 100½ bid, on volume of over $26 million. The company priced $1 billion of the bonds at 99.44 to yield 4 1/8%.

Its 4½% notes due 2022 eased by 1/8 point to 100 5/8, on turnover of over $12 million.

The company priced $1 billion of the notes at 99.26 to yield 4 5/8%.

Fiat Chrysler’s 5¼% notes due 2023 gained 1/8 point on Tuesday to finish at 101 3/8 bid, on volume of over $36 million.

A trader said that there was “good volume, but they really haven’t moved much,” trading in a 101-to-101½ range.

The London-based global car manufacturer had priced $1.5 billion of the notes at par on April 8, along with $1.5 billion of 4½% notes due 2020, which also priced at par, in a scheduled forward calendar deal.

MDC gets mauled

Away from the new deals, MDC Partners’ 6¾% notes due 2020 fell some 4½ points to 101½ bid, with more than $16 million having changed hands.

The bonds slid after the New York-based marketing communications and advertising firm disclosed that it was under SEC scrutiny, with the regulators eyeing its accounting practices and the expenses claimed by chief executive officer Miles Nadal, who agreed to pay MDC $8.6 million for reimbursed expenses, medical expenses, travel expenses and other expenses between 2009 and 2014 .

The company’s Nasdaq-traded shares plunged by $7.78, or 27.81%, to end at $20.20. Volume of 4.3 million shares was over 15 times the norm.

“It definitely was the blow-up of the day,” one of the traders declared.

Indicators turn lower

Statistical indicators of junk market performance turned lower on Tuesday after having been mixed on Monday for a third session in the previous four, and after having been mostly better on Friday.

The KDP High Yield Daily index was down by 1 basis point on Tuesday, ending at 71.82. It had been up by 4 bps on Monday after having been unchanged on Friday and lower on Thursday.

Its yield was steady at 5.13%, after having come in by 1 bp on Monday. It was the third unchanged yield in the last four sessions, having also held steady on both Thursday and Friday.

The Markit Series 24 CDX North American High Yield index was marginally lower on Tuesday, closing at 107 15/32 bid, 107½ offered, its second consecutive loss and third downturn in the last four sessions. It had been down by 1/32 on Monday.

The Merrill Lynch U.S. High Yield Master II index dipped by 0.04% on Tuesday, its first loss after three straight advances, including 0.053% on Monday, which had also been its fifth such improvement in the previous six sessions.

That dropped the index’s year-to-date return to 3.91% from Monday’s 3.952%, which had been its second consecutive new peak level for the year.

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