Forward calendar builds; Rent-A-Center jumps on acquisition; PHI up on tender offer; Acosta drops

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 18 – While the domestic and European primary markets were quiet on Monday, the stage is being set for a busy mid-to-late June period.

Baffinland Iron Mines Corp. and Baffinland Iron Mines LP started a roadshow for a $550 million offering of eight-year senior secured notes on Monday with pricing expected late in the week.

Chaparral Energy Inc. plans to start a roadshow on Tuesday for a $300 million offering of five-year senior notes.

Stars Group Inc. is expected to step forward soon with a senior notes offering to back its acquisition of Sky Betting & Gaming.

BMC Software Inc.’s $1 billion-plus offering of notes may also be close at hand, sources said.

In the European market, International Game Technology plc plans to start a roadshow on Tuesday for a €500 million offering of senior secured bullet notes due July 2024 (expected ratings Ba2/BB+).

Meanwhile, MGM Resorts International’s newly priced 5¾% senior notes due 2025 (Ba3/BB-) remained a major volume mover in the secondary space although the notes were “stuck” at their previous levels, a market source said.

Rent-A-Center Inc.’s junk bonds were active and making large gains in the secondary space after the company announced it had accepted a buy-out offer that would take the company private.

Rent-A-Center’s notes have been in focus and making gains for much of the month amid buy-out chatter.

PHI Inc.’s 5¼% senior notes due 2019 were also quoted several points higher after the company launched a cash tender offer for the notes, which will be covered with proceeds from the company’s new $500 million senior notes offering.

Acosta Holdco Inc.’s 7¾% senior notes due 2022 dropped more than 4 points on Monday. The notes have traded down since the company reported earnings last week.

Roadshow

As the June 18 week got underway, dealers continued to set the table for a busy mid-to-late June period in the primary market.

Baffinland Iron Mines started a roadshow for a $550 million offering of eight-year senior secured notes.

The debt refinancing deal is expected to price late in the June 18 week.

Morgan Stanley, Goldman Sachs and Citigroup are the joint bookrunners.

Chaparral Energy plans to start a roadshow on Tuesday for a $300 million offering of five-year senior notes, according to a market source.

The Rule 144A and Regulation S for life offering is expected to price on June 26.

J.P. Morgan Securities LLC, Capital One, KeyBanc Capital Markets LLC, Natixis Securities and SG CIB are the joint bookrunners.

In the wings

There are a couple of sizable deals in the wings, sources said.

Stars Group is expected to show up sooner than later with a senior notes offer (Caa1/B-) backing its acquisition of Sky Betting & Gaming from CVC Capital Partners and Sky plc.

The Toronto-based gaming technology company is presently in the market with a $4.98 billion equivalent term loan via Deutsche Bank, Morgan Stanley, Goldman Sachs, Macquarie, Barclays, BMO and JP Morgan.

BMC Software may be even nearer at hand with a $1 billion-plus offering of notes backing the buyout of the company by KKR from a group led by Bain Capital and Golden Gate Capital.

Credit Suisse, Goldman Sachs and Jefferies are the leads on the debt financing, a market sources said.

International Game roadshow

In the European market, International Game Technology plans to start a roadshow on Tuesday for a €500 million offering senior secured bullet notes due July 2024 (expected ratings Ba2/BB+).

Initial price talk has the deal coming with a yield in the 3¾% area.

The roadshow wraps up on Wednesday, and the debt refinancing deal is set to price thereafter.

Joint lead bookrunner BNP Paribas will bill and deliver. Banca IMI, Mediobanca and UniCredit are also joint lead bookrunners. Credit Suisse and ING are joint bookrunners.

Energizer initial price talk

Energizer Holdings Inc. circulated initial price talk for the euro-denominated portion of its $1.25 billion equivalent two-part offering of eight-year senior notes (B2/BB-).

Initial talk on Energizer Gamma Acquisition BV's $750 million equivalent of euro-denominated notes is 4¾% to 5%.

Initial talk of 6½% to 6¾% on Energizer Gamma Acquisition, Inc.'s $500 million of dollar-denominated notes surfaced during the June 11 week.

The roadshow, having concluded in the United States late in the June 11 week, continues through Wednesday, and the acquisition financing deal is set to price thereafter.

Joint bookrunner Barclays will bill and deliver. J.P. Morgan, BofA Merrill Lynch, Citigroup, MUFG, TD and Standard Chartered are also joint bookrunners.

Energizer is one of three high profile dual-currency deals expected to clear before Friday's close

Denmark-based TDC A/S is on the road with €1.4 billion equivalent of five-year senior notes, a buyout deal coming in dollars and euros. The dollar-denominated notes have initial price talk in the low 9% area. The euro-denominated notes have initial talk in the 7% area.

And Spain's Cirsa Gaming Corp. plans to sell €1.56 billion equivalent of seven-year senior secured notes (expected ratings B2/B+) in three tranches: Euro-denominated floating-rate notes with initial talk of Euribor plus 525 basis points, euro-denominated fixed-rate notes with initial talk in the 6% area and dollar-denominated fixed-rate notes with initial talk in the 8% area.

Less depth in junk market

With geopolitical headlines on topics including U.S. relations with North Korea and Brexit rocking the market, interest rates rising and central bank accommodations continuing to wind down, the market has become more challenging for issuers and dealers, a senior debt capital markets banker said on Monday.

Issuer concessions have gone up, the banker said, and added that, given the above reasons, and others, the depth of the high yield market has been reduced.

MGM stuck

While many of last week’s deals drifted out of focus in the secondary space, MGM’s new 5¾% senior notes remained active although with little change to their previous levels.

The notes were seen at par ¼ bid, par ½ offered on Monday, which was unchanged from Friday.

“They’re stuck there,” a market source said.

About $15 million of the bonds traded during Monday’s session.

The notes have been active since breaking for trade after pricing at par on June 14. However, the notes have largely traded between par and par ½.

Rent-A-Center jumps

Rent-A-Center’s junk bonds have been in focus and making gains for much of the month with the company “heavily rumored” to be on the cusp of a buy-out, a market source said.

Rent-A-Center’s junk bonds moved higher last week after the company rejected the buy-out bids received during its strategic review process.

The notes jumped on Monday on news the company had accepted a sweetened deal from previous bidder Vintage Capital.

Rent-A-Center’s 6 5/8% senior notes due 2020 were up a little more than 1 point to par bid, par ½ offered on Monday, sources said. More than $20 million of the bonds traded on Monday.

The 4¾% senior notes due 2021 were up more than 4 points to also trade at par bid, par ½ offered. The notes were previously quoted at 96½ bid, 97½ offered.

More than $12 million of those bonds during Monday’s session.

“It’s good for the holders,” a market source said. The 4¾% notes have climbed more than 7 points and the 6 5/8% notes more than 5 points since the start of the month.

The current call price on the notes is 101.104, a market source said. However, if the deal does not close by Nov. 15, the call price will drop to par, the source said.

PHI tenders

PHI’s 5¼% senior notes due 2019 were quoted several points higher after the company launched a cash tender offer for the notes.

The 5¼% notes were quoted at 97 bid, 98 offered on Monday after previously being quoted at 95 bid, 96 offered, a market source said.

The notes were active and trading between 97 5/8 and 98¼ on Monday, a market source said.

They were seen trading between 97 and 97 ¾ on Friday after PHI announced a roadshow for a new $500 million offering of five-year senior secured notes with proceeds to be used to refinance the 5¼% notes.

PHI is offering an early tender price of 101.25 for holders who tender by 5 p.m. ET on June 29. Holders who tender after the early deadline will be eligible to receive 97.125, Prospect News reported. (see related article)

PHI is not a well-liked name in Junkbondland and the new senior notes offering carries a high degree of risk due to the company’s leverage, a market source said.

Acosta drops

Acosta’s 7¾% senior notes due 2022 continued their downward spiral on Monday with the notes losing about 6 points.

The 7¾% notes traded as low as 54½ on Monday with most trades between 55 and 56, a market source said. The notes closed Friday at 60½.

The notes have steadily traded downward since the company released earnings last week and held an investor conference call, a market source said.

Indexes mixed

Benchmarks for the high-yield secondary market were again mixed on Monday after also closing Friday mixed.

The KDP High Yield index was flat, closing the day the day unchanged from Friday at 70.84. While the index’s closing price remained the same, the yield dropped 1 basis point to 5.74%.

The Merrill Lynch High Yield index saw a miniature gain on Monday after a full week of gains last week.

The index was up 0.1 bps on Monday with the year-to-date return now 0.66%.

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 down 10 bps on Monday to close the day at 106.99.

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