Wrangler, JPW, Holly price as pace slackens; new deals better; Toys up after filing; Rite Aid off on revised deal

By Paul Deckelman and Paul A. Harris

New York, Sept. 19 – The recently red-hot high-yield primary market slowed down drastically on Tuesday as a trio of issuers each did a single-tranche transaction, generating a total of some $625 million – well down from Monday’s $2.6 billion of new U.S. dollar-denominated and fully junk-rated notes, or even last Friday’s $1.15 billion.

Two of the day’s three issues came off the forward calendar, pricing after an investor roadshow.

Solid waste management company Waste Industries priced $305 million of eight-year notes, while JPW Industries, Inc., a supplier of branded metalworking and woodworking equipment and tools, did $220 million of senior secured seven-year paper.

Petroleum pipeline operator Holly Energy Partners, LP came to market with a quickly shopped $100 million add-on to its existing 2024 notes.

Secondary market participants saw the new Waste Industries deal firm smartly in active trading, and also quoted the Holly Energy notes higher.

And there was busy aftermarket action in Monday’s new deals from fast-food eateries operator Restaurant Brands International Inc. and clean energy concern NextEra Energy Partners LP, with both offerings up from their respective issue prices.

Away from the new deals, Toys ‘R’ Us Inc.’s recently beleaguered bonds were seen better now that the troubled retailer finally dropped the shoe and filed for Chapter 11.

Fellow retailer Rite Aid Corp.’s notes were mostly lower on revised, less-favorable terms for its big planned sale of nearly half of its drugstores to larger sector peer Walgreens Boots Alliance.

Wireless provider Sprint Corp.’s paper firmed on reports it was once again back in talks on a possible sale or merger with competitor T-Mobile.

Statistical market performance measures were higher across the board on Tuesday, strengthening after having been mixed for three consecutive sessions; they had turned mixed on Thursday and stayed that way on Friday and Monday, after having been unchanged-to-higher last Wednesday.

Waste Industries prices tight

In the Tuesday primary market session Waste Industries priced a $305 million issue of eight-year senior notes (Caa1/CCC+) at par to yield 6%.

The yield priced at the tight end of the 6% to 6¼% yield talk.

Barclays was the left bookrunner. Macquarie Capital and SunTrust Robinson Humphrey Inc. were the joint bookrunners.

Proceeds will be used to finance the acquisition of Waste Industries by HPS Investment Partners LLC and Equity Group Investments from Macquarie Infrastructure Partners.

JPW Industries secured deal prices

JPW Industries, Inc. priced a $220 million issue of seven-year senior secured notes (B3/B) at par to yield 9%.

The yield printed at the tight end of yield talk in the 9% area.

The notes become callable after Oct. 1, 2020 at 106.75. An issuer friendly special call provision that would have allowed the company to call up to 10% of the issue annually at 103 during the non-call period was withdrawn.

Goldman Sachs & Co. was the left bookrunner. BMO Securities and BNP Paribas Securities Corp. were the joint bookrunners.

Proceeds, together with an equity investment, will be used to repay existing credit facilities and fund the buyout of JPW Industries by Gamut Capital Management LP from Tenex Capital Management.

Holly Energy drives by

Holly Energy Partners, LP priced a $100 million tack-on to its 6% senior notes due Aug. 1, 2024 (B2/BB) at 103.25.

The reoffer price came in the middle of the 103 to 103.5 price talk, and at the rich end of initial price talk in the 103 area.

Citigroup Global Markets Inc. was the lead bookrunner. BofA Merrill Lynch, BBVA, MUFG, TD Securities and Wells Fargo Securities LLC were the joint bookrunners.

The Dallas-based petroleum pipeline operator plans to use the proceeds to repay debt under its revolving credit facility.

Avantor talks $4.25 billion

Looking ahead, Avantor, Inc. set price talk for its $4.25 billion equivalent three-part offering of high-yield notes.

A $1,401,000,000 amount of seven-year senior secured notes (B2/B) is talked to yield 5¾% to 6%.

A €500 million amount of seven-year senior secured notes (B2/B) is talked to yield 4¾% to 5%.

A $2.25 billion amount of eight-year senior unsecured notes (Caa2/CCC+) is talked to yield 8¾% to 9%.

Books close at noon ET Wednesday, and the deal is set to price Thursday.

Goldman Sachs & Co. is the left lead. Barclays, J.P. Morgan Securities LLC and Jefferies LLC are also leads.

Proceeds, together with preferred equity financing of Vail Holdco, as well as $5.5 billion of senior secured credit facilities and cash on hand at VWR International LLC, will be used to finance the acquisition of VWR and fund a distribution to equity holders of Avantor and the issuer’s subsidiaries.

Mattamy talk 6¾% area

Mattamy Group Corp. talked $450 million and C$200 million of eight-year senior notes (S&P: BB) to yield in the 6¾% area.

Official talk comes on top of initial price talk.

Books close at 10:30 a.m. ET Wednesday, and the deal, which was announced on Tuesday morning, is set to price thereafter.

Credit Suisse Securities (USA) LLC is the lead bookrunner for the dollar-denominated notes. RBC Capital Markets LLC and BMO Securities are the lead bookrunners for the Canadian dollar-denominated tranche.

Monday inflows

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

High-yield ETFs saw a substantial $427 million of inflows on the day.

Actively managed funds were essentially flat, seeing $5 million of inflows on Monday.

Wrangler bonds better

In the secondary realm, traders saw the new 6% notes due 2025 from Wrangler Buyer Corp. – the issuer of record for the Waste Industries offering – trading well up from their par issue price when they hit the aftermarket.

One quoted the Raleigh, N.C.-based solid-waste management company’s new paper in a 101-to-102 bid context, while a second saw them ending around 102to 102 1/8 bid, with over $27 million having changed hands, putting the credit high up on the day’s Most Actives list.

Holly heads higher

The traders also saw Holly Energy’s new add-on to its existing $400 million of 6% notes due in August of 2024 having firmed from their 103.25 issue price.

The notes were seen going home in a 104-to-104½ bid trading range.

Those market sources meantime did not immediately report any initial aftermarket dealings in the new 9% senior secured notes due 2024 which had been priced by JPW Industries, a LaVergne, Tenn.-based supplier of branded metalworking and woodworking equipment and shop tools.

NextEra tops Most Actives list

A trader said that “the busiest bonds of the day” were NextEra Energy Partners’ new seven- and 10-year notes, which had priced on Monday via the Juno Beach, Fla.-based clean-energy limited partnership’s NextEra Energy Operating Partners, LP unit.

He saw its 4¼% notes due 2024 having moved up to a 101-to-101¼ bid context, with over $74 million of those notes having traded, while its new 4½% notes due 2027 were even busier, with turnover of more than $100 million, tops on the day in Junkbondland. The latter issue finished at 101½ bid.

The company priced $550 million of each bond at par in a quick-to-market transaction on Monday.

Restaurant bonds increase gains

The traders also saw Restaurant Brands International’s 5% senior secured second-lien notes due 2025 having firmed from the gains that $1.5 billion add-on issue had notched after pricing on Monday.

One trader quoted the notes having improved to 101 5/8 bid, with more than $30 million traded on Tuesday, up from the 101 level at which they had finished on Monday after the drive-by issue priced at 100.5 to yield 4.887%.

The company meantime told investors at a conference Tuesday that it anticipates using the deal proceeds to finish taking out an existing issue of 2022 notes, and also looks forward to redeeming a big chunk of preferred stock (see related story elsewhere in this issue).

Toys trades up post-filing

Away from the new deals, Toys ‘R’ Us’ debt was seen trading at better levels in the wake of the troubled Wayne, N.J.-based toy, game and children’s products retailer’s generally expected Chapter 11 filing, which caused its recently beleaguered bonds to trade flat, or without their accrued interest, boosting the nominal process by several points.

Its 12% senior secured notes due 2021 were seen up 6¼ points on the day, finishing at 93¼ bid, with over $59 million having changed hands.

And its unsecured 7 3/8% notes due 2018 – which had been hammered down from the upper 90s to levels below 20 over the past several weeks on bankruptcy speculation – were seen having gained more than 8 points on the day, ending at 26½ bid, with about $18 million having traded.

Rite Aid in retreat

Also in the retailing sphere, Rite Aid Corp.’s 6 1/8% notes due 2023 were seen down more than 1¼ points on the day, ending at around 99½ bid, with more than $62 million having traded.

Those bonds had risen on Monday on the news that larger sector peer Walgreens was nearing an agreement with government antitrust regulators on its planned purchase of around half of Rite Aid’s more than 4,000 drugstores.

But Walgreens finally agreed to buy 1,932 outlets for $4.38 billion. That was far below the $5.2 billion it had originally planned to pay Camp Hill, Pa. based Rite Aid for 2,186 stores, under a deal reached in June after Walgreens abandoned its plans to buy Rite Aid outright due to antitrust concerns.

Sprint runs up

Traders saw good gains in Sprint Corp.’s paper, on news reports that Overland Park, Kans.-based wireless provider Sprint is once again in on-again, off-again merger or sale talks with sector peer T-Mobile.

Its 6 7/8% notes due 2028 jumped 2¼ points on the day to 111 bid, with over $27 million traded, while its 7 5/8% notes due 2025 were up 1 7/8 points, at 113 7/8 bid, on volume of around $20 million.

Indicators strengthen

Statistical market performance measures were higher across the board ion Tuesday, strengthening after having been mixed for three consecutive sessions; they had turned mixed on Thursday and stayed that way on Friday and Monday, after having been unchanged-to-higher last Wednesday.

The KDP Daily High Yield Index firmed by 1 basis point on Tuesday to 72.29, after having been unchanged on Monday and losing 6 bps on Friday.

Its yield narrowed by 2 bps, to 5.10%, its second straight tightening, having also come in by 4 bps on Monday after widening on Friday by 3 bps.

The Markit CDX Series 28 High Yield Index gained 3/32 point Tuesday to close at 107¼ bid, 107 9/32 offered, after having lost that same amount in Monday’s dealings.

And the Merrill Lynch North American High Yield Index posted its seventh straight advance on Tuesday, improving by 0.054%, on top of Monday’s 0.112% gain.

The latest upturn raised the index’s year-to-date return to 6.671% from 6.614% on Monday, thus establishing a seventh straight new 2017 year-to-date peak level.

© 2015 Prospect News.
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