Primary quiet as $4 billion week closes; new Revlon bonds firm smartly; Joy Global holds gains

By Paul Deckelman and Paul A. Harris

New York, July 22 – The high-yield market saw a quiet session in the primary as no new dollar-denominated and fully junk-rated deals were heard by syndicate sources to have priced.

That lack of new paper left the weekly new issuance total right where it had been at the end of Thursday’s session – $4.09 billion in eight tranches, up from the $3.36 billion which had priced in seven tranches last week, ended July 15, according to data compiled by Prospect News.

The week’s new deals, in turn, lifted the junk market’s total of new deals from domestic or industrialized-country issuers to $123.49 billion in 178 tranches – although that was still running 34.1% behind the new-deal pace seen last year, when $187.48 billion had priced in 301 tranches, according to the data.

Although no new dollar deals priced during Friday’s session, the syndicate sources said that one new deal joined the forward calendar, as Greek dairy producer FAGE International SA and its U.S. affiliate made plans to hit the road Monday to market a $420 million offering of 10-year notes.

Among the names which have already come to market, traders saw cosmetics company Revlon Inc.’s new eight-year notes sitting pretty, having moved up solidly from Thursday’s pricing level.

They also saw Thursday’s other new deal, from recording company Warner Music Group Corp., continuing to trade around the higher levels that seven-year secured offering hit after pricing on Thursday.

Also holding on to Thursday’s gains in active dealings Friday was Joy Global Inc., whose paper had zoomed by as much as 17 points on the news that the mining heavy equipment manufacturer will be bought by Japanese industry peer Komatasu for $3.7 billion, including debt assumption.

Statistical market performance measures turned higher across the board on Friday after having been mixed on Thursday. It was the second higher session in the last three trading days.

The indicators were also up all around from where they had finished out last Friday. It was the indicators’ fourth straight Friday-over-Friday gain.

FAGE Dairy roadshow

In Friday’s primary market session Athens, Greece-based FAGE International SA, along with Johnstown, N.Y.-based FAGE USA Dairy Industry Inc., announced plans to start an international roadshow on Monday for a $420 million offering of 10-year senior notes (existing ratings B2/B+), according to an informed source.

Citigroup Global Markets is the sole bookrunner.

The dairy company plans to use the proceeds to redeem its senior notes due 2020 in full.

Lecta’s two-part secured notes

In Europe, Spain’s Lecta SA priced €600 million of six-year senior secured notes (B2/B) in two tranches.

Included were €225 million of three-month Euribor plus 637.5 basis points floating-rate notes which priced at 99 and €375 million of fixed-rate notes which priced at par to yield 6½%.

Joint bookrunner Deutsche Bank will bill and deliver. Credit Suisse, BBVA and UniCredit were also joint bookrunners.

mydentist talk

IDH Finance plc, a special-purpose vehicle for mydentist, set price talk for a £425 million two-part offering of six-year senior secured notes.

A tranche of fixed-rate notes is talked to yield 6¼% to 6½%

A tranche of floating-rate notes is talked to price at 99 with a 600 basis points spread to Libor.

Global coordinator Credit Suisse will bill and deliver. JPMorgan is also a global coordinator. Goldman Sachs, ING, Lloyds, Mizuho, SG CIB and Royal Bank of Scotland are joint bookrunners.

The Manchester, England-based company plans to use the proceeds to repay debt.

ContourGlobal tapping 5 1/8% notes

Luxembourg-based ContourGlobal Power Holdings SA announced in a Friday press release that it plans to place a €50 million add-on to its 5 1/8% senior secured notes due June 15, 2021.

The company, a developer and operator of wholesale electric power generation businesses, plans to use the proceeds for general corporate purposes.

The original €550 million issue priced at par on June 10, 2016.

Revlon on the rise

A trader said that “clearly the most notable name” in Junkbondland on Friday was Revlon Inc.

Its Revlon Escrow Corp. 6¼% notes due 2024 pushed as high as the 102½ bid area in Friday trading before falling back to around a 101 5/8 to 101 7/8 bid context later on.

The issue ended the day at 101¾ bid, a ½ point gain on the session – with well over $125 million of the notes having traded

Revlon, a New York-based cosmetics and personal-care producer, priced $450 million of the notes at par on Thursday after a short roadshow.

The deal was upsized from the originally announced $400 million.

The notes had moved up to around a 101¼ bid shortly after pricing late in Thursday’s session but with only a handful of trades seen.

At the Gimme Credit independent investment advisory service, senior analyst Kim Noland opined in a research note that “although the deal is increasing leverage, Revlon bonds have not moved down and the recent pricing is consonant with where the 2021 bonds are trading.”

Noland noted that Revlon’s financial results “have been uneven over the last few years,” with high leverage.

She said that principal owner Ronald Perelman “recently said he would be seeking strategic alternatives that could involve third parties which could lead to a sale.”

Warner holds steady

Thursday’s other deal – Warner Music Group’s $300 million of 5-year senior secured notes due 2023 – were seen by traders still moving around in the same 101 to 101½ bid area to which they had traded up in initial aftermarket dealings after their pricing.

A trader saw the notes get as good as 102 bid during the morning before falling back a little and quoted them going home at 101¼ bid, 101½ offered.

But he saw “only a handful of [large-sized] trades” trading, in contrast to the nearly $40 million of activity seen on Thursday.

That was when the New York- based music recording and publishing giant priced $300 million of the notes at par in a quick-to-market offering.

Joy Global stays busy

A trader said that Joy Global’s 5 1/8% notes due 2021 were among the most active issues on Friday, with over $21 million changing hands, on top of the more than $30 million that traded on Thursday, when those bonds zoomed by more than 16 points on the session to above the 111 bid mark, powered by the news that the Milwaukee-based maker of heavy mining equipment has agreed to be acquired by Japan’s Komatsu Ltd. for $2.9 billion in cash, giving a total transaction value of $3.7 billion, including assumption of Joy’s debt.

In Friday’s dealings, he said that the notes had fallen back to around 109½ to 110½ bid, “where most of the day’s trades took place.”

However, at the end of the day, he said, the notes had moved back up to around 110½ to 111, which he called “essentially unchanged on the day.”

Indicators better on day, week

A trader said that while the market had a firm tone, volume flows were “very light.

“We are clearly in the midst of the summer doldrums.”

Statistical market performance measures meantime turned higher across the board on Friday after being mixed on Thursday. It was the second higher session in the last three trading days.

The indicators were also up all around from where they had finished out last Friday, July 15. It was the indicators’ fourth straight Friday-over-Friday gain, and their fifth such advance in the last seven weeks.

The KDP High Yield Index gained 10 basis points on Friday to close at 69.35 after retreating by 3 bps on Thursday. It was the index’s second gain in the last three sessions.

Its yield meantime came in by 3 bps to 5.48%, after rising 1 bp on Thursday. It was the second narrowing in the last three sessions.

Friday’s levels compared favorably to the 69.26 index reading and 5.50% yield at which they had closed last Friday.

The Markit Series 26 CDX Index moved up by 7/32 point on Friday to end at 104¾ bid, 104 25/32 offered, after losing an identical 7/32 point on Thursday. Friday marked its second gain in the last three sessions.

That close was up from last Friday’s 104 9/16 bid, 104 5/8 offered.

And the Merrill Lynch High Yield Index posted its fifth straight gain on Friday, firming by 0.023%, on top of Thursday’s 0.095%.

Friday’s improvement raised its year-to-date return to 12.52%, a fourth consecutive new peak year-to-date return, up from the previous zenith of 12.4.95%, set on Thursday.

For the week, the index was up by 0.292%, its fifth successive weekly gain and its 10th over the last 11 weeks. So far this year, gains have been seen in 22 weeks, versus seven weekly downturns.

Last week, it had jumped by 1.179%, closing at a year-to-date return of 12.193%.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.