Meritage Homes high yield bonds price at par to yield 7%; terms

Meritage Homes today completed an offering of senior notes via bookrunners Citi, Deutsche Bank, J.P. Morgan, and Bank of America, according to sources. Terms were inked at the tight end of talk with a $50 million upsizing, to $300 million total. Proceeds from the new deal back a cash tender offer for the company’s $285 million issue of 6.25% notes due 2015, which launched this morning. Total consideration is $1,013 per bond, including a $10 consent fee, versus the current call price, at $1,010.40, the company said. The tender runs until April 23. Scottsdale, Ariz.-based Meritage Homes builds and sells single-family detached homes in Arizona, Texas, California, Nevada, Colorado, Florida, and North Carolina. Terms:

Issuer Meritage Homes Corp.
Ratings B+/B1
Amount $300 million
Issue senior notes (144A)
Coupon 7.00%
Price 100
Yield 7.00%
Spread T+481
FRN eq. L+475
Maturity April 1, 2022
Call nc-life
Trade March 27, 2012
Settle April 10, 2012 (T+9)
Joint Bookrunners Citi/DB/JPM/BAML
Px talk 7-7.25%
Notes w/ change-of-control put @ 101; carries T+50 make-whole call; upsized by $50 million.

Cengage Learning roadshows $575M high yield bond offering to repay bank debt

Cengage Learning‘s secured notes offering is launched to market and is expected to price at the end of the week via a J.P. Morgan-helmed bookrunner group that includes Deutsche Bank, Morgan Stanley, RBC, and UBS, according to sources. As rumored last week, the transaction is coming under Rule 144A for life and proceeds will be used to repay B term loans.

Expected ratings are B/B2, and structure is eight-year (non-call four), sources note.

Cengage is the latest credit in market this year with secured notes backing institutional repayments. Indeed, already this year, of the $15.9 billion in bond-for-loan takeouts, roughly 60% came in the form of secured notes, according to LCD.

Cengage last week sweetened terms of its coordinated amend-to-extend in the loan market. The deal was said to have generated interest at original terms, but changes were being offered to maximize the amount of extended dollars. Pricing on the extended loans will be raised to L+550, from L+500, and 50 bps of MFN protection has been added to the extended loans, according to sources.

Existing Cengage bonds were under pressure last week amid heavy market conditions and following a downgrade to CCC, from CCC+, due to an increase in average cost of debt after the A-to-E in the loan market. While the transaction pushes out maturities, it also diminishes pro forma EBITDA coverage of interest expense and discretionary cash flow, according to S&P, which also cut the corporate credit rating one notch, to B, with a stable outlook.

The company’s 10.5% notes due 2015 were off roughly two points, at 82/83, but over the week levels deteriorated further, to an 80 context, according to S&P Capital IQ. Still, that’s above valuation in the high 70s before the A-to-E was revealed on Feb. 27 at the J.P. Morgan high-yield and leveraged-finance conference.

Roughly $1.215 billion of 10.5% senior notes, $233.6 million of 13.25% subordinated discount notes, and $127 million of 13.75% senior PIK notes all mature in 2015. Moody’s rates the company at B3, with a stable outlook, and has the various bonds at Caa2. – Matt Fuller


LyondellBasell Industries NV (chemicals) completes 2-part offering; terms

LyondellBasell today completed a two-part offering of senior notes, according to sources. Joint physical bookrunners on the deal are J.P. Morgan (B&D) and Credit Suisse, alongside bookrunners Barclays, Bank of America, Citi, Deutsche Bank, HSBC, ING, Morgan Stanley, and Wells Fargo, according to sources. Pricing came at the wide end of talk for the shorter dated tranche and 12.5 bps wide of talk for the longer tranche. Net proceeds from the offering, together with cash on hand, will be used to repurchase all of the company’s existing 8% secured notes due 2017, which were the Chapter 11 exit financing paper, and 11% secured notes due 2018, which were the company’s DIP-roll-up claims issuance. Terms:

Issuer LyondellBasell Industries
Ratings BB+/Ba2
Amount $2 billion
Issue senior notes (144A)
Coupon 5.00%
Price 100
Yield 5.00%
Spread T+337
FRN eq. L+319
Maturity April 15, 2019
Call nc-life
Trade March 26, 2012
Settle April 9, 2012 (T+10)
Joint Physical Books JPM/CS
Joint Bookrunners Barc/BAML/Citi/DB/HSBC/ING/MS/WF
Co’s. Miz,Scot,SMBC,Uni
Px talk 4.875-5%
Notes carries T+50 make-whole call to 90 days before maturity, then callable at par; w/ change-of-control put @ 101.
Issuer LyondellBasell
Ratings BB+/Ba2
Amount $1 billion
Issue senior notes (144A)
Coupon 5.75%
Price 100
Yield 5.75%
Spread T+323
FRN eq. L+316
Maturity April 15, 2024
Call nc-life
Trade March 26, 2012
Settle April 9, 2012 (T+10)
Joint Physical Books JPM/CS
Joint Bookrunners Barc/BAML/Citi/DB/HSBC/ING/MS/WF
Co’s. Miz,Scot,SMBC,Uni
Px talk 5.5% area
Notes carries T+50 make-whole call to 90 days before maturity, then callable at par; w/ change-of-control put @ 101.

Avis Budget Car Rental: add-on notes price at 103.5 to yield 7.33%. Terms

Avis Budget Car Rental today completed a reopening of its 8.25% notes due 2019 via bookrunners Barclays, Bank of America, Deutsche Bank, and J.P. Morgan, according to sources. Final terms printed at the tight side of guidance and at the target size of $125 million. The car rental company will use proceeds to repay a portion of its 7.625% notes due 2014, which are currently callable at 101.91, stepping down to par on May 15. Originally totaling $375 million when it was issued in 2007, the total outstanding is now $200 million. The additional notes bring the total outstanding to $725 million. Terms:

Issuer Avis Budget Car Rental
Ratings B/B2
Amount $125 million
Issue add-on senior notes (144A)
Coupon 8.25%
Price 103.5
Yield 7.329%
Spread T+569
FRN eq. L+550
Maturity Jan. 15, 2019
Call nc2.5
Trade March 26, 2012
Settle March 29, 2012 (T+3)
Books Barc/BAML/DB/JPM
Px talk 7.375% area
Notes w/ equity clawback for 35% @ 108.25 until 10/15/13; w/ change-of-control put @ 101; carries T+50 make-whole call; issue now $725 million.


Mohegan Tribal Gaming Authority completes private bond exchange, trading near par

Mohegan Tribal Gaming Authority completed its private bond exchange earlier this month, and the stub pieces of old notes continue to trade in small lots. Today, for example, the 8% notes due on April 1 have traded at 99, trade data show.

There is only $66.4 million left outstanding in what was a $250 million issue after the bond swap. Investors received a portion of a $417.8 million issue of 10.5% third-lien notes due 2016, according to the firm.

The other $250 million short-tenor issue that was swapped into the 10.5% notes was the Mohegan 6.125% notes due 2013. There is now just $9.6 left outstanding, but small blocks traded yesterday at 91, trade data show.

Both issues were trading in the low 80s after the exchange was launched, versus the high 60s at the outset of the year.

S&P earlier this month assigned a CCC rating to the new notes after raising the issuer rating to B-, from SD. The new paper is pegged at 86.375, according to S&P Capital IQ.

In addition, two subordinated note issues due in 2014 and 2015 were swapped into a $344.2 million issue of 11% subordinated toggle notes due 2018. This exchange paper also netted a CCC rating and is pegged at 74.25, according to S&P Capital IQ.

The Tribe’s $200 million issue of 11.5% second-lien notes due 2017 was exchanged into an identical issue under the debt-swap arrangement. Ratings are also CCC/NR, and valuation is 102.25, according to S&P Capital IQ.

Mohegan completed the exchange after eight extensions of the deadline and eventually after lowering the minimum participation levels required for closing via dealer manager Credit Suisse. The changes came after the Authority negotiated with an original group of bondholders that had locked themselves into the exchange in January, sources said.

A $225 million first-lien facility and an amend-and-extend for a revolving credit facility was finished simultaneously, as per the requirements of the exchange, the SEC filings show.


S&P: Global corporate defaults at lowest level in 4 years

In 2011, 53 global corporate issuers defaulted, down from 81 defaults in 2010 and the record high of 265 in 2009, according to an article published by Standard & Poor’s Global Fixed Income Research, titled “2011 Annual Global Corporate Default Study And Rating Transitions.”

All but one of the defaulted companies in 2011 that began the year with active ratings (44) came from the speculative-grade universe. Of the remaining nine, Standard & Poor’s Ratings Services assigned ratings on five companies during 2011, and four began the year with withdrawn ratings. Also, of the 53 total defaulters, 47 were initially rated speculative grade, with the majority (39) from the ‘B’ and ‘CCC’/’C’ rating categories.

“At the end of December 2011, the speculative-grade default rates fell to 1.98% in the U.S., 0.59% in the emerging markets, and 5.98% in an assorted grouping of other developed markets,” said Diane Vazza, head of Standard & Poor’s Global Fixed Income Research. “In Europe, however, the default rate rose slightly at year-end 2011, to 1.6%. When including all rated entities, the global default rate declined to 0.75% in 2011 from 1.15% a year earlier.”

The report is available to subscribers of RatingsDirect on the Global Credit Portal at If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to [email protected].



Jaguar Land Rover high yield bonds price at 99.289 to yield 8.375%

Jaguar Land Rover today placed a £500 million offering of eight-year (non-call four) unsecured bonds through Citi, Credit Suisse (B&D), J.P. Morgan, Morgan Stanley, and Standard Chartered as joint physical bookrunners. The bonds priced at the mid-point of 8.25-8.5% guidance, offering a new-issue premium to its outstanding sterling 8.125% notes due 2018, which earlier today were quoted at around 7.9% on a yield-to-worst basis. Proceeds will be used for general corporate purposes. Terms:


Issuer Jaguar Land Rover
Ratings B+/B1 (expected)
Amount £500 million
Issue Unsecured notes
Coupon 8.25%
Price 99.289
Yield 8.375%
Spread G+647
FRN eq. L+613
Maturity March. 15, 2020
Call nc4
Trade March. 22, 2012
Settle March. 27, 2012
Books Citi, CS (B&D), JPM, MS, StdChart
Px talk 8.25-8.5%
Notes Callable 104.125, 102.063, then par

Cenveo, in 11th-hour high yield effort, sees bond, share prices plummet

Cenveo’s planned $450 million bond issue as part of its plan to take out three outstanding issues is being reworked in an eleventh-hour push several days after the roadshow ended, according to sources. Guidance on an eight-year (non-call four) transaction was pitched last week at 11.5-11.75%, however several variations on size, structure, and yield have been shopped to investors amid delayed execution, sources add.

The existing bonds involved aren’t trading yet, but were being quoted yesterday in the mid-90s, versus around par earlier in the week, sources said, while the CVO shares trading on the NYSE have plunged nearly 10% yesterday, to $3.85, bringing the decline since March 13 to 26%, trade data show.

Investors relay that deal manager Bank of America last week pitched a new structure involving a $300 million issue along with a $75 million convertible credit facility backstopped by the Burton Family, a major Cenveo shareholder, but that’s still uncertain. And talk for the offering had moved up to the mid-12%, sources add.

Bank of America, which helms the bookrunner group including Morgan Stanley, Macquarie, and Barclays, told several investors that the book on the CCC+/Caa2 bond deal was half done late last week, buyside sources said. As such, the underwriters in yet another iteration may reduce the target to $225 million, the sources add.

The Stamford, Conn.-based printing company has upcoming maturities it was aiming to address with this tender. The launch of a tender offer boosted valuation of the paper to around par, from distressed prices a little more than a month ago.

Both subordinated issue are rated CCC+/Caa2 and the 2013s were quoted in the 95 context earlier this morning, down from above par yesterday, sources said, but up from an 80 context in January. And note the 7.875% notes had dipped as low as the high 60s in October, trade data show.

Cenveo outlined its original tender offer, including for its $165 million issue of 10.5% senior notes due 2016 at 101 on Feb. 29, but eventually upped the offer to 105.25, according to company filings. The offer also proposed to buy back $271.1 million of 7.875% subordinated notes due 2013 and $23.2 million of 8.375% subordinated notes due 2014 at $1,002.50 per bond.

An early tender premium of $30 per note applies to all three issues. The early deadline was March 13, and the tender expires at 5:00 p.m. EDT on March 27.

Cenveo has bank debt, second-lien notes, and senior and subordinated notes, which contain a mix of covenants governing repayments and dividends. The most recent tap was two years ago with the $400 million issue of B-/B3 second-lien 8.875% notes due 2018 to repay bank debt. Issuance was at 99.3, but it traded at 93 yesterday, yielding 10.5%, trade data show. Max Frumes



Fresenius high yield bonds enter trading mart at 99.75, versus par re-offer

Fresenius 4.25% high yield bonds due 2019 broke in the secondary yesterday to be wrapped around 99.75, versus par reoffer, according to sources. The new bonds entered a softer secondary, with the iTraxx Crossover widening to 570 as Spanish and Italian government bond yields widened.

The €500 million offering inked in line with guidance, with pricing having been moved forward to today from Thursday due to strong demand for the issue, sources added.

As reported, the deal comes via joint bookrunners Deutsche Bank (B&D), Bayern LB, Commerzbank, LBBW, and RBS, alongside co-lead managers BBVA, BNP Paribas, DNB Markets, DZ Bank, Helaba, HSBC, Mediobanca, Mizuho, RBI, SMBC Nikko, Societe Generale CIB, and West LB.

Fresenius is a familiar issuer for the European high-yield market, and its bonds are tightly held and rarely trade, sources noted. The existing bonds all yield less than 5%: the 8.75% notes due 2015 yield to maturity 3.5%; the 5% notes due 2013 yield to maturity 1.33%; and the 5.5% notes due 2016 yield to maturity 3.6%.

Fresenius is an international healthcare group that provides products and services for dialysis, hospital and outpatient medical care. Proceeds from the current offering will be used for acquisitions, including the acquisition of Damp Group, as well as for refinancing short-term debt and general corporate purposes. – Sohko Fujimoto


Fiat Finance & Trade high yield bonds price at par to yield 7%; terms

Fiat Finance & Trade today placed an €850 million offering of five-year unsecured bonds through Banca IMI, Barclays, Credit Agricole CIB, Commerzbank, Goldman Sachs, Natixis, and Unicredit. The bonds priced in line with guidance of 7% area, and from a book of more than €2.2 billion from over 350 orders. The new issue comes with a roughly 30 bps new-issue premium versus its outstanding 6.375% notes due 2016 and 7.375% notes due 2018, according to the leads. Proceeds will be used to refinance upcoming bond maturities. Terms:


Issuer Fiat Finance & Trade
Ratings BB/Ba3/BB
Amount €850 million
Issue Unsecured notes
Coupon 7%
Price 100
Yield 7%
Spread B+594
FRN eq. E+530
Maturity March. 23, 2017
Call nc-life
Trade March. 20, 2012
Settle March. 23, 2012
Bookrunners Bca IMI, Barc (B&D), CA, Cmz, GS, Nat, Uni
Px talk 7% area