U.S. market quiet to close $5.3 billion week; Autodis, Synlab price in Europe; ServiceMaster busy

By Paul Deckelman

New York, Nov. 4 – The high-yield primary arena quieted down on Friday after a busy day on Thursday, as syndicate sources reported that no new junk-rated U.S. dollar-denominated paper came to market during the session.

That stood in contrast to Thursday, when three issuers managed to get deals totaling $1.83 billion done.

The lack of any dollar-based activity Friday left the week’s new-issuance total at $5.30 billion in 10 tranches – down from last week’s $7.45 billion in nine tranches, though well up from the $2.12 billion which gotten done in five tranches two weeks ago, according to data compiled by Prospect News.

All of the day’s news in the primary realm came out of Europe, the sources said.

Synlab Bondco plc, a division of the eponymous German medical and environmental laboratory services company, priced €940 million of six-year senior secured floating-rate notes, after a planned fixed-rate tranche of six-year secured paper was abandoned.

Autodis SA, a French distributor of aftermarket spare parts for light vehicles, priced €520 million of six-year senior secured notes split into a pair of equally sized €260 million tranches of fixed- and floating-rate paper.

The forward calendar grew with the addition of one European deal, as Swedish specialty chemicals company Perstorp Holding AB was heard to have begun a roadshow for its multiple-tranche offering of dollar-and euro-denominated fixed- and floating-rate notes.

Back in the domestic bond market, Thursday’s offering of new eight-year notes from ServiceMaster Co.

was the busiest issue in Junkbondland, trading at a premium to its issue price.

Statistical market performance measures were mixed for a second consecutive session on Friday; they had turned mixed on Thursday, after having been lower across the board for six consecutive sessions before that.

But the indicators were clearly lower all around versus where they had finished last Friday, marking their second straight week on the downside.

Synlab Bondco prices

With not much going on in the dollar-denominated domestic junk bond market, investor interest shifted to Europe on Friday.

Among specific names, Synlab Bondco priced €940 million of senior secured floating-rate notes due 2022 (B2/ /B+).

European high-yield sources said on Friday that the notes priced at par and have a coupon of Euribor plus 350 basis points with a 0% Euribor floor.

Thursday’s announcement of the pending bond deal had indicated that the company would be offering both fixed- and floating-rate secured 2022 notes but no fixed-rate tranche materialized.

The London-based company – a debt-issuance vehicle for Synlab Holding GmbH, an Augsburg, Germany-based provider of laboratory services in Europe for human and veterinary medicine and environmental analysis – plans to use the proceeds to redeem all its €775 million of senior secured floating-rate notes and to repay all outstanding revolving credit facility borrowings.

Remaining proceeds will be used for general corporate purposes, including and primarily financing acquisitions.

Autodis brings two tranches

The day’s other pricing involved Autodis, a Paris-based distributor of aftermarket spare parts for light vehicles; it did €520 million of senior secured notes due 2022 (B2/B) split into a pair of €260 million tranches of fixed and floating-rate notes.

Syndicate sources said that the fixed-rate tranche priced at par with a 4 3/8% coupon.

The floating-rate tranche also priced at par with a coupon of Euribor plus 437.5 bps.

The offering came to market via joint global coordinators and physical bookrunners BNP Paribas Securities Corp., which will handle billing and delivery, and J.P. Morgan Securities LLC.

Credit Suisse Securities and Deutsche Bank Securities Inc. are also joint bookrunners on the offering.

Autodis plans to use the proceeds to fund the redemption of all €270 million of its 6½% senior secured notes due 2019; to fund the redemption of €140 million of 9%/9¾% senior holdco pay-if-you-can notes due 2020 issued by Dakar Finance SA, the issuer’s indirect parent company, and to repay in full the €80 million outstanding under its bridge facility.

Perstorp slates multi-tranche deal

Perstorp Holding was heard by syndicate sources to have begun a roadshow for a multiple-tranche offering of dollar- and euro-denominated fixed- and floating-rate notes.

That marketing campaign is scheduled to run through Nov. 14, with pricing to follow.

The offering will consist of $800 million equivalent of dollar- and euro-denominated fixed-rate and euro-denominated floating-rate notes due in June 2021 as well as a $400 million tranche of fixed-rate notes due September 2021.

The complex offering will come to market via global coordinator and bookrunner Goldman Sachs & Co. and bookrunners HSBC Securities and Nordea.

Malmö, Sweden-based Perstorp, a specialty chemicals company, will use the proceeds to refinance debt.

Week’s issuance slacks off

With no dollar deals pricing during Friday’s session, the week’s new-issuance volume stayed where it had ended on Thursday at $5.30 billion of U.S. dollar-denominated and fully junk-rated paper from domestic or industrialized-country borrowers in 10 tranches, according to data compiled by Prospect News.

That was down from the $7.45 billion which had priced in nine tranches last week, ended Oct. 28, although it was well up from the $2.20 billion which got done in five tranches during the week ended Oct. 21.

This week’s new deals pushed the year-to-date issuance total up to $197.51 billion in 303 tranches.

That was running some 18% behind the new-deal pace seen at this time last year, when $241.05 billion had priced in 376 tranches by this point on the calendar, the Prospect News data indicated.

That was wider than the 16.3% gap between this year’s and last year’s issuance which had been seen last week.

ServiceMaster most active

In the secondary market, a trader said that the new ServiceMaster 5 1/8% notes due 2024 were clearly the busiest bonds of the day on Friday.

He saw the issue “trade up a little,” pegging the notes in a 100 3/8 to 100 5/8 bid context versus the par level at which the Memphis-based provider of residential and commercial cleaning, pest-control and other janitorial and maintenance services had priced that $750 million of paper on Thursday.

A second trader saw those bonds doing even better, locating them at 100¾ bid.

He said that more than $30 million of the notes changed hands.

Recent deals less busy

While the ServiceMaster offering racked up decent volume in Friday’s aftermarket, the same could not be said Friday of other recently priced offerings; a trader saw them with only a few million traded.

He said that Lamb Weston Holdings, Inc.’s new $1.67 billion two-part offering “is still trading at a slight premium” after having given up most of its initially generated aftermarket gains.

He saw the frozen potato products company’s 4 5/8% notes due 2024 in a 100¾ to 101 bid context and said that its 4 7/8% notes due 2026 “were the same way.”

Lamb West – being spun off from Chicago-based agribusiness and food processing giant ConAgra Inc. – priced $833 million of each tranche of notes at par on Tuesday as a regularly scheduled forward calendar offering. The new bonds both shot above the 101 bid mark when they first hit the aftermarket but had given up some of their initial gains around mid-week.

The trader meantime saw Jack Ohio Finance LLC’s 6¾% first-lien senior secured notes due 2021 “still at a discount,” hanging around a 99½ to 99¾ bid level.

The Detroit-based Midwestern gaming company priced $750 million of those notes on Tuesday at par as part of a $1.05 billion two-part deal that also included $300 million of 10¼% second-lien notes due 2022.

The trader said the latter notes “weren’t trading at all” on Friday.

Indicators stay turn mixed

Statistical market performance measures were mixed for a second consecutive session on Friday; they had turned mixed on Thursday after having been lower across the board for six consecutive sessions before that.

But the indicators were clearly lower all around versus where they had finished last Friday, marking their second straight week on the downside.

The KDP High Yield Index was off by 6 basis points on Friday, ending at 70.26 bid, its ninth straight loss. On Thursday, it had eased by 1 bp, after having plunged by 27 basis points on Wednesday.

Its yield edged up by 1 bp for a second straight session on Friday, to 5.73%, its ninth consecutive rise.

Those levels compared unfavorably with the 71.23 index reading and 5.43% yield at which the index had ended last Friday.

The Markit Series 27 CDX Index lost was up by 3/32 point on Friday, closing at 102 2/7 32 bid, 102 7/8 offered – its first gain after eight consecutive downturns, including setbacks of 5/32 point on both Wednesday and again on Thursday.

But the index was still well down from last Friday’s 103½ bid, 103 17/32 offered close.

The Merrill Lynch High Yield Index was back in the red again, dropping by 0.107% on Friday after having inched upward by 0.004% on Thursday – its first gain after six straight losses, including Wednesday’s 0.333% retreat.

Friday’s loss cut the index’s year-to-date return to 14.711% from 14.834% on Thursday.

For the week, it fell by 1.131%, its second consecutive weekly loss.

The previous week, the index had fallen back by 0.522% – its first weekly loss after five consecutive weekly advances.

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