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Chart: High yield bond issuance in 2012 surges to record level

Supply in the primary U.S. high-yield market set a calendar-year record this week when it hit $291.7 billion, according to LCD, a division of S&P Capital IQ. That surpasses the previous high of $287 billion, from 2010, and there is still plenty of room to run before year-end.

Breaking the record appeared an eventuality given the frenetic pace of issuance over the past three months, but recall that high-yield supply at midyear was actually 4% lower than the comparable period a year ago. Through the end of this week it is now 56% higher year-over-year and 34% more than 2011’s full-year tally, itself the second-largest annual total.

Indeed, since midyear, volume has surged by roughly $140 billion, easily the most for any four-month span. That includes a monthly record of $46.8 billion in September followed by $41.8 billion thus far in October.

Reasons for the surge are no secret, as heightened investor interest in the asset class sparked a rally. Issuers poured into the market to take advantage of historically low rates. With that, it is not surprising that 59% of year-to-date volume has backed refinancing efforts, although the mix has been more diverse of late. For example, in October M&A and LBO deals comprised 32% of the total, while dividend recapitalizations accounted for another 18%, according to LCD. – Jon Hemingway

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Laureate Education add-on notes price at 97.75 to yield 9.7%; terms

Laureate Education today completed a $1.05 billion add-on to its 9.25% notes due 2019 via bookrunners J.P. Morgan, Barclays, Citi, BMO, Credit Suisse, Goldman Sachs, KKR, and Morgan Stanley, according to sources. Pricing came tight to talk following a series of upsizings from the original $350 million target size. The total issue size is now $1.4 billion. Moreover, an early read from the gray market has the paper wrapped around 99 on the break. Notes are callable beginning September 2015, with a first call price at par plus 75% of the coupon. Proceeds from the deal will be used to refinance $546.6 million of 10.25% PIK toggle notes due 2015 and to repay bank debt. A cash tender offer was launched a week ago offering bondholders per-note consideration of $1,030.63, which includes an early-tender payment of $20.63. The toggle issue was part of the financing package that backed the 2007 LBO of the educational-services provider. Terms:

Issuer Laureate Education
Ratings CCC+/Caa1
Amount $1.05 billion
Issue add-on senior notes (144A)
Coupon 9.25%
Price 97.75
Yield 9.699%
Spread T+849
FRN eq. L+840
Maturity Sept. 1, 2019
Call nc3; first call @ par +75% of coupon
Trade Oct. 26, 2012
Settle Nov. 13, 2012 (T+12)
Joint Bookrunners JPM/Barc/Citi/BMO/CS/GS/KKR/MS
Co-leads
Co’s.
Px talk 9.75% area
Notes upsized by $700 million; issue size now $1.4 billion.
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Shale-Inland bonds price at 99.35 to yield 8.875%; terms

Shale-Inland Holdings this afternoon completed its debut high-yield offering via joint bookrunners UBS, Barclays, Deutsche Bank, and BMO, according to sources. Terms on the B-/B3 deal, which comes under Rule 144A, for life, were inked at the middle of guidance and at the target size. Note the larger-than-typical equity clawback option for up to 40% of the issue, and the higher first-call premium to balance the short call schedule. Proceeds will be used to pay down borrowings outstanding under an ABL facility. Shale-Inland, based in Houston, Texas, is a specialty industrial distributor of pipes, valves, fittings, and related products. It provides technical services to the energy and industrial sectors. Terms:

Issuer Shale-Inland Holdings
Ratings B-/B3
Amount $250 million
Issue secured notes (144A for life)
Coupon 8.75%
Price 99.352
Yield 8.875%
Spread T+767
FRN eq. L+758
Maturity Nov. 15, 2019
Call nc3 @ par+75% coupon
Trade Oct. 26, 2012
Settle Nov. 6, 2012 (t+7)
Books UBS/Barc/DB/BMO
Px talk 8.75-9%
Notes w/ three-year equity clawback option for up to 40% of issue @108.75.
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Heckmann add-on notes price at 100.25 to yield 9.81%; terms

Heckmann today completed a $150 million add-on to its 9.875% notes due 2018 via bookrunners Jefferies, Wells Fargo, and Credit Suisse, according to sources. Pricing came at the midpoint of talk, and the additional notes bring the total issue size to $400 million. The provider of water and wastewater services made its high-yield debut with placement of the original $250 million issue in April. Issuance comes via Rough Rider Escrow under Rule 144A, but the new notes will be fungible upon registration. Proceeds from the deal will be used to fund Heckmann’s acquisition of Power Fuels for approximately $381 million. Terms:

Issuer Rough Rider Escrow / Heckmann Corp.
Ratings B/B3
Amount $150 million
Issue add-on senior notes (144A)
Coupon 9.875%
Price 100.25
Yield 9.812%
Spread n/a
FRN eq. n/a
Maturity April 15, 2018
Call nc2.5
Trade Oct. 26, 2012
Settle Nov. 5, 2012 (T+6)
Joint Bookrunners Jeff/WF/CS
Co-leads
Co’s. RBS,Roth
Px talk 100-100.5
Notes w/ 35% equity clawback @ 109.875 until 4/15/15; carries T+50 make-whole call; w/ change-of-control put @ 101; issue size now $400 million.
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European market: All of €23.9M loan and €19.5M bond BWIC clears

All of a bond and loan BWIC has traded in the European market, with most names clearing, according to sources.

As reported, bids were due on Wednesday for the €19.5 million bond BWIC, and yesterday for the €23.9 million loan BWIC. The bond portfolio contained five issues, with the largest positions €6.5 million of Portugal Telecom 5% notes due 2019, and €5 million of UPC 6.375% notes due 2020.

The loan portfolio contained seven positions from four borrowers. The largest positions are €10.7 million of Monier term loans, and €4 million of Materis TLC, sources said.

The seller is understood to be a CLO manager, sources added.

This is the eleventh loan BWIC in Europe so far this year, making a total of €1.49 billion of loans put up for sale. – Sohko Fujimoto

 

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Virgin Media completes dual-currency offering tight to talk; terms

Virgin Media Finance today completed a dual-currency offering of unsecured bullet notes, according to sources. Pricing for both the dollar and sterling tranches was finalized at the tight side of guidance, while the total size of the transaction was increased by $295 million, to a $1.545 billion equivalent. Goldman Sachs (B&D on the sterling tranche), and J.P. Morgan (B&D on the dollar tranche) are joint physical bookrunners. Bank of America, BNP, Credit Agricole, Deutsche Bank, HSBC, Lloyds, RBS, and UBS are joint bookrunners. Proceeds will be used to repay the company’s 2016 dollar- and euro-denominated senior notes, and a portion of its 2019 dollar- and sterling-denominated senior notes. The company earlier this month launched cash tender offers for the outstanding notes. Terms:

Issuer Virgin Media Finance
Ratings BB-/Ba2
Amount $900 million
Issue unsecured notes (SEC registered)
Coupon 4.875%
Price 100
Yield 4.875%
Spread T+317
FRN eq. L+308
Maturity Feb. 15, 2022
Call nc-life
Trade Oct. 25, 2012
Settle Oct. 30, 2012 (T+3)
Joint Physical Books JPM/GS
Joint Bookrunners BAML/BNP/CA/DB/HSBC/Lloyds/RBS/UBS
Px talk 5% area
Notes net deal upsizing of $295 million; w/ change-of-control put @ 101.
Issuer Virgin Media Finance
Ratings BB-/Ba2
Amount £400 million
Issue unsecured notes
Coupon 5.125%
Price 100
Yield 5.125%
Spread G+339
FRN eq. E+322
Maturity Feb. 15, 2022
Call nc-life
Trade Oct. 25, 2012
Settle Oct. 30, 2012 (T+3)
Joint Physical Books GS/JPM
Joint Bookrunners BAML/BNP/CA/DB/HSBC/Lloyds/RBS/UBS
Px talk 5.25% area (+25 bps / USD tranche)
Notes w/ change-of-control put @ 101.
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High yield mutual funds, ETFs to see another week of investor cash inflows

Daily data from EPFR Global indicate that cash-flow for U.S. high-yield mutual funds and exchange-traded funds will be positive for a second consecutive week when the full-week reading is reported this  afternoon. And with a four-session tally at $292 million of inflows combined with today’s better market tone, it’s tough to imagine a big outflow today will wipe out the sum when it’s reported tomorrow after 4:00 p.m. EDT.

ETF activity accounted for about 27% of the inflow over the past four sessions, though yesterday’s reading was deeply negative. There were $80 million of outflows from ETFs against a $24 million inflow to mutual funds, for a net negative one-day reading at $56 million.

Regardless, the $292 million over four days would be challenging to erase in one session, so tomorrow’s full-week reading is likely to be positive, following the prior week’s net $131 million inflow. That observation ended a three-week outflow streak totaling $937 million, but would have been greater if not for the deep drag of $130 million on ETF outflow.

The full-year inflow is currently $24.6 billion, of which ETFs comprise $8.3 billion, or 34% of the flow. In 2011, there were 35 weeks of net inflows, for a $13.1 billion total inflow. Excluding ETFs, the 2011 figure is only $7.6 billion, so ETF flow was 42% of the inflow, by the weekly reporters only, according to EPFR. – Matt Fuller

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Clear Channel debt mixed after $2B loan-for-bond swap settles; terms

Debt backing Clear Channel Communications is mixed today as the loan-for-bond swap settles and the new fixed-coupon guaranteed priority notes start trading after distribution under Rule 144A. The new paper – a $2 billion issue of 9% secured notes due 2019 with 2.5-years of call protection – is pegged at 92.5/93 in the secondary market, versus quotes earlier today at 93.5/93.75 in the Street, and a par-for-par swap for various term debt, the bulk of which had been trading in the low 80s prior to news of the transaction, sources said.

In the loan market, the TLB due 2016 (L+365) is quoted at 83.75/84.5 this morning, which off highs touched on the news of the exchange and the amendment, but up from 82.625/83.125 prior to launch of the exchange.

The company’s 9% secured notes due 2021, meanwhile, are trading one point higher, at 91, trade data show. This paper is pari passu to the exchange notes, dates to 2011 issuance as 10-year (non-call five) structure, and thus now carries 3.5 years of call protection.

As reported earlier this week, Clear Channel lenders approved the broadcaster’s loan-amendment request, which allows the company to exchange up to $5 billion of its loans for bonds, among other provisions that provide it with flexibility to address its capital structure. The company said that it received over $8 billion of commitments for the loan-for-bond exchange.

As noted earlier, accounts that participate in the exchange will be allocated positions in the bonds on a pro rata basis. The exchange notes include MFN protection against future issues of exchange notes that come on more attractive terms, sources noted.

Citigroup, Morgan Stanley, and Goldman Sachs arranged the amendment, while Morgan Stanley was left lead on the loan-for-bond exchange, with Citi and Goldman, sources added. The amendment allows for up to $5 billion of loan-for-bond exchanges, inclusive of the $2 billion deal that launched on Oct. 12.

Other elements of the amendment are as follows, according the SEC filings and market sources:

  • Provide the company with the ability to repurchase its term debt at sub-par prices via a Dutch auction process once it refinances its TLA or extends the maturity of the facility beyond the January 2016 maturity of its other term loans.
  • Allow the company to repay the TLA on a non-pro-rata basis with its term loans maturing in 2016.
  • Combine its TLB and delayed-draw term loans into one tranche.
  • Allow for the repurchase of junior debt maturing inside of 2016 with up to $200 million of cash on hand.
  • Preserve revolver capacity in the instance the company repays all revolver borrowings.
  • Conform the debt-incurrence covenant at Clear Channel Outdoor to match that of the 7.625% subordinated notes.

Clear Channel had about $11.29 billion of term debt outstanding as of June 30, of which $1.07 billion was under the TLA, which matures in July 2014. The remainder of the term debt matures in January 2016.

There was no fee on offer to approve the amendment, which required majority consent. As the amendment launched to market, Clear Channel outlined that it already has roughly 46% on board via holdings of sponsors Bain Capital and Thomas H. Lee Partners, as well as accounts managed by Angelo Gordon, Apollo Global Management, Canyon Capital Advisors, and Oaktree Capital Management.

Clear Channel is a global media and entertainment company specializing in radio, digital, outdoor, mobile, live events, and on-demand entertainment and information services for local communities and providing opportunities for advertisers. Corporate ratings are CCC+/Caa2. Terms on the new exchange-notes follow: – Matt Fuller/Kerry Kantin

Issuer Clear Channel Communications
Ratings CCC+/Caa1
Amount $2 billion
Issue priority guaranteed (secured) notes (144A)
Coupon 9%
Price 100
Yield 9%
Spread T+780
FRN eq. L+770
Maturity Dec. 15, 2019
Call nc2.5 @ par+50% coupon
Trade Oct. 19, 2012
Settle Oct. 25, 2012 (t+4)
Books MS/CITI/GS
Px talk n/a
Notes w/ 2.5-year equity clawback for up to 40% of issue @109.

 

 

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Nexstar bonds price tight to talk, at par, to yield 6.875%; terms

Nexstar bonds price tight to talk, at par, to yield 6.875%; terms

Nexstar Broadcasting this afternoon completed an offering of senior notes via bookrunners Bank of America, UBS, and RBC, according to sources. Terms on the B-/Caa1 return to market by the television broadcasting concern after nearly three years were inked tight to talk, with a $50 million upsizing, to $250 million. The deal will essentially replace the two series of 7% notes due 2014 targeted in the refinancing effort, though some proceeds are earmarked to pay down credit-line borrowings related to television station acquisitions. Both 7% bond issues outstanding are currently callable, at par. Note the higher first-call premium to balance the short call schedule. Terms:

     
  Issuer Nexstar Broadcasting
  Ratings B-/Caa1
  Amount $250 million
  Issue senior notes (144A)
  Coupon 6.875%
  Price 100
  Yield 6.875%
  Spread T+546
  FRN eq. L+536
  Maturity Nov. 15, 2020
  Call nc3 @ par+75% coupon
  Trade Oct. 24, 2012
  Settle Nov. 9, 2012 (T+12)
  Books BAML/UBS/RBC
  Co’s. CS, WFS
  Px talk 7% area
  Notes upsized by $50 million.
     

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Carl Marks Advisory hires middle-market advisor Joe D’Angelo

Carl Marks Advisory Group has hired Joe D’Angelo as a managing director to work with middle-market clients in a restructuring advisory capacity, the firm announced today. The role includes working as an interim officer, chief restructuring officer, or advising on turnaround business plans, according to the announcement. He would also represent secured creditors in bankruptcy restructuring cases.

This type of hire adds to the “corporate revitalization” practice at Carl Marks, a middle-market merchant bank that has both a principal investment arm and an advisory group that focuses on distressed companies.

Before joining Carl Marks, D’Angelo was a principal at XRoads Solutions Group, a Santa Ana, Calif.-based consultancy for middle-market companies that has a corporate restructuring group. Previously D’Angelo was a senior vice president at Platinum Equity, the Los Angeles-based private equity firm founded by Tom Gores, and was a managing director at Alvarez & Marsal, according to the release. His experience includes automotive, manufacturing, entertainment, digital media, software, specialty finance, and telecommunications. – Max Frumes