Monier announces €250M offering of secured bonds

Monier, a global leader in clay and concrete tiles for roofing, has announced plans to issue a €250 million offering of seven-year (non-call three) secured bonds via J.P. Morgan (B&D) and Deutsche Bank as global coordinators and BNP Paribas, Morgan Stanley, and UniCredit as joint bookrunners.

A European roadshow is scheduled for April 30 through May 3, with pricing thereafter.

Proceeds will be used to refinance bank debt. Ratings have yet to be confirmed.

As reported earlier this week, Monier received strong support for its amend-to-extend, with lenders holding more than 95% of the senior facilities approving the request.

The company currently has €680 million of debt outstanding under its reinstated senior debt facility due April 2015. This existing debt pays a margin of 25 bps cash and 2% PIK. The margin on the extended debt will rise to E+450, all cash-pay. Monier has also raised a new €150 million, super-senior revolver from a group of banks.

The A-to-E also included a provision to issue a secured bond in order to prepay amounts under the senior debt facilities, that will be weighted to the extended debt. The debt extension request is subject to this prepayment taking place.

Monier generated revenues of €1.392 billion in 2011, to give EBIT of €25.2 million, against revenues of €1.28 billion in 2010 and EBIT of negative €39.1 million. The company has €233.2 million of cash on its balance sheet. – Luke Millar/Ruth McGavin


More cash pours into high yield bond funds, though inflows are ETF-heavy

Data from EPFR Global show a $747 million cash inflow to U.S.-domiciled high-yield mutual funds and exchange-traded funds in the week ended April 25, by the weekly reporters only. A two-week inflow streak totaling $1.34 billion has now wiped out the outflow of $1.17 billion three weeks ago, which itself was the first outflow of the year, and, in fact, the first outflow after an 18-week inflow streak totaling $18.9 billion.

(You can read about how ETFs work here: LCD’s online Loan Market Primer.)

The four-week trailing average rises again, to positive $187 million, from positive $147 million last week, and versus negative $292 million the week prior to that. The latter was the first negative reading in the four-week average in 17 weeks.

The influence of ETFs is heavy again in today’s reading, with ETF flow accounting for $386 million, or 52% of the total inflow during the week. Last week it was 49% of the outflow, and it’s averaged 41% of flow per week.

For the year-to-date reading, it’s positive $18.9 billion, by the weekly reporters only. The ETF-only flow accounts for 42% of the sum, or roughly $6.7 billion, according to EPFR.

Market momentum through Wednesday was also positive, and net asset value expanded $751 million. That’s based on $171.9 billion of total assets of the weekly reporter sample, versus $170.5 billion at the end of the prior week, and stripping out the inflow figure. Net assets are up 18% so far this year after the 18% gain in 2011, according to EPFR. – Matt Fuller


Chesapeake Energy high yield bonds volatile after co. sets review of CEO loans

Chesapeake Energy shares yesterday gained nearly 2%, to $18.44, and various bonds from the prolific issuer spiked, then retreated, on news that the company is reviewing financing arrangements between the CEO and lenders. As well, the company said it is negotiating with the CEO to terminate early the controversial well-investment agreement, according to a statement.

Chesapeake 6.775% notes due 2019 traded half a point higher, at 98.5, on the news, only to retreat to either side of 98, according to sources and trade data. Likewise, the 6.125% notes due 2021 are now at 94.75/95.75, versus prints at 95.5 yesterday and 95.875 on Wednesday, trade data show.

The Chesapeake board of directors agreed to not renew the Founder Well Participation Program with CEO Aubrey McClendon when the 10-year deal terminates in 2015, and parties are in negotiation about early termination, according to the company statement. As well, McClendon agreed to disclose information regarding his interests in the program and related third-party loans for review by the board of directors.

The FWPP gave McClendon the unique opportunity to invest for a 2.5% interest in each of the company’s oil and gas wells. McClendon reportedly drew $1.1 billion in loans over the past three years to make the investments, according to a Reuters report last week that called it “an unusual corporate perk,” torpedoing bonds in the secondary market. Indeed, the 6.775% notes were in a 99 context prior, while the 6.125% notes were two points higher than current valuation.

The issue raised was that McClendon was using the FWPP investment as collateral on the loans, which raises questions about the value of bondholder collateral, sources said.

In addition to today’s statement about termination of the program and initiation of a review of the financing arrangements, Chesapeake clarified last week’s statement issued by its general counsel. The statement that the board is “fully aware of the existence” of McClendon’s participation in the program was intended to convey that the board is “generally aware,” according to the statement.

“The Board of Directors did not review, approve, or have knowledge of the specific transactions engaged in by Mr. McClendon or the terms of those transactions,” the statement noted.

Chesapeake bonds have also been under pressure in recent months amid the plunge in natural-gas prices to 10-year lows, with the one-month contracts for delivery at the Henry Hub in Louisiana around $2 per million British thermal units, down from $3 at the beginning of the year and around $4 last fall. The benchmark 6.625% notes, for example, were trading in a 111 context in October, falling to around par earlier this month and yesterday were as low as 97-98, trade data show. – Matt Fuller



Ineos Finance bonds price at par to yield 7.5%; terms

Ineos Finance this afternoon completed an offering of secured notes at the tight end of talk, at 7.5%, according to sources. The $775 million deal represents a downsizing from an initial target of $2.2 billion, split between dollar-denominated and euro-denominated tranches. The euro tranche was dropped, and the loan package grew to a $3.025 billion crossborder transaction, from the initial target for $1.5 billion, sources note. Both sides of the transaction saw heavy demand. The B+/B1 bonds priced tight to talk that had been revised 12.5 bps thinner, and nonetheless an early read from the gray market shows follow-on demand, with markets signalling as much as a two-point gain on the break, sources add. J.P. Morgan (B&D) and Barclays are global coordinators, with Goldman Sachs and UBS as underwriters, according to sources. Proceeds from the combined package are aimed at taking out the U.K.-based chemicals company’s existing senior facilities in entirety. Terms:

Issuer Ineos Finance
Ratings B+/B1
Amount $775 million
Issue secured notes (144A)
Coupon 7.5%
Price par
Yield 7.5%
Spread T+594
FRN eq. L+570
Maturity May 1, 2020
Call nc3
Trade April 26, 2012
Settle May 4, 2012 (t+6)
Books JPM (B&D) / Barclays
Jt. Books GS/UBS
Px talk 7.5-7.625% (revised fro 7.375-7.625%)
Notes first call at par plus 75% coupon; downsized in favor of more term debt; euro-tranche dropped.

Tenet Healthcare places 2 add-on note issues for share repurchase

Tenet Healthcare today announced that it has completed two private placement add-on issues of notes and will use proceeds to repurchase $299 million of mandatory convertible preferred shares, according to a company statement. Bank of America was bookrunner for the transactions, sources note. “This repurchase of preferred stock avoids the potential issuance of up to 51 million additional common shares later this year,” explained CEO Trevor Fetter in today’s statement. Both pricing points represent a 2.75-point discount to the outstanding paper, according to S&P Capital IQ. Terms:

Issuer Tenet Healthcare
Ratings BB-/B1
Amount $141.2 million
Issue add-on secured notes (144A)
Coupon 6.25%
Price 101
Yield 6.062%
Spread T+474
FRN eq. L+448
Maturity Nov. 1, 2018
Call nc-life
Trade April 25, 2012
Settle April 30, 2012 (t+3)
Books BAML
Notes total now $1.041 billion; original $900 million priced @par Nov. 4, 2011
Issuer Tenet Healthcare
Ratings CCC+/Caa1
Amount $150 million
Issue add-on senior notes (144A)
Coupon 8%
Price 99.75
Yield 8.039%
Spread T+671
FRN eq. L+647
Maturity Aug. 1, 2020
Call nc3 (originally nc5)
Trade April 25, 2012
Settle April 30, 2012 (t+3)
Books BAML
Notes total now $750 million; original $600 million priced @par Aug. 3, 2010



Affinity Gaming (Herbst) slates loans, bonds to refinance Ch. 11 exit debt

affinity gaming logoAffinity Gaming is due to head out on the road today with a $200 million offering of eight-year (non-call four) senior notes as part of an effort to refinance bankruptcy-exit debt. Deutsche Bank, J.P. Morgan, Jefferies, and Macquarie are joint bookrunners for pricing after the roadshow ends on Thursday, May 3, according to sources.

Likewise the four lead arrangers are launching at a bank meeting tomorrow morning a $200 million, seven-year term loan and $35 million, five-year super-priority RC, sources said. The institutional tranche will have a one-year, 101 soft call, sources note.

Formerly know as Herbst Gaming, the issuer seeks capital to refinance existing debt. That debt includes the company’s $350 million bankruptcy-exit term loan. The five-year loan was inked at L+700, according to an SEC filing on Dec. 31, 2010.

Ratings on the new bonds and loan are to be determined, sources note.

As reported, Herbst filed for Chapter 11 in March 2009, partly blaming Nevada’s smoking ban. Herbst’s slot route operation was hit hard due to tavern owners having to choose between serving food and allowing patrons to smoke while they gambled. Under terms of the court-supervised restructuring, claimants received the new loan, bondholders were out $362 million, and equity was erased. Funds of Silver Point Capital own 18%, and Highland Capital Management owns 6% of membership interests of the company as a result of the bankruptcy restructuring transaction, court filings showed. – Matt Fuller


Technical snapshot: Loan market cools in April as supply jumps

After running hot in February and March, the primary loan market has flagged in April in the face of a surging new-issue calendar, including a modest increase in the all-important M&A segment. At the same time, visible repayments have waned, meaning accounts will keep more of the paper they book in the weeks ahead.

The gap between prospective volume and repayments stood at $15.5 billion on April 18. On the other side of the technical ledger, the combined amount of loan-fund inflows, CLO prints, and repayments has been largely stable over the first few weeks of the month, at $23.8 billion.

These data illustrate why managers expect volume in the weeks ahead to soak up much of the excess liquidity that has built up on the buyside in the first quarter, when inflows exceeded net supply by $11.5 billion.

Thus, while secondary prices have been rangebound in April, accounts are taking a more guarded approach to new issues. Flex activity provides a tale of the tape here. During the first three weeks of April, arrangers flexed 11 institutional loans, while reverse-flexing eight. Looking at just April 8-21, the ratio is even more lopsided, at 5:2. That is a complete turnabout from the first quarter, when price cuts outnumbered increases by a ratio of 9:2.

These flexes have pushed clearing yields for single-B loans up 20 bps over the past two weeks (April 9-23) from March’s lows:

Up the grade, there are too few recent comps to form a meaningful sample. Broadly speaking, however, arrangers say the roughly 3.75-4.25% four-B clearing band of February and March has given way to 4-4.5% levels (though there are exceptions, as demonstrated by the table below, which includes loans for double-B borrowers issued over the past 30 days):

Aside from the notably wide print from Bass Pro Shops, the three other deals are trading within a point of their issue prices, which also suggests accounts are unwilling to reach for thinly priced paper.

Looking ahead, participants think inflows have hit something of a stability point – which will last until it doesn’t – at $500 million to $1 billion of loan mutual fund inflows and $2 billion, give or take, of regular-way CLO issuance. (Of course, this figure might understate the case, as April issuance already stands at $4.2 billion, including $1.1 billion of middle-market deals.)

The wild cards, then, will be new-issue volume and repayments. For the moment, with takeout activity down and the calendar at multi-month highs, investors may well be able to hold their recent discipline, keeping clearing yields wide of the February/March lows, though still significantly inside the highs of the second half. – Steve Miller


Verso high yield bonds surge as co. sets new distressed-swap offer

Verso Paper high yield bonds surged today as the issuer stepped forward with a distressed-debt uptier swap for the company’s subordinated notes and amended terms of a par-for-par uptier exchange launched last month on its second-lien FRNs. Most notable, the subordinated 11.375% notes due 2016 involved in the new exchange offer rallied 10 points, to a 70 context, sources note.

And the first-lien 11.75% notes due 2019 also advanced, rising three points, to 105.5/106.5, according to sources. Note the $345 million issue of BB-/Ba2 notes were issued regular-way last month, at 98.9, to yield 12%, via Credit Suisse, Citi, Barclays, and Goldman Sachs in an effort to refinance 11.5% secured notes due 2014.

However, the second-lien 8.75% notes due 2019 shed two points, to 52/54, due to the cram-down nature of the exchange, according to sources.

In today’s new deal, the company is offering holders of that $300 million 11.375% subordinated issue an opportunity to swap up into new 11.75% intermediate-lien (1.5-lien) notes due 2019. The tender cap is $157.5 million and exchange-notes issuance will top out at $104.7 million, thus consideration works out to 66.5% of par, including a $50 per bond early consents premium, according to company filings.

In addition, Verso will offer as cash payment of $110 per bond for early participation, and $60 after that deadline. Early participation is due 5:00 p.m. EDT on May 8, and the overarching deal expires 11:59 p.m. EDT on May 22, the filing shows.

Verso also amended the FRN uptier exchange launched last month to match the new exchange and extended the deadline by 10 business days, to 11:59 p.m. EDT on May 8. Changes include raising the coupon on exchange notes to the same as above, 11.75%, from 9.75%, revision of maturity to the same as above, to Jan. 15, 2019, from Feb. 1, 2019, and adding a stipulation that consummation is tied to completion of the subordinated-notes swap, the filings show (Details of the original transaction are available at LCD News, March 29: “Verso Paper offers uptier exchange for FRNs“). As of the original April 24 deadline, Verso says just $20 million of the $180 million outstanding of L+375 notes due 2014 joined into the deal, the filings show.

The new exchange notes are coming under Rule 144A, and Citi is handling the transaction, according to sources. Each exchange requires at least 50% participation, and the two exchanges are conditioned upon one another.

If consummated, market players expect the new exchange notes will trade just short of par. The big question is where the balance of subordinated notes – $142.5 million left outstanding if the deal is fully subscribed – would trade in the wake of the transaction, according to sources.

The exchange removes the covenant protections that bondholders previously enjoyed, which augers for it to trade down. But assuming these exchange offers are consummated, the stub paper is next to mature, which could inspire investors to hold out for a refinancing or an improved exchange offer, according to Imperial Capital analyst Kevin Cohen.

“The reason this is good for the company is you fully remove the overhang of the next to mature, and in addition to that you remove the majority of the second-to-mature,” said Cohen, who had given the 11.375% notes a buy rating prior to today’s announcement. “Now the company better positions itself as coated paper prices continue to improve in the second half of the year.”

All of the Verso bonds are trading much higher since the transactions launched. For reference, the recently issued first-lien notes were at 102/103, the second-lien 8.75% notes had been in a 50 context, the second-lien FRNs were trading at 69, and the subordinated notes were pegged in the high 40s, according to sources and trade data.

Alongside the new bond issue in March, the maker of magazine-grade paper also received commitments from lenders for a new $150 million ABL facility and a $50 million first-priority revolving facility. These will replace the existing $200 million revolver due Aug. 1, 2012, the company said. – Matt Fuller/Max Frumes


Guggenheim Investments launches 3 new BulletShares HY ETFs

Guggenheim Investments today launched three new high-yield corporate bond exchange-traded funds, adding to the nascent but growing segment of the fixed-income ETF market. Guggenheim’s new high-yield ETFs add to the asset-management firm’s four high-yield ETFs outstanding since January 2011, and nine similarly structured investment-grade corporate ETFs.

(Check out LCD’s online Loan Market Primer for an explanation of ETFs.)

The new funds are the BulletShares High-Yield ETFs with target maturities of 2016, 2017, and 2018, according to the firm. The three funds trade on the NYSE Arca under the respective tickers BSJG, BSJH, and BSJI. These fixed-income defined-maturity funds can be used to ladder exposure to the asset class, according to the firm.

The BulletShares ETFs track indices of approximately 56-200 high-yield corporate bonds with effective maturities in the same calendar year as each fund’s maturity, with maturity dates ranging from 2012-2018 at this time. Indeed, the 2012-2015 target date funds were already in market, having started on Jan. 25, 2011. Tickers are BSJC, BSJD, BSJE, and BSJF, respectively.

Portfolio managers are Chuck Craig and Saroj Kanuri. Expenses are 0.42%, according to the prospectus. The funds will normally be at least 80% invested, the filing shows.

Guggenheim joins several other investment managers ushering new high-yield ETFs to market this year amid heavy inflows to the asset class. Indeed, EPFR Global shows that of the $18.9 billion of cash inflows to domestic high-yield funds this year, roughly 42% of the sum, or $6.3 billion, has been directed to high-yield ETFs.

To meet that demand, asset-management firms have now launched a total of nine new high-yield-bond-focused ETFs this year, including one short-term (0-5 years) U.S. high-yield bond fund, four with international, multicurrency exposure, and a fallen-angel index fund.

Indeed, last month Van Eck Global launched two high-yield-bond-focused ETFs, including the Market Vectors Fallen Angel High Yield Bond ETF, on the NYSE Arca under the symbol ANGL, and the Market Vectors International High Yield Bond ETF, on the same exchange under the symbol IHY. Both track Bank of America indexes.

BlackRock launched GHYG, a global multicurrency high-yield bond fund; HYXU, a global non-U.S.-dollar high-yield bond fund; and EMHY, an emerging-markets high-yield bond fund. All three trades on the BATS Exchange.

State Street Global Advisors in March launched the short-tenor fund – the SPDR Barclays Capital Short Term High Yield Bond ETF – listed on the NYSE Arca under the symbol SJNK. The aim is to provide exposure to the asset class through shorter-duration bonds, providing less volatility and interest-rate sensitivity, the firm explained. The fund will be invested in dollar-denominated, sub-investment-grade fixed-rate bonds with remaining maturities of less than five years and a minimum issue size of $350 million.

The first and largest in the small but expanding sector is the iShares iBoxx High Yield Corporate Bond Fund, which trades on the NYSE Arca under the ticker HYG. The fund, which was launched in April 2007, is intended to track the iBoxx $ Liquid High Yield Index as a rules-based index consisting of approximately 50 of the most liquid and tradable U.S.-dollar-denominated high-yield corporate bonds for sale in the U.S.

Since then, other index-pegged funds have launched, including JNK, PHB, and IHYG in Europe; an actively managed ETF hit the market as HYLD; and an inverse fund was created to track an index at negative 1x under the short-sale-suggestive ticker SJB. – Matt Fuller


Nokia steps into HY world with Fitch downgrade; bonds weaken

nokia logoNokia 5.5% notes due 2014 were down two to three points yesterday and marked around 100.25, while the company’s 6.75% notes due 2019 were down roughly three to four points at a mid-price of 94.75, as Fitch downgraded the company to BB+ from BBB-, with a negative outlook, according to sources.

Five-year CDS referencing the company has also widened, to four to five points upfront.

The Finnish mobile phone manufacturer, which is still rated investment grade by Standard & Poor’s (BBB-, downgraded March 2) and Moody’s (Baa3, downgraded April 16), has been making headlines this month as it issued a profit warning at the beginning of April, and announced a €1.34 billion operating loss for the first quarter of 2012. Shares fell to around €2.60, from roughly €4 at the end of March.

Nokia takes a step into the European high-yield market with €1.25 billion outstanding under the 5.5% euro notes due 2014, €500 million outstanding under the 6.75% euro notes due 2019, $1 billion outstanding under the 5.375% dollar notes due 2019, and $500 million outstanding under the 6.625% dollar notes due 2039. Its euro medium-term note programme is sized at €5 billion via arranger Deutsche Bank, alongside dealers Citi, Goldman Sachs, and J.P. Morgan. Its SEC shelf registration programme size is indeterminate.

The group also has a €2 billion revolver maturing in June 2012, and S&P notes that the company has already obtained agreements to refinance its revolver with a €1.3 billion facility in two equal tranches, maturing in June 2013 and June 2015. Maintenance covenants will be included, and the agency believes there should be adequate headroom in the next few quarters. Nokia doesn’t face any debt maturities until 2014, other than its telecom network equipment division, Nokia Siemens Network, facing €1.4 billion of debt amortisation this year.

According to Fitch, Nokia will need to improve its performance in the upcoming quarters in order to avoid further downgrades.

Nokia reported total cash of roughly €1.83 billion as of March 31.

Nokia is the world’s largest manufacturer of mobile phones, and is headquartered in Espoo, Finland. – Sohko Fujimoto/Luke Millar