RegionalCare, Fresh Market price; NBTY, other new deals lead trading; AMD up on news

By Paul A. Harris and Stephanie N. Rotondo

Seattle, April 22 – Two new deals priced in the high-yield primary on Friday but activity was muted as Passover began, causing a lot of market participants to be out of their offices.

The day’s volume came to a total of $1.59 billion.

RegionalCare Hospital Partners Holdings, Inc. priced an $800 million issue of seven-year senior secured notes (B1/B) at par to yield 8¼%. Fresh Market also priced an $800 million issue, bringing 9¾% seven-year first-priority senior secured notes to yield 9.951%, wider than talk.

In the secondary, high-yield debt investors continued to focus their attention on recently priced deals as the week came to a close.

“It was all new issues,” a trader said. Another trader said that NBTY Inc.’s $1.08 billion of 7 5/8% notes due 2021 in particular were “really active.

“It exceeded volume on everything else by a good bit,” he said.

That issue priced Thursday.

Away from new deals, Advanced Micro Devices Inc.’s bonds got a sizeable boost following news announced late Thursday. Not only did the chipmaker report first-quarter earnings that, while not stellar, were certainly better than expected. It also announced a new joint venture that got the market excited.

One trader said the name was the day’s “big outlier in price.”

Meanwhile, market indicators were mixed as Friday’s session came to a close.

The KDP High Yield Index ended at 67.4, with a 6.21% yield. That compared to Thursday’s reading of 67.44, with a 6.18% yield.

But the Markit Series 26 CDX North America High Yield Index ticked up slightly to 103.38 bid, 103.5 offered, according to a market source.

RegionalCare comes mid-talk

In the primary, both of the day’s new deals came with face amounts of $800 million and both were marketed on roadshows.

Neither one was upsized.

One priced in the middle of talk while the other came wide of talk.

RegionalCare Hospital Partners priced an $800 million issue of seven-year senior secured notes (B1/B) at par to yield 8¼%.

The yield printed in the middle of the 8 1/8% to 8 3/8% yield talk.

The offering also underwent covenant changes before pricing.

The merger deal played to $1.25 billion of orders, market sources said.

Barclays was the lead left bookrunner. RBC, Deutsche Bank, Credit Suisse, UBS and Citigroup were the joint bookrunners.

Fresh Market comes wide

Fresh Market also priced an $800 million issue.

The St. Louis-based specialty food retailer’s new 9¾% seven-year first-priority senior secured notes (Ba2/B) came at 99.00 to yield 9.951%, 20 basis points beyond the wide end of the 9½% to 9¾% yield talk.

Demand for the acquisition financing deal was not believed to have significantly exceeded its size, sources said.

Joint bookrunner Barclays will bill and deliver. RBC, Jefferies, Macquarie and UBS were also joint bookrunners.

Trilogy for Monday

The Friday session came with one new deal announcement.

Trilogy International Partners LLC plans to price a $450 million offering of three-year senior secured notes (Caa1) on Monday via Deutsche Bank.

Market sources remarked upon the deal’s novel three-year non-call six-months structure.

However the offer appears to be circled up, according to a trader who was advised by a salesman that no Trilogy International bonds would be for sale.

The Bellevue, Wash.-based wireless telecommunications company – with operations in Latin America, the Caribbean and New Zealand – plans to use the proceeds to refinance its 10¼% senior secured notes due Aug. 15, 2016.

The week ahead

Canvassing sources for deal tips on the week ahead turned up only names already in the pipeline.

PQ Corp. is roadshowing a $500 million offering of 6.5-year springing-maturity senior secured notes (B2/B+).

Citigroup is the left bookrunner.

Official talk has yet to surface, however initial guidance is 7¼% to 7½%, a trader said.

Corral Petroleum Holdings AB (Preem) was set to wrap up the European roadshow for its $700 million equivalent offering of five-year PIK toggle notes on Friday.

The deal will be sold in dollar- and euro-denominated tranches.

A U.S. roadshow is scheduled to get underway in the week ahead.

Early guidance is 11% to 12% on the dollar-denominated tranche, according to a trader who added that the buzz in the market is that the Preem deal is facing some headwinds.

Deutsche Bank has the books.

Beyond those deals, which are already on the active forward calendar, look for McGraw-Hill Global Education Holdings LLC to roll out a $640 million offering of eight-year senior notes (B3//BB-) via Credit Suisse, sources said on Friday. The deal could be sized at $670 million, a trader said.

And YUM! Brands is expected to show up with new bonds announced in a press release that ran in the latter part of the week just concluded. Look for Barclays to be involved in the bond offer, a portfolio manager said.

The week ahead, Passover Week, could be a quiet one in the new issue market, a trader said.

However primary market activity is expected to ramp up considerably during the first week in May, the source added.

Mixed flows on Thursday

Cash flows for dedicated high-yield bond funds were mixed on Thursday, the most recent session for which data was available at press time, a trader said.

High-yield ETFs sustained $338 million of outflows on the day.

However actively managed funds saw $35 million of inflows on Thursday.

The news follows Thursday afternoon’s report from Lipper US Fund Flows that dedicated high-yield funds saw $410 million of inflows for the week to Wednesday’s close.

The lion’s share of that amount, $386 million, flowed into high-yield ETFs, a market source said.

Away from the junk bond asset class, dedicated bank loan funds sustained $85 million of daily outflows on Thursday.

NBTY takes the cake

NBTY’s new 7 5/8% notes due 2021 easily dominated the day’s trading, according to traders.

“There were tons of trades,” one trader said, though he added that he believed most of the activity in the name occurred early in the day.

He pegged the issue at par 5/8.

Another trader saw the bonds closing in a “par ½ to par ¾ kind of ZIP code.”

Proceeds will be used to repay debt and breakage costs.

The issuer is a Ronkonkoma, N.Y.-based manufacturer, marketer, distributor and retailer of vitamins and nutritional supplements.

Among other deals form the week, Altice NV’s $2.75 billion of 7½% notes due 2026 also continued to be busy, though the paper slipped a touch to par ¼, according to a trader. It had closed at 101 on Thursday, unchanged on the session in “heavy volume.”

Altice brought that deal on Monday.

Another active new deal was Protection 1’s $3.14 billion of 9¼% second-priority senior secured notes due 2023, which came late Wednesday.

It was seen falling over 1½ points to 101 5/8 in Friday’s trading.

Other traders had seen a much lower close on Thursday, one putting the close that day at 101 7/8, up a point on the session but off the day’s high of 103. Another saw it end at 101¾, having hit levels of 102¾ to 103 earlier that day.

Advanced Micro jumps

Among bonds that have been hanging around longer, Advanced Micro Devices debt “popped a bunch,” a trader said Friday.

The gain came after the company announced its first-quarter results, as well as a new Chinese joint venture.

Post-news, the trader said the bonds improved 7 to 10 points.

He saw the 6¾% notes due 2019 adding 7 points to close at 85. The 7¾% notes due 2020 meantime put on about 10 points to end in the low-80s.

As for the 7% notes due 2024, the trader said they moved up to a 75 to 76 context, which compared to levels around 66 on Thursday. The 7½% notes due 2022 had a similar move, pushing up to 78 from 68.

At another desk, a trader said the 6¾% notes were “pretty active,” trading around 85½. The 7¾% notes were seen at 81, the 7% notes at 76 and the 7½% notes at 77 7/8.

Yet another market source called the 7½% notes up almost 9 points at 78½ bid.

For the quarter, the Sunnyvale, Calif.-based company posted a net loss of $1.09 million, or 14 cents per share. On an adjusted basis, the loss narrowed to $96 million, or 12 cents per share.

The adjusted loss compared to a loss of $73 million, or 9 cents per share, the year before.

Revenue declined over 19% to $832 million.

However, analysts had forecast an adjusted loss of 13 cents per share on revenue of $818.2 million.

AMD also said that it expects second-quarter revenue to increase by as much as 15% sequentially.

But perhaps even better news was word that AMD had inked a deal to form a joint venture with China-based Tianjin Haiguang Advanced Technology Investment Co., Ltd. to develop SoCs – or systems on a chip – tailored to the Chinese server market.

The deal will garner AMD an extra $298 million.

As for the earnings, Gimme Credit LLC analyst Dave Novosel noted that while the numbers on their face were not overly impressive, there were some positive signs, such as the fact that revenue was down only 19%, versus the 20%-plus declines seen in the last five quarters. Novosel also noted that cash burn was less than it has been of late, helped in part by expense cutting efforts.

Novosel deemed news of the joint venture “more significant,” however, than the earnings.

© 2015 Prospect News.
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