MGM leads continued new-deal parade; market awaits Diamond Resorts and Big Tex pricings

By Paul Deckelman and Paul A. Harris

New York, Aug. 16 – The high yield primary market continued to ward off the usual mid-August new-deal lull on Tuesday, pushing out another five new issues totaling $1.55 billion, on top of Monday’s $1.9 billion.

Gaming giant MGM Resorts International had the big deal of the day, a quick-to-market $500 million of 10-year notes.

Also coming in with an unscheduled offering was footwear and apparel company Wolverine World Wide, Inc., with $250 million of 10-years.

Three other offerings priced off the forward calendar after having surfaced in the market on Monday.

Wood products manufacturer and building materials distributor Boise Cascade Co. did $350 million of eight-year notes, while integrated media company National CineMedia, LLC brought $250 million of 10-year paper to market.

Oil and natural gas operator Parsley Energy, Inc. did a $200 million add-on to its existing 2024 notes.

When they hit the aftermarket, the National CineMedia and Boise Cascade bonds were heard by traders to have firmed solidly. They saw the day’s other three new deals hovering around their respective issue prices.

Monday’s new issue from Novelis Corp. began trading, pushing upwards by several points.

Syndicate sources meantime were looking for potential Wednesday pricings from Diamond Resorts International, Inc. – pushed back from Tuesday – and Big Tex Trailers.

Statistical market performance measures turned mixed on Tuesday, after having been higher across the board on Monday after three straight mixed sessions before that.

MGM Resorts 10-year bullet

Five issuers priced single-tranche deals during a Tuesday session that generated a high volume of news in the primary market.

The combined take was $1.5 billion of proceeds.

Two of the five deals were a.m.-to-p.m. drive-bys, while the rest were in the market at least overnight.

Only one of the five deals was upsized.

Executions appears solid with three of the five deals pricing on either the tight or rich ends of talk, while the other two came on top of talk.

MGM Resorts International priced a $500 million issue of 10-year senior bullet notes (B1/BB-/BB) at par to yield 4 5/8%.

The yield printed in the middle of the 4½% to 4¾% yield talk. Early guidance had the deal coming with a yield in the 4¾% area.

Joint physical bookrunner Barclays will bill and deliver for the debt refinancing deal. BofA Merrill Lynch and JP Morgan were also joint physical bookrunners.

Boise Cascade, upsized and tight

Boise Cascade Co. priced an upsized $350 million issue of eight-year senior notes at par to yield 5 5/8%.

The issue size was increased from $300 million.

The yield printed at the tight end of yield talk in the 5¾% area. Earlier guidance was in the 6% area.

Wells Fargo was the left bookrunner. BofA Merrill Lynch, J.P. Morgan, U.S. Bancorp and Goldman Sachs were the joint bookrunners.

The Boise, Idaho-based wood products manufacturer and building materials distributor plans to use the proceeds, along with cash on hand, to purchase or redeem the 6 3/8% notes due 2020. The $50 million upsize will be used to decrease the amount of cash used in the refinancing.

National CineMedia 10-year deal

National CineMedia, LLC priced a $250 million issue of 10-year senior notes (B2/B) at par to yield 5¾%.

The yield printed at the tight end of the 5¾% to 6% yield talk. Initial talk was in the 6% area.

JP Morgan, Barclays, BofA Merrill Lynch, Credit Suisse and RBC were the joint bookrunners.

The Centennial, Colo.-based integrated media company plans to use the proceeds to redeem $200 million of its senior notes due 2021 and for general corporate purposes, including the repayment of a portion of its revolver.

Wolverine drives by

In quick-to-market action Wolverine World Wide, Inc. priced a $250 million issue of 10-year senior notes (Ba3/BB+) at par to yield 5%.

The yield printed on top of yield talk. Initial guidance was in the low 5% yield context.

JP Morgan, Wells Fargo and HSBC were the joint bookrunners for the debt refinancing deal.

Parsley Energy talks 6¼% notes

Parsley Energy, LLC, a subsidiary of Parsley Energy, Inc., priced a $200 million add-on to its 6¼% senior notes due June 1, 2024 (B3) at 102.00.

The reoffer price came at the rich end of the 101.5 to 102 price talk, a market source said.

JP Morgan was the lead.

The Austin, Texas-based oil and gas exploration and production company plans to use the proceeds, along with proceeds from a concurrent offering of up to 8.05 million common shares, to fund the acquisition of oil and gas interests in Glasscock County, Texas, with any remaining proceeds to be used to fund a portion of Parsley's capital program and for general corporate purposes, including potential future acquisitions.

Diamond Resorts upsizes

Looking to the Wednesday session, three announced deals are on deck.

Diamond Resorts International, Inc. upsized its two-part offering of high yield notes to $1.1 billion from $1 billion.

The deal includes an upsized $500 million amount of seven-year senior secured notes (B1/B+). The secured notes tranche is increased from $400 million. Price talk remains unchanged at 7¾% area.

Talk on the $600 million tranche of eight-year senior unsecured notes (Caa1/CCC+) remains in the 10¾% area, also unchanged.

Books were scheduled to close at 5 p.m. ET on Tuesday, with allocations to follow on Wednesday. Earlier timing had books closing at noon Tuesday.

The deal was upsized to $1.1 billion from $1 billion after having previously been upsized from $600 million, with the addition of the $400 million senior secured notes tranche last week.

Tuesday's additional $100 million upsize represents a further decrease in the amount of the concurrent term loan to $700 million from $800 million. That decrease follows the previous downsize to $800 million from $1.2 billion which came when proceeds were shifted to the secured notes tranche from the loan last week.

Along with Thursday's upsize of the bond deal came covenant changes.

RBC is the left bookrunner for the acquisition financing. Barclays and Jefferies are the joint bookrunners.

The unsecured notes offering ran an Aug. 1 to Aug. 4 roadshow and was subsequently delayed when the company elected to restate earnings.

Big Tex talk 9¾% area

Big Tex Trailers/American Trailer Works talked its $670 million offering of seven-year senior secured notes (B3/B) to yield in the 9¾% area.

There are also covenant changes.

Books close at 10:30 a.m. ET Wednesday, and the deal is set to price thereafter.

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

The Southlake, Texas-based freight container company plans to use the proceeds to finance the acquisition of American Trailer Works by Bain Capital and to refinance ATW’s existing debt, including debt incurred in connection with the Big Tex transactions.

Tallgrass Energy roadshow

Tallgrass Energy Partners, LP and Tallgrass Energy Finance Corp. began a roadshow on Tuesday for a $400 million offering of eight-year senior notes.

The roadshow wraps up on Thursday, and the deal is set to price thereafter.

Initial guidance has the debt refinancing deal coming in a mid-to-high 5% yield context, according to an investor.

Barclays is the lead left bookrunner. Wells Fargo, Capital One, Credit Suisse, Deutsche Bank, Morgan Stanley, PNC are the joint bookrunners.

Daily inflows continue

In a string of positive cash flows stretching back a week, the flows of the dedicated high yield bond funds came in well north of the balk line again on Monday, an investor said.

High yield ETFs saw $142 million of inflows on the day.

Asset managers saw $40 million of inflows on Monday.

National CineMedia, busy, better

In the secondary market, all five of the day’s new deals were heard to have traded around following their respective pricings, though some on greater volume than others.

The busiest of the lot, a trader said, was National CineMedia’s new 5¾% notes due 2026, with more than $34 million having changed hands. He pegged those bonds at 101¾ bid, up from their par issue price.

Several other traders located the issue in a 101½ to 102 bid range.

The new Boise Cascade 5 5/8% notes due 2024 also pushed higher after pricing, with one trader seeing them between 101 1/8 and 101 5/8 bid, while a second quoted them at 101 to 101½ bid.

MGM moves marginally

Las Vegas-based casino operator MGM Resorts’ new 4 5/8% notes due 2026 had less of a gain when it began trading around. A market source said the bonds edged up by around ¼ point on the session, with around $15 million traded.

That was also the case with Rockford, Mich.-based footwear and apparel company Wolverine World Wide.

Its 5% notes due 2026 edged up about 1/8 point from their par pricing level, on volume of around $23 million.

Another trader put them in a 99 7/8 to100 1/8 bid context.

Parsley pops a little

Despite being a smallish add-on, Parsley Energy’s $200 million tap of 6¼% notes due in June of 2024 did see some active aftermarket dealings, with over $26 million of the bonds moving around.

A market source said the bonds had gotten as good as 103 bid when they began trading around, up from their 102 pricing level.

A second trader saw the Parsley notes finishing out the session at 102¾ bid.

New Novelis firms up

A trader said that Junkbondland’s busiest issue of the day was the Novelis Corp. 6¼% notes due 2024 which had priced late in the day on Monday.

“They came too late on Monday to really trade, so they were active today,” he said.

More than $85 million of the notes changed hands, and they firmed smartly to 102½ bid.

The Atlanta-based aluminum products company had priced $1.15 billion of those notes at par in a quick-to-market transaction on Monday, after the offering was upsized from the originally announced $525 million.

Indicators turn mixed

Statistical market performance measures turned mixed on Tuesday, after having been higher across the board on Monday after three straight mixed sessions before that.

The KDP High Yield index climbed by 13 basis points on Tuesday to end at 70.21, after having jumped by 20 bps on Monday. It was the index’s third straight gain and its eighth advance in the last nine sessions.

Tuesday’s close marked its third straight new high for the year so far and 52-week high, surpassing the old mark of 70.08 set on Monday.

Its yield came in by 6 bps, to 5.28%, its third consecutive narrowing and eighth the last nine sessions. It had also tightened by 9 bps on Monday.

However, the Markit Series 26 CDX index lost 1/8 point on Tuesday to finish at 104 25/32 bid, 104 13/16 offered, after having gained slightly more than ¼ point on Monday. Tuesday’s setback was second in the last three sessions.

The Merrill Lynch High Yield index was meanwhile up for a 10th successive session on Tuesday, firming by 0.147%, following the 0.218% advance seen on Monday.

The streak-prone index’s gains of the last 10 sessions follow a six-session slump before that.

Tuesday’s upturn brought the index’s year-to-date return up to 14.004%, its eighth straight new peak level for the year, versus Monday’s 13.837%, the former peak level.

It was also the first time the index had finished above the 14% mark since Dec. 31, 2012, when it had closed out the year with a 15.583% cumulative return.

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