SS&C Technologies, Endo price; Amkor, Ashton Woods trade up; funds add $1.04 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 14 – The domestic high-yield market was active on Thursday with two drive-by deals pricing and the forward calendar growing.

SS&C Technologies, Inc. priced a massively upsized $2 billion issue of 8.5-year senior notes (B2/B+) at par to yield 5½%.

Endo International plc subsidiary Par Pharmaceutical Cos., Inc. priced an upsized $1.5 billion issue of eight-year senior secured notes (Ba3/B+) at par to yield 7½%.

Luxembourg-based Millicom International Cellular SA, which operates in Latin America and Africa, recently priced an upsized $750 million issue of 6¼% senior notes due March 2029 (Ba2//BB+).

The forward calendar also grew with emerging-markets focused Kosmos Energy Ltd. planning investor meetings to shop a $600 million offering of seven-year senior notes (B+/BB).

However, all eyes will be on Friday’s session when Power Solutions’ megadeal is slated to price. However, the senior notes offering was downsized to $3.7 billion equivalent from $4.7 billion equivalent with proceeds shifted to the concurrent term loan.

In the European market, PPF Arena 1 BV mandated banks to market its debut global bond deal, an offering of euro-denominated notes (Ba1) with a four- to six-year maturity.

While the primary market was active preparing new deals in the pipeline, volume was light in the secondary space which remained firm, sources said.

As Endo prepared its new offering, the pharmaceutical company’s outstanding issues were active and making large gains.

Amkor Technology, Inc.’s 6 5/8% senior notes due 2027 and Ashton Woods USA LLC’s 9 7/8% senior notes due 2027 were putting in a strong performance in the secondary space with both trading at a large premium to their issue price.

Meanwhile, high-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall liquidity trends in the junk market – saw inflows of $1.04 billion for the week ended Wednesday, according to fund-flow statistics generated by AMG Data Services Inc.

The inflow follows an outflow of $1.91 billion for the week ended March 6, which was the first outflow in six weeks.

While funds saw record outflows in 2018, fund flows in 2019 have been net positive with a cumulative inflow of $8.22 billion in the 11 weeks thus far, according to a Prospect News analysis of the reports by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division.

Upsized SS&C prices tight

SS&C Technologies, Inc. priced a massively upsized $2 billion issue of 8.5-year senior notes (B2/B+) at par to yield 5½% in a Thursday drive-by.

The issue size increased from $750 million.

The yield printed at the tight end of the 5½% to 5¾% yield talk. Initial guidance had the deal coming to yield in the high 5% area.

Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., BofA Merrill Lynch and Oppenheimer & Co. Inc. were the joint bookrunners for the debt refinancing deal.

Endo/Par drives through

In other Thursday drive-by action, Endo International subsidiary Par Pharmaceutical priced an upsized $1 billion issue of eight-year senior secured notes (Ba3/B+) at par to yield 7½%.

The issue size increased from $1 billion.

The yield printed in the middle of initial talk in the 7½% area.

J.P. Morgan Securities LLC managed the debt refinancing deal.

Power Solutions’ give and take

Looking to Friday, the market's attention will be closely focused on the Power Solutions megadeal which has been winding its way along the international high-yield road for the past fortnight.

In Thursday developments, the issuer upsized its term loan and downsized its bonds, while making some concessions on covenants but applying further torque to the pricing screws.

Specifically, Power Solutions downsized its high-yield notes offer to $3.7 billion equivalent from $4.7 billion equivalent.

The revised bond deal now features a downsized $1 billion tranche of seven-year senior secured notes (Ba3/B+/BB).

The tranche is downsized from $2 billion, with the shift of $1 billion of proceeds to the term loan, increasing the loan size to $4.2 billion from $3.2 billion.

Talk tightened to 6¼% from earlier talk of 6½% to 6¾%. Initial guidance was in the 7% area.

Talk on the €660 million tranche of seven-year senior secured notes (Ba3/B+/BB) tightened to 4 3/8% from earlier talk of 4½% to 4¾%. Initial guidance was in the 5% area.

Talk on the sole unsecured tranche, $1.95 billion of eight-year senior notes (B3/B/B-), remains unchanged, in the 225 basis points area behind the dollar-denominated secured notes.

The tightened pricing comes as investors gained some ground on covenant protection on the bonds and the loan, market sources say.

The issuer made concessions on the most-favored-nation clause, the restricted payments buildup basket rules, asset sales, Ebitda add-backs and change-of-control language.

However, those covenant changes fall well short of being monumental, a high yield investor, eyeing the deal, remarked late Thursday.

The Power Solutions bond deal is massively oversubscribed, with books across all three tranches said to contain orders in excess of $12 billion, the investor added.

The bonds are set to price Friday morning, New York time.

Proceeds will be used to fund Brookfield Business Partners’ acquisition of Johnson Controls’ Power Solutions business.

Kosmos Energy roadshow

Emerging markets-focused Kosmos Energy plans to commence meetings with investors on Monday for the purpose of shopping a $600 million offering of seven-year senior notes (B+/BB).

Initial guidance has the offer coming with a yield in the 7% area, a bond trader said.

Citigroup, SG CIB and Standard Chartered Bank are joint bookrunners for the debt refinancing deal from the Dallas-based independent oil and gas exploration and production company, which has operations in Ghana, Equatorial Guinea, U.S. Gulf of Mexico, Mauritania, Senegal, Suriname, Cote d'Ivoire, Namibia and elsewhere.

Kosmos Energy is one of several credits hitting the debt capital markets in mid-March with deals that have audiences among both emerging markets investors and junk accounts, sources say.

Luxembourg-based Millicom International Cellular, which operates in Latin America and Africa, lately priced an upsized $750 million issue (from $500 million) of 6¼% senior notes due March 2029 (Ba2//BB+).

And Central & Eastern Europe-focused PPF Arena 1 BV, which has headquarters in the Netherlands, mandated banks to market its debut global bond deal, an offering of euro-denominated notes (Ba1) with a four- to six-year maturity.

HSBC and Societe Generale CIB are the global coordinators.

Pent-up demand among high yield investors in Europe, where the 2019 new issue calendar has been conspicuously sparse, is a force motivating those investors to look a bit beyond the most familiar postal codes, sources there say.

Endo in focus

With new paper from Endo in the works, its outstanding issues were making large gains in secondary trading.

The four series of notes Endo launched a tender for were the most active of the capital structure with the notes trading up to their tender offer price, a market source said.

Endo’s 5 3/8% senior notes due 2023 were the most active of the capital structure with more than $26 million of the bonds trading hands.

The notes rose 3½ points to 83¼ in the high-volume activity, a market source said.

Endo’s 5¾% senior notes due 2022 rose 5 points to 96 with more than $19 million of the bonds on the tape, a market source said.

Endo’s 6% senior notes due 2025 were up about 1/8 point to 75 with more than $20 million of the bonds changing hands.

The 6% notes due 2023 were rose 1 5/8 points to 80½ and also saw more than $20 million in trades.

Endo launched a tender offer for up to $1 billion of its outstanding notes.

Endo is tendering for its 7¼% notes due 2022 at $970, its 5¾% notes due 2023 at $930, its 5 3/8% notes due 2023 at $810, its 6% notes due 2023 at $790.

Those who tender by the early tender deadline will receive an additional $30 premium to the tender offer. (See related article in this issue)

Endo’s capital structure was under pressure in early March with its junk bonds trading down on news Purdue Pharma was preparing to file for bankruptcy due to liability it is facing as the maker of OxyContin.

Endo has also been named in thousands of lawsuits accusing the generics and specialty pharmaceutical company of contributing to the opioid epidemic.

However, the tender offer and the fact the new deal was able to come to market so quickly was good news for the pharmaceutical company, a market source said.

Amkor active

Amkor Technology’s new 6 5/8% senior notes due 2027 were among the most actively traded issue in the secondary space with the notes making large gains in high-volume activity.

The 6 5/8% notes were up 2 points to 101¾ on Thursday, a market source said. More than $44.5 million of the bonds changed hands.

The notes were fairly priced and the semiconductor company has solid books with low leverage and positive cash flow, a market source said.

Amkor Technology priced a $525 million issue of 6 5/8% notes at 99.50 to yield 6.703% on Tuesday.

The yield printed wide of price talk in the 6½% area. Initial guidance was 6¼% to 6½%.

Ashton Woods trades up

While volume was light, Ashton Woods’ 9 7/8% notes due 2027 were also trading at a large premium to their issue price in the secondary space.

The notes were changing hands between 101 and 101½ during Thursday’s session, a market source said.

The notes carried a large coupon, which was most likely responsible for their secondary market performance, a market source said.

Ashton Woods priced a $255 million issue of the 9 7/8% notes at 99.301 to yield 10% in a Wednesday drive-by.

The deal was brought to market by reverse inquiry.

Proceeds will be used to tender Ashton Woods’ 6 7/8% senior notes due 2021.

Indexes were mixed

Indexes were mixed on Thursday, breaking a streak of consecutive gains seen since Monday.

The KDP High Yield Daily index rose 5 bps to close Thursday at 69.82 with the yield now 6.03%.

The index was up 11 bps on Wednesday, 13 bps on Tuesday and 5 bps on Monday.

The ICE BofAML US High Yield index gained 8.6 bps with the year-to-date return now 6.598%.

The index rose 24.8 bps on Wednesday, 23.5 bps on Tuesday and 19.7 bps on Monday.

After sinking below 6% year-to-date returns on Friday, the index popped back above it on Monday.

The index initially shot past 6% returns on Feb. 25 after passing 5% returns on Feb. 12.

The CDX High Yield 30 index dropped 10 bps to close Thursday at 106.38. The index rose 26 bps on Wednesday, 15 bps on Tuesday and 57 bps on Monday.

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