IMS, Allison bring upsized megadeals; new IMS jumps; market awaits Great Western, Inmarsat

By Paul Deckelman and Paul A. Harris

New York, Sept. 14 – The high-yield primary market priced slightly over $2 billion of new dollar-denominated and fully junk-rated paper from a pair of issuers on Wednesday, syndicate sources said.

IMS Health, Inc., a provider of information technology services to the health-care industry, came to market with an upsized $1.05 billion of new 10-year notes as part of a two-tranche, upsized $1.75 billion equivalent regularly scheduled forward calendar transaction that also included a tranche of eight-year euro-denominated notes.

Traders saw those new bonds firm smartly when they hit the aftermarket.

The session also saw a quickly shopped and upsized $1 billion of eight-year paper from automotive transmission manufacturer Allison Transmission, Inc.

Traders reported little or no immediate aftermarket activity in the latter deal, which priced later in the day than IMS did.

Elsewhere in the primary market, syndicate sources were tabbing two prospective offerings as likely to price on Thursday: energy exploration and production company Great Western Petroleum LLC’s $300 million five-year deal and satellite communications company Inmarsat plc’s $400 million of eight-year notes.

Secondary market participants meantime saw brisk activity in some of the recently priced new issues, including Tuesday’s deal from medical products maker Acelity LP Inc., Monday’s offering from PDC Energy, Inc. and Friday’s transaction from Cablevision Systems Corp.

Statistical market performance measures were lower across the board on Wednesday for a second straight session. They were mixed on Monday and turned lower on Tuesday. It was the third losing session in the last four trading days.

IMS upsizes

In the primary market IMS Health priced an upsized $1.75 billion equivalent two-part issuance of senior notes (Ba3/BB+) on Wednesday.

Both the dollar- and euro-denominated tranches are upsized.

The deal included €625 million of eight-year notes that priced at par to yield 3½%. The tranche size increased from €500 million. Price talk was in the 3½% area.

An upsized $1.05 billion of 10-year notes priced at par to yield 5%. The tranche size increased from $1 billion. The 10-year notes were talked in the 5% area.

The overall size of the deal was increased from $1.5 billion.

Goldman Sachs & Co. was the left bookrunner for the debt refinancing deal related to the merger of IMS Health with Quintiles Transnational Holdings Inc.

J.P. Morgan Securities Inc., Barclays, BofA Merrill Lynch, HSBC and Wells Fargo Securities LLC were the joint bookrunners

Allison doubles size

Allison Transmission priced an upsized $1 billion issue of eight-year senior notes (Ba3//BB) at par to yield 5%.

The issue size was increased from $500 million.

The yield printed at the tight end of the 5% to 5¼% yield talk.

Timing on the deal was accelerated. When announced on Wednesday morning it was scheduled to remain in the market into Thursday.

Citigroup Global Markets Inc. was the left bookrunner. Barclays, BofA Merrill Lynch, BMO Securities, Fifth Third Bank, JPMorgan SMBC Nikko, Deutsche Bank Securities Inc., Goldman Sachs and MUFG were the joint bookrunners.

The Indianapolis-based automatic transmission company and supplier of hybrid-propulsion systems plans to use the proceeds to refinance a portion of its term loan B.

Lowell GFKL prices floaters

Garfunkelux Holdco 3 SA priced a €230 million issue of floating-rate senior secured notes due 2021 at a 550 basis points spread to Euribor.

The deal was talked at Euribor plus 550 bps to 575 bps at an original issue discount of 99 to 99.5.

Credit Suisse Securities (Eur) Ltd. is the stabilization manager.

The Austrian debt collection service plans to use the proceeds as part of the financing for the proposed acquisition of Tesch Inkasso Group.

Talking the deals

Great Western Petroleum and Great Western Finance Inc. talked their $300 million offering of five-year senior notes (Caa1/CCC+) to yield in the 8¾% area.

Books close at 2 p.m. ET Thursday, and the Credit Suisse-led dead is set to price thereafter.

Credit Suisse, MUFG, Citigroup and RBC are the joint bookrunners.

Elsewhere Callon Petroleum Co. talked its $350 million offering of eight-year senior notes (B3/B+) to yield 6 1/8% to 6 3/8%.

The JPMorgan-led deal is expected to price before the end of the week.

Inmarsat guidance 6¼% area

Inmarsat is guiding its $400 million offering of eight-year senior notes (Ba2/BB+) to yield in the 6¼% area.

The deal is expected to price on Thursday.

BofA Merrill Lynch, Credit Suisse, JPMorgan, Barclays, Credit Agricole and RBS are managing the sale.

The London-based mobile satellite communications company plans to use the proceeds to repay its EIB facility (about $107 million) and for general corporate purposes.

New IMS bonds gain

In the aftermarket, traders said that IMS Health’s new 5% notes due 2026 moved solidly higher when they began trading around after pricing at par.

“They kind of shot right up” to a 102-102¾ bid context, one said, before finally settling somewhere between 102 and 102¼ bid.

A second trader saw the Danbury, Conn.-based medical information technology company’s bonds around 101 bid at one point but said they had moved up to 102¾ later on in the session.

Recent issues busy

The traders said that new and recently priced issues continued to dominate the Junkbondland secondary sphere on Wednesday.

One said that for a second straight session, the new Acelity 9 5/8% senior secured second-lien notes due 2021, issued by the San Antonio, Texas-based wound therapeutics company’s Kinetic Concepts Inc. and KCI USA Inc. subsidiaries, were the most actively traded junk credits of the day.

He said that more than $43 million of those notes changed hands on Wednesday, although that was down considerably from the better than $99 million of the megadeal’s notes that had traded on Tuesday.

He pegged the bonds at 100¼ bid, calling that up ¼ point on the session.

A second market source also saw the notes going home at that level, calling them “a little better on the day.”

A third trader saw the bonds up 3/8 point on the day at 100 1/8 bid, 100½ offered.

That $1.75 billion deal had priced at par on Tuesday as a regularly scheduled forward calendar offering.

Elsewhere among the recently priced names, a trader said that Navient Corp.’s 7¼% notes due 2023 “were wrapped around 101,” up from the par level at which the Wilmington, Del.-based financial services company had priced its quickly shopped $500 million transaction on Tuesday.

The 6 1/8% notes due 2024 from PDC Energy gained 1/8 point on the day to end at 100 7/8 bid, with over $29 million traded.

The Denver-based independent oil and natural gas exploration and production company had priced $400 million of the notes at par in a quick-to-market offering Monday, with aftermarket levels as high as 101½-to-102 bid.

Cablevision’s 5½% senior guaranteed notes due April 2027 were up 1/16 point on the day for a second straight session, closing at 101, on volume of $24 million.

The Bethpage, N.Y.-based media and telecommunications company – now a subsidiary of Europe’s Altice SA – priced $1.31 billion of those notes at par on Friday in a quick-to-market transaction, after the deal was downsized from an originally announced $1.91 billion with the shift of $600 million of that borrowing into a concurrently shopped bank loan deal.

Indicators turn lower

Statistical market performance measures were lower across the board for a second straight session on Wednesday, the third such weaker finish in the last four trading days.

The KDP High Yield index saw its fourth straight loss on Wednesday, backtracking by 8 basis points to end at 70.15, after having nosedived by 22 bps on Tuesday.

The four-day slide left the index well down from last Thursday’s 70.78 close – its year-to-date and 52-week highs.

Its yield meantime rose by 2 bps, on top of Tuesday’s 6 bps rise, to close at 5.38%, its fourth consecutive increase.

The Markit Series 26 CDX index lost 1/8 point to end at 103¼ bid, 103 9/32 offered, its second straight loss. It plunged by nearly 7/8 point on Tuesday.

And the Merrill Lynch High Yield index recorded its fourth straight loss after five consecutive sessions on the upside, retreating by 0.028% on Wednesday, on top of Tuesday’s 0.31% downturn.

That dropped its year-to-date return to 13.92%, down from 13.952% on Tuesday, its first time under 14% since Aug. 15, when it had closed with a 13.837% return.

Those levels were well down from Thursday’s 14.992%, which had been its fourth straight new 2016 peak cumulative level.

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