Williams Scotsman sole dollar deal in quieter primary; recent issues busy; Neiman Marcus gains after numbers

By Paul Deckelman and Paul A. Harris

New York, Nov. 21 – The high-yield primary quieted considerably on Tuesday, as junk bond market activity began winding down ahead of Thursday’s Thanksgiving Day holiday in the United States.

Just one new dollar-denominated and fully junk-rated offering was heard by syndicate sources to have priced, as Williams Scotsman International, Inc., a producer and provider of modular storage products and temporary structures, priced $300 million of five-year secured notes.

The company’s existing notes were meantime mixed in fairly active trading.

The solitary new deal stood in contrast to Monday’s busy session, which saw six new deals collectively worth nearly $1.9 billion get done – the third consecutive session in which issuance either approached or topped the $2 billion mark.

Most of those deals were trading actively on Tuesday, including the offerings from Bombardier Inc. – repeating as Junkbondland’s single busiest credit of the day – Talen Energy Supply. LLC, Weight Watchers International, Inc. and Everi Payments, Inc.

Away from the new issues, market participants saw some upside in Neiman Marcus Group Ltd. LLC’s paper after the upscale retailer reported quarterly results and had a generally upbeat conference call.

Statistical market performance measures were higher across the board on Tuesday, after two consecutive mixed sessions before that. They had first turned mixed on Friday after having strengthened across the board last Thursday for the first time since Oct. 19, breaking a streak of seven consecutive losses.

Williams Scotsman inside talk

News volume in the primary market fell dramatically on Tuesday and should continue to decline on Wednesday as numerous market participants in the United States are choosing to add the abbreviated Wednesday market session to the extended Thanksgiving holiday weekend ahead, sources said.

In Tuesday's dollar-denominated market Williams Scotsman International, Inc. priced a $300 million issue of five-year senior secured notes (B2/B-) at par to yield 7 7/8%.

The yield printed inside of the 8% to 8¼% yield talk.

Deutsche Bank was the lead.

The Baltimore-based provider of modular portable storage solutions and remote workforce accommodation management services plans to use the proceeds, together with funds from other sources, to fund its merger with Double Eagle Acquisition Corp., to prepay certain third-party and inter-company debt and to provide cash for the combined company’s balance sheet.

The William Scotsman deal clears the dollar-denominated pre-holiday calendar, sources say.

Although one deal remains, GNC Holdings, Inc.'s $500 million offer of five-year senior secured notes, there has been no news for nearly a week, sources say.

The most recent word on the offer was initial guidance of 10%, which came soon after the deal was announced on Nov. 8.

Since then it has been radio silence.

Unipol prints 3½% 10-year notes

In the euro-denominated market Unipol Gruppo Finanziario priced a €500 million issue of 3½% 10-year senior notes (Ba2//BB+) at mid-swaps plus 270 basis points.

The spread printed in the middle of spread talk in the mid-swaps plus 270 bps area.

The reoffer price was 99.842, rendering a yield of 3.519%.

JP Morgan, Mediobanca and UniCredit managed the sale.

Raffinerie Heide roadshow

German refiner Raffinerie Heide GmbH began a roadshow on Tuesday for a €250 million offering of five-year senior secured notes, according to a market source.

Credit Suisse and Commerz are managing the sale.

The roadshow wraps up on Friday.

The Hemmingstedt, Germany-based company plans to use the proceeds to fund a dividend to shareholders.

Unipol and Raffinerie Heide join Berlin-based property management firm Adler Real Estate AG, which plans to commence marketing of a euro-denominated dual-tranche offering of senior notes (S&P: BB+) on Thursday.

Goldman Sachs International is the global coordinator and joint bookrunner. Deutsche Bank, JP Morgan, and Morgan Stanley are also joint bookrunners.

Mixed Monday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Monday, the most recent session for which data was available at press time, according to a trader.

High-yield ETFs saw $349 million of inflows on the day.

However actively managed funds sustained $75 million of outflows on Monday.

Dedicated bank loan funds, meanwhile, sustained $165 million of outflows on Monday, the trader said.

New Williams Scotsman seen quiet

In the secondary market, a trader quoted the new Williams Scotsman 7 7/8% senior secured notes due 2021 – issued by Algeco Scotsman Holdings Sarl – in an initial par-to-100¼ bid context, although he said that he did not see much in the way of actual trading in the issue.

However, there was some trading activity going on in the modular storage container company’s existing Algeco Scotsman Global Finance plc bonds, which were turning in a mixed performance.

Its 8½% notes due 2018 were down some 9/16 point on the day, ending at 98 3/16 bid, with around $16 million traded, putting the credit on the day’s Most Actives list.

Those bonds were giving back some of the hefty gains they had notched on Monday ahead of the new deal, when the ’18s had firmed by more than 1 full point on the day.

The company’s 10¾% notes due 2019, on the other hand, were seen by a market source to have zoomed more than 8 point on the session Tuesday, closing at 89¾ bid, with about $6 million having traded.

Bombardier again Most Active

Traders said that most of Monday’s new deals were being actively traded on Tuesday, once again led on a volume basis by the new Bombardier 7½% notes due 2024.

A market source said that more than $100 million of those bonds changed hands during the session, on top of the more than $45 million that had traded on Monday after the Montreal-based aircraft and railroad transportation equipment manufacturer had priced its quickly shopped $1 billion deal at par, following an upsizing from the originally announced $900 million.

While the new notes retreated from their early gains on Monday to close right around that par issue level, on Tuesday they moved up, with a trader seeing them “wrapped around 101.” He saw the last prints between 100¾ and 101 1/8 bid.

Another trader quoted the issue going home at 100¾ bid.

Bombardier’s existing 7½% notes due 2025, which on Monday had fallen a full point in active trading, were down another quarter point on Tuesday, finishing at 100 3/8 bid, with more than $13 million having traded.

However, its 7¾% notes due 2020 gained ¼ point, closing at 108¼ bid.

Monday deals trade busily

Among other deals that had come to market during Monday’s session, the new Talen Energy Supply 10½% senior guaranteed notes due in January of 2026 were seen finishing at 99 bid, down ¾ point on the day, with over $33 million seen having traded.

The paper still remained up from the 97.5 level at which the Allentown, Pa.-based independent power generating company’s add-on tranche had priced to yield 10.964% in a regularly scheduled forward calendar offering, after having been twice upsized, first from an originally announced $100 million to $200 million, and ultimately to $275 million.

However, the paper was well down from the levels slightly above par at which the existing bonds had been trading at the end of last week.

Talen had priced its original $400 million of the notes at 96.029 in a quick-to-market transaction just last Tuesday, yielding 11.25%.

A market source meantime said that in the wake of the add-on issue, the company’s 9½% notes due 2022 eased by ¼ point on Tuesday, to 103½ bid, with its 6½% notes due 2025 up ¾ point, to 83½ bid, both on volume of over $13 million.

The new Weight Watchers International 8 5/8% notes due 2025 fattened up a little on Tuesday, gaining 3/8 point to end at 100 7/8 bid, on volume of more than $27 million.

The New York-based provider of diet foods and weight-management programs had priced $300 million of those notes – slimmed down from an originally announced $500 million – at par in a regularly scheduled offering on Monday. The bonds were heard to have firmed by around ½ point in light initial aftermarket dealings.

Las Vegas-based gaming technology company Everi Payments’ new 7½% notes due 2025 were seen by a trader “wrapped around par” in a par-to-100¼ bid context, on some $24 million of turnover.

Another market source saw the notes ending at 100 1/16 bid, down 3/16 on the session.

The company had priced $375 million of the notes at par off the forward calendar on Monday, and they initially shot up to near the 101 bid mark, albeit on light volume, in initial aftermarket deals, before coming off those peaks to end Monday at around 100¼ bid.

Another Monday name – H & E Equipment Services, Inc.’s add-on to its existing $750 million of 5 5/8% notes due in September of 2025 – gained ¼ point Tuesday to end at 105 bid, with over $11 million having traded.

The Baton Rouge, La.-based heavy equipment manufacturer had priced its quick-to-market $200 million addition to the original bonds at 104.25 to yield 4.958%, and the notes had firmed by around ½ point in fairly active initial aftermarket trading later in the day on Monday.

Retailers on the rise

Away from the new issues, traders saw several retail names better, including Staples Inc.’s 8½% notes due 2025, which firmed smartly to 89 3/8 bid, a gain of more than 2 points on the day.

More than $41 million of those notes traded.

A trader said he had not seen any fresh news out on the Framingham, Mass.-based office supply retailer that might explain the gain.

Neiman Marcus Group’s 8% notes due 2021 finished up 1½ points on the session at 57¾ bid, with over $19 million having traded.

Its 8¾%/9½% senior PIK toggle notes due 2021 – which are now paying interest in kind through the issuance of additional notes rather than in cash – were up nearly 3 points from their most recent previous round-lot levels seen at the end of trading last week, finishing Tuesday just under 55 bid, with around $5 million traded.

The Dallas-based high end department store and luxury catalog retailer reported results for the 2018 fiscal first quarter ended Oct. 28, including comparable-store sales and a $10 million rise in adjusted EBITDA from the year earlier quarter.

On their conference call following the release of the numbers, company executive touted the success of their “Digital First” strategy to grow the traditional brick-and-mortar stores company’s online selling presence.

They also noted that NMG finished the quarter with what its chief financial officer called “more than ample liquidity of $657 million of cash, equivalents and revolving credit facility availability, and has no significant debt maturities coming due for nearly three years (see related story elsewhere in this issue).

Indicators firm up

Statistical market performance measures were higher across the board on Tuesday, after two consecutive mixed sessions before that. They had first turned mixed on Friday after having strengthened across the board last Thursday for the first time since Oct. 19, breaking a streak of seven consecutive losses.

The KDP High Yield Daily Index firmed by 6 basis points on Tuesday to end at 71.61, its fourth straight gain after seven consecutive sessions before that on the downside.

It had also risen by 3 bps on Monday, on top of 18 bps and 10 bps jumps on Thursday and Friday, respectively, in contrast to Wednesday’s 28 bps freefall and Tuesday’s 16 bps nosedive.

Its yield came in by 2 bps on Tuesday to 5.39% after having been unchanged on Monday. It had also tightened by 3 bps on Friday and by 6 bps on Thursday, after having widened out for eight successive sessions before that, including Wednesday’s 9 bps increase.

The Markit CDX Series 29 index rose more than 5/16 point on Tuesday to go home at 107 7/8 bid, 107 29/32 offered, its first gain after two consecutive losses. It had eased marginally on Monday, on top of a 1/16 point retreat on Friday.

The Merrill Lynch North American High Yield Master II Index posted its fourth consecutive gain on Tuesday, advancing by 0.136%, on top of Monday’s 0.111% rise.

The latest improvement lifted the index’s year-to-date return to 6.893% from Monday’s 6.747% close, although the year-to-date return still remains well down from the 7.636% posted on Oct. 24 – the peak cumulative return for 2017 so far.

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