Aleris prices; Matterhorn postpones; Navient active; Cimpress, WeWork improve

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 8 – The domestic and European high-yield primary markets each saw one deal price during Friday’s session with the week ahead expected to be active.

Aleris International, Inc. priced a $400 million issue of five-year senior secured junior priority notes (Caa2/CCC+) at par to yield 10¾% late in Friday’s session.

Ardent Health Services joined the forward calendar with plans to start a roadshow on Monday for a $535 million offering of eight-year senior notes.

In the European market, InterXion Holding NV priced a €1 billion issue of seven-year senior notes (B1/BB-) at par to yield 4¾%.

Outokumpu Oyj is expected to price its €250 million offering of six-year senior secured notes on Monday.

However, Matterhorn Telecom SA (Salt Mobile, SA) postponed its CHF 2,085,000,000 equivalent four-part offering of senior secured notes.

Meanwhile, the secondary space was quiet on Friday with light trading volume across the board, sources said.

However, Navient Corp.’s new 6¾% senior notes due 2026 (Ba3/B+/BB) remained active and dominated trading activity in the secondary space with the notes flat to down slightly.

The trading frenzy surrounding Mueller Water Products, Inc.’s new 5½% senior notes due 2026 (Ba3/BB) died down on Friday, leaving the notes relatively unchanged in scattered activity.

Cimpress NV’s recently priced 7% senior notes due 2026 (B1/B+) were quoted slightly higher on Friday although trading of the new notes has been light since they freed to trade.

WeWork Cos. Inc.’s struggling 7 7/8% senior notes due 2025 (Caa1/B+/BB-) continued to see improvement with the notes quoted higher since the start of the week.

However, the notes are still trading well below their issue price.

Aleris at the tight end

Aleris priced a $400 million issue of five-year senior secured junior priority notes (Caa2/CCC+) at par to yield 10¾% late Friday.

The yield printed at the tight end of the 10¾% to 11% yield talk and inside initial talk that was set in the 11¼% area.

There were also covenant changes.

Aleris’ deal was heard to be two-times oversubscribed at 11¼%, according to an investor.

People liked that coupon and the deal was seeing a significant roll from investors being taken out of the company’s 7 7/8% senior notes due 2020 and 9½% senior secured notes due 2021, which are being redeemed in the transaction, the investor said.

Deutsche Bank was left lead. Barclays, BofA Merrill Lynch and J.P. Morgan Securities LLC were also bookrunners.

InterXion prices

InterXion Holding priced a €1 billion issue of seven-year senior notes (B1/BB-) at par to yield 4¾%.

The yield printed at the wide end of the 4½% to 4¾% yield talk.

BofA Merrill Lynch was the bookrunner for the debt refinancing deal. Barclays Capital Markets, ABN Amro Inc., Citigroup Global Markets Inc. and Credit Agricole were the joint bookrunners.

Looking to the week ahead in the European market, Outokumpu is expected to price its €250 million of six-year senior secured notes on Monday.

Price talk is still pending, a sell-side source said.

Matterhorn postponed

Matterhorn Telecom SA (Salt Mobile SA) postponed its CHF 2,085,000,000 equivalent four-part offering of senior secured notes, according to a Friday press release.

The Luxembourg-based mobile network operator cited market conditions in its decision to postpone the deal and added that it will not redeem its existing notes.

The offer, which involved two tranches of euro-denominated notes, one tranche of Swiss franc-denominated notes and one tranche of dollar-denominated notes, with seven-year and eight-year maturities, had been marketed by means of a roadshow, according to market sources.

Price talk had been set and the deal had been expected to price on Thursday.

However, the euro-denominated tranches, a seven-year floating-rate tranche and an eight-year fixed-rate tranche, had not been well received, according to a high-yield investor.

The company was not desperate for the money and was trying to push through an aggressive covenant package that would have allowed it to do some things down the road, a sell-side source said.

Investors pushed back, the source added.

Credit Suisse was the left lead global coordinator. Goldman Sachs and SG CIB were also global coordinators. BNP Paribas, JPMorgan and Natixis are joint bookrunners.

Ardent Health roadshow

Ardent Health Services plans to start a roadshow on Monday for a $535 million offering of eight-year senior notes.

Joint bookrunner Barclays will bill and deliver. Jefferies and BofA Merrill Lynch are also joint bookrunners.

Proceeds, along with a $990 million credit facility, will be used to refinance or otherwise extinguish Ardent’s existing credit facilities. Remaining proceeds will be used for working capital and general corporate purposes.

Week ahead

Away from Ardent Health, the week ahead is expected to be a reasonably active one, sources say.

However, the new issue market is not cranking as it once did.

Year-over-year issuance for 2018 to date is off 20% to 30%, according to the calculations of various market sources.

BofA Merrill Lynch made a mid-year revision to its estimate for 2018 new issuance, taking it down to $250 billion from $270 billion, a sell-side source said.

“Lately debt refinancing is 70% of this market and a lot of the better credits have already refinanced,” a debt capital markets banker said on Friday.

Those better-rated companies have capital locked in at rates which they are fine with, especially given the upward moves in Treasuries that have come in 2018, the banker noted.

Also, the term loan B market continues to be on a firm technical footing and a lot of merger and acquisition financing is taking place in that market.

What you have left are the late-cycle, lower quality, single B and lower issuers needing to refinance debt.

“As we’ve seen, those deals are receiving mixed reactions from investors,” the banker said.

Nevertheless, the June 11 week should see some more “middle-of-the-fairway” deals, the source added.

Week see $2.60 billion

Issuance for the week came to a total of $2.60 billion in five deals, significantly improved from the anemic $900 million seen the previous week and pretty much in line with the $2.49 billion total of the May 20 week.

However the three weeks make up three of the five slowest weeks of the year so far.

Year-to-date issuance now totals $98.98 billion in 187 tranches, down 27.1% from the $135.13 billion in 246 tranches seem at the comparable point in 2017.

Navient dominates

While trading volume was light on Friday, Navient’s new 6¾% senior notes due 2026 remained active.

The notes were flat to down about 1/8 point from Thursday’s levels, a market source said.

They were quoted at par ¼ bid, par ¾ offered early in the session and were seen trading at par 5/8 later in the afternoon with about $57 million of the bonds on the tape.

Navient priced the $500 million issue of eight-year senior bullet notes at par in a drive-by sale on Thursday.

The yield printed in the middle of yield talk that was set in the 6¾% area.

Navient carries a higher coupon than other double B credits because it is in the consumer financial sector which investors generally do not like to become involved in, a market source said.

Mueller Water quiet

While Navient’s new notes remained in focus in the secondary space, Mueller Water Products’ new 5½% senior notes due 2026 faded into the background.

The notes were seen relatively unchanged with trades between 101 and 101¼, a market source said.

Only about $10 million of the bonds changed hands during Friday’s session, compared to Thursday when the notes dominated trading activity with more than $61 million of the bonds in play.

Mueller Water Products priced an upsized $450 million issue of the eight-year senior notes at par on Thursday.

The yield printed at the tight end of talk for a yield in the 5 5/8% area and inside initial guidance in the high 5% to 6% area.

Cimpress up

Cimpress’ recently priced 7% senior notes due 2026 have slowly climbed throughout the week after hovering around par on their first days in the secondary market.

The 7% notes were seen at par 7/8 bid, 101 7/8 offered on Friday, about a ¼ point gain from Thursday, according to a market source.

The notes have steadily climbed since Monday when they were seen trading in a range of 99 7/8 to par ¼.

However, the notes have not been active since they hit the secondary space, sources said.

Cimpress priced $400 million of the eight-year senior notes on Friday at par.

Pricing came within price talk for a coupon of 7% and wider than initial price talk in the mid to high 6% area, according to a market source.

Proceeds will be used to redeem the company’s 7% senior notes due 2022 (B1/B+), which were last seen trading around 105.5. The 7% notes due 2022 priced at par in 2015.

WeWork improves

WeWork’s struggling 7 7/8% senior notes due 2025 showed signs of improvement over the past week, sources said.

The 7 7/8% notes were up about ¼ point to 95 5/8 bid, 96 3/8 offered on Friday. That was nearly 1½ points better than where the notes were seen on Monday at 94¼ bid, 95 offered.

The 7 7/8% notes have been slowly recuperating since bottoming out in mid-May when they traded as low as 92.

While improved, the notes have not been active in the secondary space, sources said.

WeWork priced an upsized $702 million of the 7 7/8% senior notes at par on April 25.

The deal has been described as a disaster.

Indexes dip

Benchmarks for the high-yield secondary market all saw a slight dip on Friday.

The KDP High Yield index was down slightly with the yield flat after a 10 basis points gain on Thursday.

The index was down 1 bps to close Friday at 70.62 with the yield flat at 5.84%.

The Merrill Lynch High Yield index was also down slightly on Friday although it remained in positive territory.

The index was down 2 bps with the year-to-date return now 0.225%. The index was up 13.5 bps on Thursday.

The index crossed into positive territory on Tuesday for the first time since May 15.

The CDX High Yield 30 index was down 3 bps to close Friday at 106.51 after a 29 bps drop on Thursday.

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