Waste Pro prices, rises; Downstream gains more; Cliffs up on Q4; funds lose $1.13 billion

By Paul Deckelman and Paul A. Harris

New York, Jan. 25 – The high-yield primary market saw one new deal pricing on Thursday – but that medium-sized offering of eight-year notes from solid-waste management company Waste Pro USA Inc. saw heavy aftermarket trading and posted solid gains.

Wednesday’s well-received new issue from tribal gaming entity Downstream Development Authority added to the hefty initial gains it had posted when it began trading around right after pricing, although volume on Thursday dropped off.

Traders meantime saw active dealings from Wednesday’s other new issues, from oil and natural gas exploration and production company Diamondback Energy Inc. and commercial mortgage REIT Starwood Property Trust, Inc.

Going back a little further among recently priced deals, the traders saw Mattel Inc.’s upside ride of the past few sessions come to an abrupt halt – but said the toy manufacturer’s notes still retained most of the gains they have racked up this week on merger speculation.

Algeco Scotsman announced plans for marketing a €1.42 billion equivalent five-tranche notes deal, denominated in euros and in dollars; the container and modular structure company’s existing bonds were seen higher in active trading.

Away from new-deal related names, Cleveland-Cliffs Inc.’s bonds firmed after the iron-ore company reported fourth-quarter and full-year 2017 results.

Statistical market performance measures improved on Thursday after turning mixed on Wednesday; it was the indicators’ second strong performance in the last three trading days.

But another numerical indicator – flows of investor cash into or out of high yield mutual funds and exchange-traded funds, which are considered a reliable barometer of overall junk market liquidity trends – remained in negative territory for a second straight week, after two weeks before that on the plus side. Some $1.13 billion more left those weekly-reporting-only domestic funds in the form of investor redemptions than came into them during the week ended Wednesday, Jan. 24, on top of the $3.08 billion cash loss reported last week (see related story elsewhere in this issue).

Waste Pro upsized and tight

In Thursday’s primary market, Waste Pro USA priced an upsized $500 million issue of eight-year senior notes (B3/B+) at par to yield 5½%.

The amount was increased from $450 million and the yield printed at the tight end of price talk that was set in the 5 5/8% area.

Lead left active bookrunner Wells Fargo will bill and deliver.

The Longwood, Fla.-based solid waste services company plans to use the proceeds to refinance its existing credit facilities. The additional proceeds resulting from the $50 million upsizing of the deal will be used to pay down the company’s ABL facility.

Viking Cruises to market deal

Viking Cruises Ltd. plans to sell $950 million of high-yield notes during the Jan. 29 week.

The two-part deal features $675 million of new 10-year senior secured notes (Ba2/BB-) and a $275 million add-on to the company’s existing 5 7/8% senior notes due Sept. 15, 2027 (B3/B).

BofA Merrill Lynch, Wells Fargo Securities LLC and Credit Suisse Securities (USA) LLC are managing the debt refinancing deal.

Algeco to roadshow

Algeco Scotsman plans to start a full international roadshow on Friday for a €1,415,000,000 equivalent five-part offering of high-yield notes.

The deal is expected to include €1.12 billion equivalent in three tranches of senior secured notes (B2/B-/B+) from affiliate Algeco Scotsman Global Finance plc. They include dollar- and euro-denominated fixed-rate notes, and euro-denominated floating-rate notes.

The deal is also expected to include €295 million equivalent of 5.5-year senior unsecured fixed-rate notes (Caa1/CCC/CCC+) from affiliate Algeco Scotsman Global Finance 2 plc.

All five tranche sizes remain to be determined.

The roadshow is expected to run through the Jan. 29 week.

Global coordinator BofA Merrill Lynch will bill and deliver for the dollar-denominated secured notes. Global coordinator Deutsche Bank will bill and deliver for both tranches of unsecured notes. Global coordinator Goldman Sachs will bill and deliver for both tranches of euro-denominated secured notes. Barclays, Credit Suisse and ING are also joint global coordinators.

Proceeds, together with proceeds from an equity contribution, borrowings under a new ABL facility and cash on hand, will be used, among other things, to repay debt including all the debt outstanding under Algeco Scotsman’s existing ABL facilities agreement and its existing senior secured and senior unsecured notes.

Nordex talk at 6¼% to 6½%

Elsewhere in the euro market, Nordex SE talked its €275 million offering of five-year senior notes (B3/B) to yield 6¼% to 6½%.

Books close Friday.

JP Morgan is leading the deal, which qualifies as a green bond.

The Hamburg, Germany-based wind turbine manufacturer plans to use the proceeds to refinance debt maturing in 2019 and 2021.

Waste Pro paper pops

In the secondary realm, a trader said that Waste Pro USA’s new 5½% notes due 2026 “sure moved up” to a 102¼ to 102½ bid context after that deal had priced at par.

A second trader pegged the new bonds in a 102 to 102¼ bid range.

One of the traders said that volume in the new issue was an eye-popping $121 million – certainly a sizable amount for a $500 million offering.

“The deal was 10 times over-subscribed,” he theorized, “so there were a lot of flippers.”

Downstream adds to gains

Wednesday’s new deal from Downstream Development Authority continued to trade strongly, the traders said, with one seeing the bonds trading between 102½ and 102¾ bid, although he only saw around $11 million of those notes changing hands.

That was well down from the more than $51 million which had traded in initial aftermarket dealings on Wednesday, after the Quapaw, Okla.-based tribal casino operator priced $270 million of those 10½% senior secured notes due 2023 at par.

They were seen moving as high as 102½ bid in their initial aftermarket dealings after pricing

But another market source on Thursday said that although the volume was reduced, the new bonds gained strength, seeing the issue up 7/8 on the session, ending at 103 1/8 bid.

Wednesday deals active

Wednesday’s two other new deals besides Downstream – which came to market later in that session and did not see much initial aftermarket trading – were both seen actively traded on Thursday.

A market source said that more than $22 million of the new Diamondback Energy 5 3/8% add-on notes due May 31, 2025 traded on Thursday, seeing them at 104¼ bid, which he called down about 1/16 point on the day.

A second trader saw the notes earlier in the session moving around between 104¼ and 104¾ bid.

At another desk, the notes were seen in a 104 1/8 to 104 5/8 bid contest, although the last prints of the day were centered around 104 1/8 to 104¼.

The Midland, Texas-based energy E&P company priced a quickly shopped $300 million tap of the notes on Wednesday at 104 to yield 4.522% after the deal was upsized from $250 million originally.

The notes initially traded in a 104¼ to 104½ bid context.

The company sold the original $500 million issue of those notes in December 2016.

Starwood Properties Trust’s 3 5/8% notes due 2021 were seen by a market source having gained 1/8 point on the day to end at 100¼ bid, with more than $19 million traded.

Another trader pegged those bonds between 100 1/8 and 100½ bid.

The Greenwich, Conn.-based commercial mortgage real estate investment trust priced $500 million of the notes at par after that quick-to-market deal was upsized from an originally announced $400 million.

Mattel moves lower

Traders saw the rise over the past few sessions in Mattel’s 6¾% notes due 2025 finally come to an end on Thursday, with one seeing the bonds down 1¼ points on the day, ending at 102½ bid on volume of more than $17 million.

Those notes had risen nearly 5 points over the previous two days – to nearly the 104 mark from a 99 bid area previously – on active volume.

There was no fresh news out on the El Segundo, Calif.-based maker of such iconic toy lines as Fisher-Price, Thomas and Friends, Barbie and Hot Wheels – other than renewed market speculation that industry rival Hasbro, Inc. might make another offer for Mattel, which reportedly turned down an earlier acquisition bid in November.

The news that major toy and game retailer Toys ‘R’ Us plans to close another 180 of its stores as it reorganizes was seen throwing a wet blanket over some of that speculation of a toy industry mega-merger.

Mattel sold $1 billion of the 6¾% paper in one of the last deals of 2017, pricing them at par in a regularly scheduled transaction on Dec. 15.

The bonds have mostly languished at or below their issue price for most of the time since then.

Algeco Scotsman up ahead of deal

The news that Algeco Scotsman plans to shop around a big five-tranche dual-currency deal seemed to help the Baltimore-based container and modular structure manufacturer’s existing debt.

As part of its planned refinancing, it will call several issues of notes slated to mature this year and next, using the new deal proceeds to take them out.

Its 8½% senior secured notes maturing this coming Oct. 15 gained 1/8 point, ending at 102¼ bid, with over $21 million changing hands.

Its 10¾% notes due 2019 improved by 5/8 point to 103 bid, with over $18 million traded.

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