MGM upsizes; Blue Racer prices tight, Ardent wide; RSP Permian jumps; funds add $324 million

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 14 – The domestic high-yield primary market roared back into life on Thursday with $1.91 billion of new paper pricing in four deals.

In Thursday drive-by action, MGM Resorts International sold an upsized $1 billion issue of seven-year senior bullet notes (Ba3/BB-) at par to yield 5¾%.

Blue Racer Midstream LLC priced a $300 million issue of eight-year senior notes (B2/B) at par to yield 6 5/8%.

At the end of a roadshow, Ardent Health Services LLC priced a downsized $475 million offering of 9¾% eight-year senior notes (Caa2/CCC+) at 98.628 to yield 10%.

In a private placement, Mark Andy priced a $135 million issue of five-year senior secured notes at par to yield 9½%.

The domestic and European primary market’s forward calendar also continued to build. Cirsa Gaming Corp. SA started a roadshow on Thursday for a €1.56 billion equivalent three-part offering of seven-year senior secured notes (expected ratings B2/B+) to be sold in dollars and euros.

Schmolz + Bickenbach AG plans to begin a brief roadshow on Friday for a €150 million add-on to the 5 5/8% senior secured notes due July 15, 2022 issued by Schmolz + Bickenbach Luxembourg Finance SA, with pricing expected on Monday.

The uptick in new issue activity comes on the heels of the Federal Reserve’s rate increase and the expectation that it will raise rates twice again before the end of 2018, sources said.

“With the visibility that the Fed Funds rate will probably be increased two more time before the end of the year, sooner suddenly seems better to issuers than later,” a trader said.

The new issue activity kicked the secondary market into action with MGM and Blue Racer seeing high volume trading. While MGM hovered around par, Blue Racer traded up almost a point, a market source said.

Meanwhile, RSP Permian Inc.’s junk bonds were lifted after Concho Resources Inc. announced a new investment-grade note offering on Wednesday with $1.2 billion in proceeds to be used to redeem RSP’s junk bonds.

RSP’s 5¼% senior notes due 2025, which are non-callable, jumped about 4 points on the news.

Avantor Inc.’s 6% senior notes due 2024 (B2/B) were active although moving largely sideways on Thursday after news broke that subsidiary VWR would be the exclusive distributor of Biocept Inc.’s blood collection tubes.

High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – attracted $324 million of cash in the week to June 13, according to fund-flow statistics generated by AMG Data Services Inc.

MGM Resorts doubles deal-size

In drive-by action, MGM Resorts International priced an upsized $1 billion issue of seven-year senior bullet notes (Ba3/BB-) at par to yield 5¾%.

The amount was increased from $500 million.

The yield printed in the middle of yield talk that was set in the 5¾% area and tight to initial talk in the high 5% area.

Citigroup was the left bookrunner. BofA Merrill Lynch, Barclays, BNP Paribas, Fifth Third Bank and SMBC Nikko were joint bookrunners.

Blue Racer tight to talk

Blue Racer Midstream also did a drive-by on Thursday, pricing a $300 million issue of eight-year senior notes (B2/B) at par to yield 6 5/8%.

The yield printed at the tight end of yield talk in the 6¾% area.

Lead left active bookrunner Wells Fargo will bill and deliver. RBC Capital Markets LLC and TD Securities (USA) LLC were joint active bookrunners. BBVA Securities Inc., Capital One, SunTrust Robinson Humphrey Inc. and U.S. Bancorp Investments Inc. were passive bookrunners.

The privately held Dallas-based midstream energy company plans to use the proceeds to repay debt under its revolving credit facility and for general corporate purposes.

Ardent downsizes

At the end of a roadshow, Ardent Health Services priced a downsized $475 million issue of 9¾% eight-year senior notes (Caa2/CCC+) at 98.628 to yield 10%.

The deal was cut from $535 million, as $60 million of proceeds were shifted to the term loan, increasing the loan size to $825 million from $765 million.

The coupon, reoffer price and yield came on top of final talk which was revised from earlier 9¼% to 9½% yield talk. Initial talk was in the 9% area.

There were also covenant changes.

Joint bookrunner Barclays will bill and deliver. Jefferies and BofA Merrill Lynch were also joint bookrunners.

Proceeds will be used to help refinance or otherwise extinguish Ardent’s existing credit facilities and provide working capital and funds for other general corporate purposes.

Mark Andy completes private

In a private placement, Mark Andy priced a $135 million issue of five-year senior secured notes at par to yield 9½%.

The reoffer price came on top of price talk. The yield printed on top of yield talk that was set in the 9½% area.

There were changes to the debt incurrence and restricted payments covenants.

William Blair was the sole placement agent for the debt refinancing deal, carried out as a Rule 4(a)(2) private placement.

Cirsa roadshows €1.56 billion

Cirsa Gaming Corp. started a roadshow on Thursday in Europe for a €1.56 billion equivalent three-part offering of seven-year senior secured notes (expected ratings B2/B+) to be sold in dollars and euros.

A roadshow in the United States will follow from Tuesday to Thursday, June 21.

The deal features euro-denominated floating-rate notes and euro-denominated and dollar-denominated fixed-rate notes. Tranche sizes remain to be decided.

Joint global coordinator and joint bookrunner Deutsche Bank will bill and deliver.

Proceeds will be used to fund the buy-out of the Madrid-based gaming company by Blackstone and repay Cirsa debt.

Schmolz roadshows tap

Schmolz + Bickenbach plans to begin a brief roadshow on Friday for a €150 million add-on to the 5 5/8% senior secured notes due July 15, 2022 issued via Schmolz + Bickenbach Luxembourg Finance SA.

The offer is expected to price on Monday.

Credit Suisse is the left bookrunner.

The Lucerne, Switzerland-based steel producer plans to use the proceeds to repay debt under its senior secured syndicated revolving credit facility which was used in funding the acquisition of the majority of Asco Industries SAS’ sites and facilities.

Proceeds will also be used to fund working capital requirements.

MGM heavy

MGM’s 5¾% senior notes due 2025 were hovering above par in high-volume activity after breaking for trade.

The notes were quoted at par bid, par ½ offered but dropped to par bid, par 1/8 offered as the afternoon progressed, sources said.

They were seen trading at par with more than $45 million of the bonds on the tape by late afternoon.

The lack of movement in the notes in secondary trading was a surprise to some.

“They look cheap compared to the curve and everyone is starved for new issuance,” a market source said. “You’d think there’d be some excitement.”

While the notes look attractive, “they’re heavy out of the gate,” a source said.

Blue Racer trades up

While MGM’s new notes were stuck at par, Blue Racer’s 6 5/8% senior notes due 2026 traded up.

The notes were seen at par ¼ bid, par 101 offered. There was an odd lot trade of 101 1/8 but the majority of trades were between par 3/8 and par ¾, sources said.

The notes from the energy company have a wide audience, a market source said. About $22 million of the notes changed hands by late afternoon.

The make-whole

RSP Permian’s junk bonds were lifted after acquiring company Concho Resources announced a new investment-grade senior notes offering on Thursday.

Proceeds from Concho’s offering will be used to redeem RSP’s 6 5/8% senior notes due 2022 and 5¼% senior notes due 2025.

While the 6 5/8% notes traded a little higher, RSP’s 5¼% notes jumped 4 points on the news, a market source said.

The 5¼% notes were quoted at 106 1/8 bid, 106 5/8 offered on Thursday.

Prior to the news of Concho’s deal, the notes traded around 103 Thursday morning before jumping to a 106 handle, a market source said.

They were quoted at 102 3/8 bid, 102½ offered on Wednesday.

The 5 ¼% notes are non-callable until 2020 and if they are taken out earlier the issuer will have to use the make-whole call provision, a market source said.

Avantor active

Avantor’s 6% senior notes due 2024 were active on Thursday after news broke that subsidiary VWR has exclusive distribution rights for Biocept’s blood collection tubes.

While the notes were active, they were trading largely sideways with the notes up about 1/8 point to par 1/8, according to a market source. About $16 million of the bonds had traded by late afternoon.

The 6% notes, which priced at par, came to the market in September 2017 to finance Avantor’s acquisition of VWR.

Indexes gain

Benchmarks for the high-yield secondary market saw gains for a fourth consecutive trading day on Thursday.

The KDP High Yield index was up 9 basis points to close Thursday at 70.87 with the yield now 5.75%. The index was up 7 bps on Wednesday.

The Merrill Lynch High Yield index continued its climb into positive territory on Thursday. The index was up 11.7 bps with the year-to-date return now 0.648%. The index was up 9.1 bps on Wednesday.

The index broke into positive territory on June 5 for the first time since May 15 and has remained there since.

The CDX High Yield 30 index was up 25 bps to close Thursday at 107 after a 9 bps gain on Wednesday.

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