Cincinnati Bell term loan B-2 better in trading with new equity raise announcement

By Sara Rosenberg

New York, Aug. 30 – Cincinnati Bell saw its term loan B-2 strengthen in the secondary market on Wednesday in reaction to news that the company raised new funding to support construction of its fiber networks.

Also, Shearer’s Foods LLC’s first-lien term loan held steady in the secondary market, unmoved by a ratings upgrade by S&P Global Ratings, as the debt already trades in the par-plus context.

Cincinnati Bell gains

Cincinnati Bell’s term loan B-2 rose to around 97¼ bid, 98¼ offered on Wednesday from around 95½ bid, 96½ offered on Tuesday as the company announced that it raised $600 million in new funding to support the continued construction of fiber networks throughout incumbent and expansion markets in Ohio, Kentucky, Indiana and Hawaii, according to a market source.

The company expects to complete the construction of fiber to every single-family unit within Greater Cincinnati by the end of 2023, and the completion of the construction of Hawaii’s statewide fiber network is expected by the end of 2027.

The equity raise was solely supported by existing investors, funds managed by Macquarie Asset Management, Ares Management, and supporting co-investors.

Cincinnati Bell, now doing business as altafiber, is a Cincinnati-based provider of integrated communications solutions to residential and business customers over its fiber-optic network.

Shearer’s steady

Shearer’s Foods’ first-lien term loan was unmoved by a ratings upgrade from S&P, with levels quoted at par bid, par 3/8 offered, unchanged from Tuesday’s levels, a trader remarked.

S&P lifted the company’s issuer credit rating to B from B-, first-lien credit facilities rating to B+ from B and second-lien debt rating to CCC+ from CCC. The outlook is stable.

The upgrade reflects the company’s improved operating performance and lower debt leverage, the rating release said. S&P estimates leverage for the last 12 months of 5.9x, excluding preferred shares, and forecasts leverage to improve to about 5.2x by the end of fiscal 2023 and to mid-4x in fiscal 2024 compared to the ratings agency’s previous expectation of about 6x and 5.8x by the end of fiscal 2023 and 2024, respectively, excluding preferred equity.

In addition, S&P notes that the company extended the maturity of its $125 million asset-based lending facility earlier this month to Sept. 23, 2026 from September 2024, and repaid $60 million of its second-lien term loan in the third quarter of fiscal 2023.

Shearer’s Foods is a Massillon, Ohio-based contract manufacturer of snack foods.

Secondary better

Traders said on Wednesday that the secondary market in general was better, probably by about an eighth of a point on the day.

One trader remarked that he saw a decent amount of trading as some investors are getting ready for new issuance in September.

A second trader agreed that some activity may be due to preparations for new debt entering the market, but added that he is “not seeing a ton of selling” taking place.

Loan bids rise

According to IHS Markit data, average secondary market bids in the United States on Tuesday were 92.63, up 0.05% from the previous day and up 0.83% year to date.

Some of the top advancers on Tuesday were National Mentor/Civitas’ March 2021 covenant-lite term loan at 84.2, up from 79.19, Houghton Mifflin’s April 2022 covenant-lite term loan B at 92.5, up from 89.92, and AMC Entertainment’s April 2019 covenant-lite term loan B at 77.52, up from 76, IHS Markit data said.

Some top decliners on Tuesday were Jo-Ann Stores’ July 2021 covenant-lite term loan B at 42.4, down from 44.2, Padagis/Perrigo’s July 2021 covenant-lite term loan B at 97, down from 97.5, and Fox US Bidco/Robertshaw’s February 2018 covenant-lite term loan B at 50.19, down from 50.44.

Fund flows

In other news, actively managed loan fund flows on Tuesday were negative $15 million and loan ETFs were positive $81 million, market sources said.

Actively managed high-yield fund flows on Tuesday were negative $85 million and high-yield ETFs were positive $650 million, sources added.

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