Restaurant Brands upsizes junk deal; Hill-Rom, FMG active; Iron Mountain positive

By Cristal Cody and James McCandless

Tupelo, Miss., Sept. 6 – The junk bond market ended the week on a strong note Friday.

Restaurant Brands International, Inc. priced an upsized $750 million of notes, to round out an active week.

Week to date, dollar-denominated junk bond supply totals more than $4.5 billion.

The week ahead is shaping up to be a busy one with several loan and bond combination deals and BB-rated bond offerings anticipated.

“It could be one of the busier weeks of the year,” a market source said.

In recently priced paper, Hill-Rom Holdings, Inc.’s and FMG Resources Pty Ltd.’s new senior notes were traded actively but finished flat.

Meanwhile, Iron Mountain Inc.’s new ten-year issues saw slightly higher levels.

Restaurant Brands upsizes

The week ended with an upsized deal from Restaurant Brands International, Inc. that priced Friday at a yield not seen on many eight-year deals.

The company sold $750 million of first lien senior secured notes due Jan. 15, 2028 at par to yield 3 7/8%.

The deal was upsized at the launch and priced tighter than initial talk.

“I haven’t seen too many prints that low ever for an eight-year deal,” one source said. “Usually, there’s a little bit of resistance at 4 and 5 [handles] but that one really went well.”

Junk calendar builds

Meanwhile, InfraBuild Australia Pty. Ltd. is marketing $475 million of five-year senior notes.

Advanced Drainage Systems, Inc. plans to price new senior notes and expects to issue $1.05 billion of credit facilities to help fund its $1.08 billion acquisition of Infiltrator Water Technologies, LLC.

Inmarsat plc has a bank meeting set for Tuesday as part of its debt financing plan, which includes $1,125,000,000 of senior secured notes and $3.3 billion of credit facilities to fund its acquisition by a consortium that includes Apax, Warburg Pincus, Canada Pension Plan Investment Board and Ontario Teachers' Pension Plan Board.

Shutterfly Inc. expects to bring an upsized bridged $500 million offering of senior secured notes backing the buyout of the company by Apollo Global Management LLC.

Debt financing for the buyout also includes a $300 million revolver and a $1,285,000,000 first lien term loan B.

Murphy Oil zooms

Some of the new junk bond issues priced this week have been a “rocket ship” in the secondary market, an informed source said.

Murphy Oil USA Inc.’s $500 million of guaranteed senior notes due Sept. 15, 2029 (Ba2/BB+/) priced on Wednesday at par to yield 4¾% climbed to 102 bid on Friday.

Hill-Rom active

Hill-Rom’s new eight-year notes were active on their first day, traders said.

The 4 3/8% senior notes due 2027 rose up 1 point to close at 102 bid.

The Chicago-based medical supplies name’s notes were initially talked to price in the 4½% to 4¾% area, Prospect News reported.

The deal priced at $425 million on Thursday.

FMG better

Elsewhere, FMG’s issues were performing better, market sources said.

The 4½% senior notes due 2027 were active but closed flat at 100 bid.

The subsidiary of Perth, Australia-based iron ore company Fortescue Metals Group Ltd. was another company bringing a deal to market on Thursday, pricing at $600 million.

Iron Mountain higher

Information name Iron Mountain’s paper moved slightly higher, traders said.

The 4 7/8% senior paper due 2029 tacked on ¼ point to close at 100¾ bid.

The Boston-based information management name’s $1 billion Wednesday pricing was one of the larger deals in a week of a flood of new issuance.

“Conditions are really favorable for just about anybody who wants to put paper out there,” a trader said.

PG&E gains

Meanwhile, in utilities, PG&E Corp.’s notes took a better track, traders said.

The 6.05% notes due 2034 rose ¼ point to close at 108½ bid.

The San Francisco-based bankrupt electric utility was under pressure for most of the day but saw some relief in the afternoon despite unfavorable developments in the California legislature.

A bill that would have let the company use future profits to finance up to $20 million in bonds dedicated to covering wildfire liabilities died before being considered.

The proposal may be considered again in January.

Opposing the measure was a group of creditors who claimed that it was a bailout for shareholders.

The company had lobbied the body to pass the bill in advance of its anticipated restructuring plan, which is expected to be filed in bankruptcy court next week.

Mallinckrodt varies

Mallinckrodt plc’s issues varied in direction in Friday’s session, traders said.

The 4 7/8% senior notes due 2020 added 4½ points to close at 62 bid. The 5¾% senior notes due 2022 lost 2¼ points to close at 36 bid.

The Staines-upon-Thames, England-based drug manufacturer announced that it had reached an agreement to pay two Ohio counties, Summit and Cuyahoga, $24 million in cash to settle lawsuits related to the opioid epidemic.

Once finalized, the settlement would resolve any lawsuits that are scheduled to go to trial in October.

As part of the agreement, the company will donate $6 million worth of generic products to the counties.

“It’s a question of how many settlements they can withstand,” a trader said.

Analysts have said that the industry could be made to collectively pay out hundreds of millions to billions of dollars in settlements across the country.

The name’s structure came under more pressure on Thursday after news broke that the company had hired restructuring advisors to explore options with bankruptcy on the table.

Indexes rise

Three high-yield indexes all capped off the week with improvements.

The KDP High Yield Daily index gained 4 basis points to finish the week at 71.78 with the yield moving lower to 5.35%.

The index rose 5 basis points on Thursday, fell 6 bps on Wednesday and dropped 7 bps on Tuesday.

For the week, the index gave back a cumulative 4 bps.

The ICE BofAML US High Yield index picked up 8.9 bps to end Friday with the year-to-date return now at 11.424%.

The index added 17.2 bps on Thursday, gained 13.5 bps on Wednesday and gave back 17.7 bps on Tuesday.

The CDX High Yield 30 index garnered 32.72 bps at the end of the week to close at 107.2511.

The index improved by 33.27 bps on Thursday, finished Wednesday up by 34.24 bps and lost 34.77 bps on Tuesday.

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