Ply Gem, Wyndham, W/S price; McDermott delayed; recent deals mixed; funds off $0.62 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 29 – The primary market closed a busy week pricing eight out of nine deals on the calendar and pushing one out to next week.

Ply Gem Holdings Inc. sold a $645 million issue of eight-year senior notes (expected Caa1/confirmed CCC+) at par to yield 8% on Thursday.

Wyndham Hotels & Resorts, Inc. brought a $500 million issue of eight-year senior notes (Ba2/BB-) at par to yield 5 3/8%.

W/S Packaging Holdings Inc. priced an upsized $260 million issue of five-year first lien notes (B3/B) at par to yield 9%.

However, the largest of the deals on the pre-holiday calendar was unable to price before the market came to a close. McDermott International Inc. pushed its downsized $1.3 billion offering of senior notes (B2/B-) into the post-holiday week.

As the primary market cleared $4.7 billion of its $6 billion calendar, several recent deals continued to have mixed performance in the secondary space.

New notes from W/S Packaging, Charles River Laboratories International Inc., Boyne USA, Inc. were off to the races and trading strong on their secondary market debut.

Meanwhile, Coty Inc.’s new notes continued to hover around par and Tronox Inc. and GCP Applied Technologies Inc. were seen trading below their issue price.

Meanwhile high-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – were once more in the red during the most recent reporting week, losing $0.619 billion, according to sources familiar with the fund-flow statistics generated by AMG Data Services Inc.

McDermott delayed

McDermott’s downsized offering of $1.3 billion six-year senior notes (B2/B-) was the only deal in the pre-holiday calendar that was unable to price by the week’s end.

The deal was expected to price on Thursday. The Barclays deal, which was downsized from $1.5 billion in a set of revisions that also saw the elimination of a longer maturity eight-year tranche, widened dramatically during the time it was in the market.

Formal talk in the 10½% area surfaced on Wednesday. Talk was significantly wider than the early guidance of 8 3/8% to 8½%.

The bonds are coming in connection with the merger of McDermott and Chicago Bridge and Iron (CB&I).

The engineering, procurement, and construction companies that specialize in projects for oil and gas companies merged in December in a $6 billion all stock transaction.

Proceeds from the offering will be used to repay debt at both entities and for general corporate purposes.

Coming week’s calendar

The coming week’s calendar is already starting to build with McDermott’s delayed offering and a new deal from American Greetings Corp. on tap.

American Greetings is expected to price $325 million of eight-year senior notes (Caa1/CCC+) on Tuesday.

Deutsche Bank is the lead for the offering from the Cleveland, Ohio-based greeting card producer.

Ply Gem’s deal

Ply Gem Holdings completed its LBO financing deal on Thursday. The Cary, N.C.-based building products manufacturer priced a $645 million issue of eight-year senior notes (expected Caa1/confirmed CCC+) at par to yield 8%.

The yield printed at the wide end of the 7¾% to 8% yield talk. Official talk, in turn, came well wide of the 7% to 7¼% initial guidance.

Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, UBS Investment Bank, Barclays, Goldman Sachs & Co., BofA Merrill Lynch, RBC Capital Markets LLC, Jefferies LLC, MUFG, Natixis, SG CIB and Credit Agricole CIB were the joint bookrunners.

Proceeds will be used to help fund Clayton, Dubilier & Rice’s buy-out of the company, which will take Ply Gem private. The transaction is valued at about $2.4 billion.

Clayton, Dubilier & Rice has also entered into a definitive agreement to acquire Atrium Windows & Doors and combine the company with Ply Gem to create an exterior building products company with total revenue of more than $2.4 billion in 2017, Prospect News reported.

Wyndham comes within talk

Wyndham Hotels priced a $500 million issue of eight-year senior notes (Ba2/BB-) at par to yield 5 3/8%.

The yield printed in the middle of the yield 5¼% to 5½% yield talk.

Lead left bookrunner Barclays will bill and deliver. Deutsche Bank Securities Inc., BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and Wells Fargo Securities LLC were joint bookrunners.

Proceeds will be used to help fund the acquisition of La Quinta Holdings Inc.’s hotel franchise and hotel management businesses for $1.95 billion in cash and for general corporate purposes.

W/S Packaging trades up

W/S Packaging’s five-year first lien notes were seen trading up shortly after pricing an upsized offering.

W/S Packaging priced an upsized $260 million issue of five-year first lien notes (B3/B) at par to yield 9%, according to market sources.

The issue size was initially $250 million.

The yield printed at the wide end of the 8¾% to 9% yield talk; initial guidance was also 8¾% to 9%. BofA Merrill Lynch, Barclays and BMO Capital Markets Corp. were the joint bookrunners.

The 9% notes from the Portland, Ore.-based packaging products company was seen trading up on Thursday. The notes were at 101 bid early in the session and continued to trade higher as the day progressed.

The notes were seen at 101 3/8 bid, 102 1/8 offer shortly before the market close.

Recent deals mixed

New notes from Charles River and Boyne were also strong in the secondary market with both issues seen trading well above their pricing levels.

Charles River’s 5½% senior notes due 2026 were at 101 5/8 bid, 102 1/8 offer late in Thursday’s session. The 5½% senior notes were at 101 3/8 bid on Wednesday.

Charles River priced $500 million of the eight-year senior notes (B1/BB+) at par on Wednesday. The yield printed at the tight end of official yield talk and initial guidance, both of which had been set a 5½% to 5¾%.

The Wilmington, Mass-based company that provides research and development services to pharmaceutical companies will use proceeds to fund the acquisition of MPI Research, a preclinical research company.

Boyne’s new 7¼% senior secured second-lien notes due 2025 (B2/B) continued their upward momentum on Thursday. They were seen at 102 5/8 bid, 103 3/8 offer late in the afternoon. The final trade of the day was 102 5/8.

Boyne’s notes have been in hot demand since pricing on Tuesday. The order book was four times the deal size, sources said.

Boyne priced $400 million of the notes at par on Tuesday, at the tight end of the 7¼% to 7½% yield talk, and inside of the 7½% to 7¾% initial guidance.

The notes were seen as cheap and came with second-lien security and assets, a market source said.

While new notes from W/S Packaging, Charles River, and Boyne were in hot demand and making gains in the secondary market other deals that priced during the week did not have the same reception.

Coty, Tronox not so hot

Coty’s recently priced 6½% senior notes (B2/BB) due 2026 continued to hover around their par issue price and were relative unchanged from Wednesday. The 6½% notes were seen at 100¼ bid, 100½ offer late in Thursday’s session.

The 6 ½% notes were the sole dollar-denominated tranche in a three tranche offering that had been downsized and revised before pricing.

Coty priced a downsized $1.5 billion offering on Wednesday which included a €550 million tranche of five-year notes, a €250 million tranche of eight-year notes, and $550 million of the 6½% notes due 2026 which printed 25 bps beyond the wide end of the 6% to 6¼% yield talk.

Tronox’s 6½% senior notes due 2026 (B3/B-) made slight gains on Thursday after spending much of Wednesday below par. The 6½% notes were seen at 99¾ bid, 100¼ offer late in the session with most trades wrapped around par.

The notes were largely trading in the 99 ¾ to 99 7/8 range on Wednesday. Tronox priced the $615 million issue at par in a quick-to-market trade on Tuesday.

The yield printed at the wide end of yield talk in the 6 3/8% area, which was also the initial guidance.

GCP Applied Technologies’ 5½% senior notes due 2026 (B1/BB-) continued to lose steam on Thursday with the notes dropping below their issue price. The 5½% notes were seen at 99¾ bid, 100½ offer late in Thursday’s session.

The notes were wavering just above par after pricing on Monday.

GCP priced a $350 million issue of non-callable eight-year senior notes (B1/BB) at par to yield 5½% in a quick-to-market trade on Monday, according to market sources.

The yield printed in the middle of yield talk in the 5½% area. Initial talk had the deal coming to yield 5½% to 5¾%.

Proceeds from the offering are being used to help fund the repurchase of the Cambridge, Mass-based construction products manufacturer’s 9½% senior notes due 2023.

Week totals $4.81 billion

With Thursday’s deals completed, the holiday-shortened week saw a total of $4.81 billion of new issuance.

Although there were just four trading session, the week’s total was more than double the $1.85 billion that the previous week’s five sessions managed.

The latest week pushed the year-to-date total up to $60.29 billion in 114 tranches, still lagging the 2017 pace of $79.60 billion in 138 tranches by a substantial margin.

Indexes

The KDP High Yield Daily index was largely flat on Thursday with the price remaining at 70.20 but the yield shaving off 1 bps to return to 5.90%.

The Merrill Lynch High Yield index gained 48 bps on Thursday with its negative year-to-date return improving to 0.931% after an 88 bps drop on Wednesday pushed the negative year-to-date to 0.979%.

The CDX high yield 29 index was up 43.8 bps on Thursday recouping its 25.7 bps loss on Wednesday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.