Ahern prices to cap $2.7 billion week, new issue moves up; overall market heavy as stocks slide

By Paul Deckelman and Paul A. Harris

New York, May 31 - The high-yield primary sphere closed the books on May with a relatively quiet session which saw only one dollar-denominated deal price - from construction equipment rental company Ahern Rentals, Inc., which did a slightly upsized $420 million of five-year secured notes. Traders saw the new bonds up solidly in the aftermarket - a feat all the more notable given the junk market's overall downturn.

The Ahern deal topped off a holiday-shortened week that saw $2.73 billion of new U.S.-dollar denominated, fully junk-rated paper from domestic or industrialized-county issuers come to market, according to data compiled by Prospect News. The week was, in fact, the second-slowest of the year, topping only the very first few days of January, when just $800 million priced in one deal.

On the other hand, the anemic week did not prevent May from grabbing the top spot as the busiest month ever in Junkbondland, the data indicated, as $45.47 billion of new junk bonds came to market in 101 tranches, narrowly surpassing the previous high mark for any one month, the $44.36 billion set last September.

The Ahern deal lifted year-to-date issuance to $157.46 billion in 346 tranches, running 20.7% ahead of the $130.40 billion which had priced 274 tranches by this time last year - which turned out as the most active year ever for sales of high-yield debt, the Prospect News data showed.

Syndicate sources also saw several pricings out of Europe, including euro-denominated deals from France's Novalis SAS and Germany's Stabilus GmbH and a sterling-denominated issue from Britain's William Hill plc.

Traders saw the overall junk market heavier on Friday, reflecting continued investor angst about the prospect of higher interest rates should the Federal Reserve choose to wind down its expansive low-interest-rate policies. Equities, which frequently move in tandem with junk, were especially hard-hit.

The junk downturn was reflected in statistical indicators of market performance, which were lower on both the day and when compared with their levels a week ago.

Ahern completes secured deal

News volume in the dollar-denominated high-yield primary market was muted on Friday, with just one deal reaching the finish line.

Ahern Rentals priced an upsized $420 million issue of five-year second-priority senior secured notes at par to yield 9½%.

The yield printed on top of yield talk while the amount was increased from $415 million.

Jefferies ran the books for the deal.

The Las Vegas-based equipment rental company plans to use the proceeds to refinance debt.

Moody's Investors Service assigns its Caa1 rating to the notes. The Standard & Poor's rating remains to be determined.

Hot Topic sets Monday call

Hot Topic, Inc. has planned a Monday investor call to discuss a $350 million offering of eight-year senior secured notes.

The deal is set to price late in the week ahead.

BofA Merrill Lynch and Jefferies are the joint bookrunners.

Credit ratings in the single-B range are expected.

Proceeds, together with cash on hand and an equity contribution, will be used to fund the proposed acquisition of Hot Topic by affiliates of Sycamore Partners Management LLC.

Quieter week expected

In the dollar primary, the week ahead could be a relatively quiet one, according to a syndicate official who professed visibility on just four medium-sized transactions, including two from the energy space and one from an industrial.

InterGen NV is expected to price an $800 million equivalent dual-currency offering of senior secured notes (B1//).

The deal is coming in tranches of sterling-denominated eight-year notes, with four years of call protection, and dollar-denominated 10-year notes, with five years of call protection.

Official price talk has not been released.

Deutsche Bank is the global coordinator. Barclays, BofA Merrill Lynch, Credit Suisse, Mitsubishi and RBC are the joint bookrunners.

And Warren Resources, Inc. is expected to price its $200 million offering of eight-year senior notes during the latter part of the week.

BMO is the bookrunner.

Again, price talk remains to be announced.

Novalis at the tight end

As has often been the case throughout the spring, the European high-yield market cranked out a higher news volume on Friday than did its counterpart in the United States.

France's Novalis SAS priced a €450 million issue of five-year senior secured notes (B1/B+) at par to yield 6%.

The deal was priced at the tight end of the 6% to 6¼% price talk.

The offering came on a short timeline, with two days of presentations in London and a group meeting in Paris, according to an informed source who added that the subscription level for the deal was healthy.

Global coordinator and joint bookrunner BNP Paribas will bill and deliver. Deutsche Bank was also a global coordinator and joint bookrunner. Goldman Sachs and JPMorgan were also joint bookrunners.

Proceeds will be used to refinance debt.

Stabilus offers secureds

Germany's Stabilus priced a €315 million issue of five-year senior secured notes (B2/B) at par to yield 7¾%.

The yield printed on top of final yield talk. However that was revised from the earlier 7¼% to 7½% level.

JPMorgan was the bookrunner.

The Koblenz, Germany-based supplier of gas springs and hydraulic dampers, plans to use the proceeds to repay debt and refinance a shareholder loan.

William Hill prices

London-based gaming firm William Hill priced a £375 million issue of non-callable seven-year senior notes (Ba1/BB+) at par to yield 4¼% on Friday, according to an informed source.

The yield printed on top of talk.

The deal received a high-grade-style execution, market sources said.

Barclays, Lloyds Bank and Royal Bank of Scotland were the bookrunners. Royal Bank of Scotland will bill and deliver.

GFL to roadshow

Canada's GFL Environmental Corp. plans to roadshow a C$200 million offering of five-year senior notes during the week ahead.

The deal is expected to price during the June 10 week.

BMO and Scotia are the leads.

The Pickering, Ont.-based integrated waste management company plans to use the proceeds to repay debt, to fund growth and for general corporate purposes.

Ahern is attractive

In the secondary market, a trader said that Ahearn Rentals' new 9½% secured notes due 2018 "did okay."

He quoted the issue going home at 101 5/8 bid, 102 offered, "which is pretty good in this market."

That was up from the notes' par issue price.

A second trader pegged the new bonds at 101¾ bid, 102½ offered.

Recent deals a mixed bag

Going back to some of the issues which priced earlier during this holiday-shortened week, a trader said that Thursday's offering from Ultrapetrol (Bahamas) Ltd. had moved up by 3/8 point to 101 3/8 bid, 102 offered.

The Nassau, Bahamas- based industrial shipping company had priced $200 million of 8 7/8% first-preferred ship mortgage notes due 2021 at par, and the issue had firmed to 101 bid, 101½ offered in initial aftermarket activity.

Thursday's other deal, from Plano, Texas-based telecommunications services provider Goodman Networks Inc., was seen little changed from the 107¾ bid, 108¾ level at which its 12 1/8% senior secured notes due 2018 were seen trading late in the day on Thursday. The company had priced a quickly shopped $100 million add-on to its existing bonds at 105, yielding 10.81%.

A market source saw Regal Entertainment Group's 5¾% notes due 2023 off about ½ point on the session at par bid, 101 offered.

The Knoxville, Tenn.-based movie theater chain operator had priced $250 million of those notes at par on Wednesday in a quick-to-market transaction; they had moved up on Thursday to 100½ bid, offered.

Nationstar Mortgage Holdings Inc.'s new 6½% notes due 2022 were among the busiest junk issues seen trading on Friday, with over $9 million of those bonds changing hands. They were seen unchanged at 100¼ bid, although several smallish odd-lot transactions later in the session tried to take the bonds as high as 101¼ bid.

The Lewisville, Texas-based mortgage lender had priced $300 million of those notes at par in a quick-to-market deal on Wednesday; they had been seen in initial aftermarket dealings Wednesday, and again on Thursday, trading in a 100¼ to 100½ bid range.

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