Aston Martin, EQT, Smyrna price; PetSmart pulls offering; MotorCity outperforms

By Abigail W. Adams

Portland, Me., Oct. 30 – As the sell-off continued to accelerate in the high-yield space, the primary market continued to crank out deals with three issuers clearing the market.

Aston Martin Lagonda Global Holdings plc subsidiary Aston Martin Capital Holdings Ltd. priced a reconfigured $1,085,500,000 offering of five-year senior secured notes (Caa1/CCC).

EQT Corp. priced an upsized $350 million of eight-year senior bullet notes (Ba3//BB).

And Smyrna Ready Mix Concrete, LLC priced an upsized $830 million offering of eight-year senior secured notes (B1/B+).

However, PetSmart LLC and PetSmart Finance Corp. pulled their $2.65 billion megadeal from the market amid investor pushback and market volatility, a source said.

The pulled offering sent PetSmart’s outstanding notes into a tailspin with the capital structure down 1 to 3 points.

While the overall market was under pressure with panic beginning to set in, the deals to price on Friday were performing well on the break, sources said.

CCM Merger Inc. (MotorCity)’s recently priced 6 3/8% senior notes due 2026 (Caa1/B+) were a bright spot on a dark day with the notes trading up to a 102-handle.

The forward calendar is all but empty heading into the Nov. 2 week.

Franchise Group Inc. had been slated to price its $650 million offering of five-year senior secured notes on Friday. However, there were no updates on the deal as of press time.

While the volatility is expected to continue, there may still be some deals in the week ahead, a source said.

Aston Martin widens

Aston Martin priced a reconfigured $1,085,500,000 offering of five-year senior secured notes (Caa1/CCC) at par to yield 10½%.

Pricing came at the midpoint of widened price talk in the 10½% area.

Initial talk for both tranches was in the high 8% area to 9%.

The deal was restructured to a single dollar-denominated tranche from a two-tranche £840 million equivalent offering.

Call protection was also extended to four years from two years.

While the deal was reconfigured and price talk widened, the offering was heavily oversubscribed, a source said.

However, the deal was also very “clubby,” a source said.

The 10½% notes saw a strong break with the notes trading up to 101, sources said.

“It’s a 10½% yield, so that’s no surprise,” a source said.

EQT oversubscribed

EQT priced an upsized $350 million, from $300 million, issue of eight-year senior bullet notes (Ba3//BB) at par to yield 5%.

Pricing came tighter than talk in the 5¼% area.

Early whispers had the deal coming in the mid-5% area.

The deal was heavily oversubscribed with orders of up to $1.2 billion in the early afternoon, a source said.

The notes also saw a strong break and were poised to close the day at par ¾, a source said.

Smyrna flat

Smyrna priced an upsized $830 million, from $515 million, offering of eight-year senior secured notes (B1/B+) at par to yield 6%.

Pricing came at the wide end of talk for a yield of 5¾% to 6%. Initial talk was in the 5% area.

The deal was initially announced as a $515 million offering, but proceeds from a withdrawn $315 million term loan were shifted to the notes.

The notes fell flat in the aftermarket and were largely wrapped around par heading into the market close.

PetSmart pulls offering

PetSmart pulled their $2.65 billion megadeal from the market amid investor pushback and market volatility, a source said.

The pulled deal sent the pet specialty product retailer’s outstanding notes into a tailspin.

PetSmart’s 7 1/8% senior notes due 2023 were down 2¼ points to close the day at 98½, a source said.

More than $26 million of the bonds were on the tape.

The notes traded up to 101 5/8 on Monday after PetSmart announced its new offering.

PetSmart’s 8 7/8% senior notes due 2025 dropped 3 points to par ½ with more than $32 million of the bonds on the tape.

The notes closed Monday at 104 3/8.

Proceeds from the deal, together with proceeds from a new term loan and a $1.3 billion contribution to PetSmart’s equity, were to be used to redeem, repurchase and repay the full amount of its existing term loans and its three outstanding tranches of senior notes.

The secondary space

The sell-off in the secondary space continued to gain speed on Friday with panic beginning to sink it.

“It’s pretty ugly,” a source said.

The ETF outflows have been brutal.

“There’s plenty of action every day and the equity tape certainly isn’t helping,” another source said.

Several names, particularly in the energy sector were getting smacked with market players attempting to reduce their risk heading into the election.

Sellers were outnumbering buyers nearly 3-1, a source said.

However, while the tone in the secondary space was heavy, MotorCity’s recently priced 6 3/8% senior notes due 2026 (Caa1/B+) were a bright spot.

The 6 3/8% notes traded up to a 102-handle and stood poised to close the day at 102½ bid, a source said.

There was more than $34.5 million of the bonds on the tape during Friday’s session.

CCM Merger, which owns and operates MotorCity Casino Hotel in Detroit, priced a $275 million offering of the 6 3/8% notes at par on Thursday.

Pricing came tighter than the 6½% to 6¾% yield talk. Early guidance was in the high-6% area.

Indexes down

Indexes closed the week with losses.

The KDP High Yield Daily index dropped another 10 points to close Friday at 66.06 with the yield now 5.65%.

The index was down 12 bps on Thursday, 35 bps on Wednesday, 5 bps on Tuesday and 11 bps on Monday.

The index posted a cumulative loss of 73 bps on the week.

The ICE BofAML US High Yield index shaved off 2.5 bps with the year-to-date return now 0.168%.

The index gained 1.6 bps on Thursday after dropping 69.9 bps on Wednesday, 8.3 bps on Tuesday and 30 bps on Monday.

The index posted a cumulative loss of 109.1 bps on the week.

The CDX High Yield 30 index dropped another 15 bps to close Friday at 103.5.

The index was down 15 bps on Thursday, plummeted 112 bps on Wednesday after dropping 16 bps on Tuesday and 67 bps on Monday.

The index posted a cumulative loss of 210 bps on the week.

© 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.