Albertsons, Hertz, MultiPlan megadeals lead considerably busier day; new deals trade up

By Paul Deckelman and Paul A. Harris

New York, May 25 – The already robust high-yield primary market picked up steam on Wednesday. A total of six issuers brought an eye-popping $5.44 billion of new dollar-denominated and fully junk-rated paper to market.

Supermarket operator Albertsons Cos. LLC priced $1.25 billion of eight-year notes in a regularly scheduled forward calendar offering. The new notes were seen by traders to have firmed smartly on active volume when they hit the aftermarket.

Very late in the day, vehicle and equipment rental giant Hertz Global Holdings, Inc. brought an upsized $1.24 billion of secured six- and eight-year notes to market via its equipment rental unit, while earlier in the day, health-care cost management solutions provider MultiPlan Inc. did a downsized $1.1 billion of eight-year paper, with both the Hertz and MultiPlan megadeals also pricing off the forward calendar. MultiPlan’s new bonds jumped in busy secondary dealings.

Aircraft components maker TransDigm Inc.’s quickly shopped 10-year offering fell just shy of megadeal territory, at $950 million, and was quoted slightly higher.

Software company Open Text Corp. upsized its quick-to-market 10-year offering to $600 million, with the bonds seen solidly better when they were freed to trade.

Rounding out the day’s pricing activity, homebuilder CalAtlantic Group Inc. drove by with a $300 million 10-year issue.

The day’s new-issue total was the second-heaviest session of the year so far, according to data compiled by Prospect News.

Traders also saw brisk volume in some of the bonds that had priced on Monday and Tuesday from the likes of U.S. Concrete, Inc., Match Group, Inc. and Iron Mountain, Inc.

Statistical market performance measures were higher across the board for a second straight session. They had improved all around on Tuesday after having been mixed on Monday. It was the indicators’ third higher session in the last four trading days.

Albertsons prices tight

The high-yield primary market continued to operate at a feverish pace on Wednesday, with six issuers raising a combined total of $5.44 billion.

Three of the six came as drive-bys.

Two were upsized and one was downsized.

Executions were generally solid, with three tranches coming at the tight ends of talk, one coming on top of talk and one coming at the wide end.

Albertsons priced a $1.25 billion issue of eight-year notes (B3/B+) at par to yield 6 5/8%.

The yield printed at the tight end of yield talk in the 6¾% area and inside of the earlier 6¾% to 7% guidance.

BofA Merrill Lynch was the left bookrunner. Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, Goldman Sachs & Co., Deutsche Bank Securities Inc. and Barclays were the joint bookrunners for the debt refinancing deal.

Hertz upsizes

Hertz Equipment Rental Corp. priced an upsized $1.24 billion of senior secured second-priority notes (B3/B+) in two tranches on Wednesday.

The deal included $610 million of six-year notes that priced at par to yield 7½% and $625 million of eight-year notes that priced at par to yield 7¾%.

BofA Merrill Lynch was the left bookrunner. Goldman Sachs, Barclays, BMO Securities, BNP Paribas Securities Corp., Citigroup, Credit Agricole CIB, J.P. Morgan Securities LLC and RBC Capital Markets were the joint bookrunners.

The issuing entities will be Herc Spinoff Escrow Issuer, LLC and Herc Spinoff Escrow Issuer, Corp., wholly owned subsidiaries of Hertz Equipment Rental.

Proceeds will be used to finance the proposed spinoff of Hertz Global's equipment rental business.

Big book for MultiPlan

MultiPlan priced a downsized $1.1 billion issue of eight-year senior notes (Caa1/B-) at par to yield 7 1/8%.

The deal was downsized from $1.3 billion, with the shift of $200 million of proceeds to the concurrent term loan, increasing the loan size to $3.47 billion from $3.27 billion.

The yield printed at the tight end of yield talk in the 7¼% area.

The deal played to $6 billion of orders, according to a portfolio manager, who added that the company wanted to allocate the issue to just nine accounts but was told by the dealer that it would not be possible to do so.

Goldman Sachs was the left bookrunner. Barclays, BofA Merrill Lynch, Citigroup and UBS Investment Bank were the joint bookrunners for the buyout deal.

TransDigm drive-by

TransDigm priced a $950 million issue of 10-year senior subordinated notes (B3/CCC+) at par to yield 6 3/8%.

The yield printed at the tight end of yield talk in the 6½% area and inside of early guidance of 6½% to 6¾%.

Morgan Stanley, Credit Suisse, Citigroup, UBS, Barclays, Credit Agricole, Goldman Sachs, HSBC and RBC managed the sale.

Cleveland-based designer, producer and supplier of highly engineered aircraft components plans to use the proceeds to fund the acquisition of Data Device Corp. and for general corporate purposes including potential acquisitions and/or dividends.

Open Text upsizes

Open Text priced an upsized $600 million issue of 10-year senior notes (Ba2/BB) at par to yield 5 7/8%.

The issue size was increased from $500 million.

The yield printed on top of yield talk and in line with initial guidance in the high 5% context.

Barclays was the lead left bookrunner. Morgan Stanley, RBC and Citigroup were the joint bookrunners.

The Waterloo, Ont.-based provider of enterprise information management software plans to use the proceeds for general corporate purposes including acquisitions.

CalAtlantic at the wide end

CalAtlantic Group priced a $300 million issue of 10-year senior notes (Ba2/BB) at par to yield 5¼%.

The yield came at the wide end of the 5 1/8% to 5¼% yield talk but in line with initial guidance in the low 5% context, the source said.

JPMorgan, Citigroup, Mizuho, BofA Merrill Lynch, Credit Suisse and Wells Fargo were the joint bookrunners.

The Irvine, Calif.-based homebuilder plans to use a portion of the proceeds to repay or repurchase its 10¾% senior notes due September 2016. Pending that use, it will use the proceeds for general corporate purposes, which may include land acquisition and development, home construction, repurchases of common stock and debt repayment.

EMI talk 7½% to 7¾%

Looking to the Thursday session, EMI Publishing Group North America Holdings Inc. talked its $350 million offering of eight-year senior notes (B3/B) to yield 7½% to 7¾%.

Books close at 12:30 p.m. ET on Thursday, and the deal is set to price thereafter.

Goldman Sachs is the left bookrunner. UBS is the joint bookrunner.

HeidelbergCement price

In the European market HeidelbergCement AG priced a €750 million issue of 2¼% eight-year notes at 98.963 to yield 2.394%.

The bond was issued at the upper end of the volume and the lower end of the coupon range, the company stated in its release, adding that demand was very high, as the bond was more than four-times oversubscribed.

Active bookrunner Deutsche Bank AG, London Branch will bill and deliver. Citigroup, Danske and Banca IMI were also active bookrunners.

The Heidelberg, Germany-based building supplies company plans to use the proceeds for general corporate purposes and especially to prefund the upcoming Italcementi acquisition.

The company's refinancing needs in the bond market for the Italcementi acquisition are largely covered with this bond issuance, HeidelbergCement stated in the Wednesday press release.

Mixed daily flows

The cash flows of the dedicated high-yield bond accounts were mixed on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield exchange-traded funds saw $344 million of inflows on the day.

Asset managers, however, sustained $30 million of outflows on Tuesday.

Second-busiest session

According to data compiled by Prospect News, the day’s tally of $5.44 billion of new dollar-denominated junk paper from domestic or industrialized-country issuers was the second-biggest new-issuance total seen so far this year.

It was topped only by the $8.13 billion that got done in five tranches back on April 6, although most of that day’s astounding total – $5.19 billion, to be exact – was attributable to just one new deal, the greatly upsized offering of 7 3/8% senior secured notes due 2026 from French cable and telecommunications company Numericable SFR SA.

Wednesday’s six deals and seven total tranches were the most deals and tranches seen of any session so far this year, the data indicated.

Days new deals trade up

Traders saw several of Wednesday’s new offerings having posted strong gains in active volume when they were freed for aftermarket dealings.

A trader said that MultiPlan’s new 7 1/8% notes due 2024 were Junkbondland’s most heavily traded issue on Wednesday, with over $89 million having changed hands by late in the afternoon.

He noted that the health-care cost solutions company’s big deal had been the first of the day’s issues to price, giving participants ample opportunity to rack up strong volume.

He quoted the notes having firmed smartly to 102¾ bid, versus their par issue price.

A second trader pegged those bonds in a 102¾-to-103¾ bid context, while yet another market source also saw them topping the 103 mark.

Albertsons’ new 6 5/8% notes due 2024 were quoted by a trader at 101 3/8 bid, 101 5/8 offered, up from the par level at which the grocer’s megadeal had priced earlier.

More than $55 million of those bonds traded, a market source said, seeing them get as good at 101¾ bid.

Also showing some aftermarket strength was Open Text’s 5 7/8% notes due 2026, which moved up to a range between 101 and 101½ bid, a market source said.

At another desk, a trader said that the bonds were ending around 101¼ bid, with more than $21 million having moved around.

A trader saw the new TransDigm 6 3/8% senior subordinated notes due 2026 up ¼ point on the day from their par issue price, on volume of around $18 million.

Recent deals stay busy

Among some of the deals that came to market earlier in the week, a trader saw U.S. Concrete’s 6 3/8% notes due 2024 straddling the par level at which the Euless, Texas-based supplier of ready-mixed concrete had priced its $400 million issue off the forward calendar on Monday after upsizing it from an original $350 million.

More than $14 million traded on Wednesday.

Match Group’s 6 3/8% notes due 2024, which had already pushed up to around the 102 mark in initial aftermarket action after the Dallas-based online dating service operator had priced its quickly shopped $400 million of the bonds on Tuesday, gained another ¾ point on Wednesday, a trader said, locating the bonds in a 102¼-to-102¾ bid context.

A second market source saw the bonds ending at 102 5/16 bid, on volume of more than $20 million.

Both halves of Iron Mountain’s new Tuesday issue, in contrast, continued to trade right around their respective par issue price levels.

A trader saw the Boston-based records and document storage company’s 4 3/8% notes due 2021 actually down 1/8 point at 100 1/8 bid, 100 5/8 offered, with over $18 million traded. Its 5 3/8% notes due 2026 were down 5/8 point, he said, at 99 7/8 bid, 100¼ offered.

Indicators add to gains

A trader said that as had been the case on Tuesday, new issues were the main focus of the day on Wednesday.

Statistical market performance measures were higher across the board for a second straight session Wednesday. They had improved all around on Tuesday after having been mixed on Monday. It was the indicators’ third higher session in the last four trading days.

The KDP High Yield Daily index jumped by 22 basis points on Wednesday, closing at 67.46, its second consecutive gain and third improvement in the last four sessions. On Tuesday it had risen by 17 bps after having retreated by 10 bps on Monday.

Wednesday’s yield, accordingly, came in by 7 bps to 6.22%, its second straight narrowing and third such tightening in the last four sessions. It had also come in by 6 bps on Tuesday, in contrast to Monday’s 4 bps widening.

The Markit Series 26 CDX North American High Yield index posted its fourth successive rise after three successive losses and its fifth such gain in the last eight sessions. It improved to 103 1/32 bid, 103 1/16 offered, up by 13.32 on the day, on top of Tuesday’s 25/32 point strengthening.

The Merrill Lynch North American High Yield Master II index also saw its fourth straight advance on Wednesday, following two successive setbacks, making it six gains in the last eight sessions. The index firmed by 0.283% on the heels of Tuesday’s 0.257% strengthening.

The latest gain lifted its year-to-date return to 7.84% – the index’s second consecutive new peak level for the year. That was up from the 7.55% on Tuesday, the previous zenith.

© 2015 Prospect News.
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