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Fresh & Easy files for Ch.11 in Delaware

Fresh & Easy filed for bankruptcy for the second time in as many years on Friday, announcing on its company website that it is seeking Chapter 11 protection to enable “the orderly wind-down” of its operations and sale of its assets.

The El Segundo, Calif.-based grocery chain filed with the U.S. Bankruptcy Court in Wilmington, Del, and listed between $100–500 million in liabilities, and less than $50 million in assets, court papers show.

Fresh & Easy, which was launched in 2006 by U.K. supermarket giant Tesco Plc, sold the majority of its stores to Ronald Burkle’s private equity firm Yucaipa Cos. as it emerged from its 2013 bankruptcy. An affiliate of Tesco provided Yucaipa with $120 million to help fund the acquisition.

Fresh & Easy’s demise comes just three months after Great Atlantic & Pacific Tea Co (A&P), which is also partly owned by Yucaipa Cos., among others, filed for bankruptcy protection in Manhattan. — Rachelle Kakouris

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After Massive Increase, First Data Wraps High Yield Bond Offering at $3.4B

First Data last night completed a significantly upsized $3.4 billion offering of senior notes via a 15-strong bookrunner team spearheaded by Bank of America. Note, this is the sixth-largest single tranche ever sold, according to LCD. Terms were finalized at the middle of talk, sources said. With the $2.65 billion upsize the company will redeem not just all of the 2007 vintage LBO-related 12.625% notes due 2021, but also refi-related 10.625% senior notes and the 11.75% subordinated notes issued since that time. Note, the structure includes a first call premium at par plus 50% coupon, despite a short schedule on the eight-year tenor. First Data also raised $2.8 billion in its IPO earlier this month. Terms:

Issuer First Data Corporation
Ratings B/Caa1/CCC+
Amount $3.4 billion
Issue senior notes (144A-life)
Coupon 7%
Price 100
Yield 7%
Spread T+499
Maturity Dec. 1, 2023
Call nc3 @ par+50% coupon
Trade Oct. 29, 2015
Settle Nov. 18, 2015 (T+13)
Bookrunners BAML/Citi/DB/MS/CS/Barc/HSBC/Miz/PNC/STRH/WFS/KKR/BBVA/FTN/ KEY
Price talk 7% area
Notes Upsized by $2.65 billion; first call par+50% coupon.
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Back to Bonds (cont’d): US High Yield Funds See Another Investor Cash Windfall

Retail-cash inflows to U.S. high-yield bond funds were $2 billion in the week ended Oct. 28, according to Lipper. While that’s down from last week’s $3.3 billion infusion, itself the largest one-week haul in four years, it’s nonetheless a fourth consecutive inflow, for $7.6 billion over that span.

high yield bond flows

The robust inflow was heavy on the exchange-traded front, however, at 61% of the total, or $1.2 billion this past week. Last week, ETFs composed just 31% of the large inflow, but two weeks ago was also ETF-heavy, at 75% of the $1.5 billion infusion.

Whatever that might say about hedging strategies and market timing, it’s another big infloaw, so the trailing-four-week average balloons to positive $1.9 billion per week, from $851 million last week, and just $19 million two weeks ago.

The full-year reading rises to positive $2.6 billion. However, that’s based on a year-to-date withdrawal of $453 million from mutual funds backfilled by an inflow of $3 billion to ETFs. Last year, after 43 weeks, there was a net outflow of $2.2 billion, with 6% of the withdrawal tied to ETFs. (Recall that last year’s total outflow at this point in the year included the all-time record $7.1 billion outflow in the week ended Aug. 6, 2014.)

The change due to market conditions last week was barely positive, at just $128 million. The minimal expansion is essentially nil against total assets, which were $181.5 billion at the end of the observation period. At present, ETFs account for $38.7 billion of total assets, or roughly 19% of the sum. (Note: any reconciliation to prior reports will show a disjointed asset pool due to some fund reclassifications. Please contact Lipper for details.)

Recall that a change due to market conditions of negative $3.2 billion four weeks ago, or nearly a 2% drop, amid the market sell-off, was the largest one-week plunge in 120 weeks, or roughly 2.3 years, dating to the $3.7 billion deterioration in the week ended June 26, 2013. — Matt Fuller

Follow Matthew on Twitter @mfuller2009 for leveraged debt deal-flow, fund-flow, trading news, and more.

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Bond prices rise, led by M&A-fueled surge in Rite Aid

The average bid of LCD’s flow-name high-yield bonds advanced 59 bps in today’s reading, to 95.07% of par, yielding 7.52%, from 94.48% of par, yielding 7.65%, on Oct. 27. Performance within the 15-bond sample was mixed, with six gainers against four decliners and five issues unchanged.

The gain adds to Tuesday’s small increase for an 80 bps rise on the week. Rite Aid led today’s climb, with the 6.125% notes due 2023 advancing 4.75 points to 108 on the proposed acquisition with Walgreens Boots Alliance. Recall a week ago, a 120 bps plunge in the average bid price was tied to Valeant Pharmaceuticals International 5.875% notes due 2023, which fell 14.5 points, to 81.5, after two days of drubbing following a damning Street research report. In today’s observation, the Valeant notes are trading at 86.25.

The average is 35 bps higher dating back two weeks. In a trailing-four-week observation, however, the measurement picks up on a bit more of the rebound from the September slump. The average is positive 297 bps over that span.

Those two readings illustrate market momentum of late, with a rebound in early October and mild waffling since then. Recent technical conditions have been positive, as supply has been thin, underlying U.S. Treasury rates had remained fairly low until yesterday, and there have been fresh retail cash inflows to the asset class, including last week’s one-week inflow of $3.3 billion, according to Lipper, which was the most in four years.

Recall that a four-year low in the average price of 91.98 was recorded on Sept. 29—the lowest reading since 91.25 on Oct. 6, 2011. The average is up 309 bps since that recent trough, and it’s down 63 bps in the year to date, versus a decline of 536 bps in all of 2014.

With today’s gain in the average bid price, the average yield to worst tightens 13 bps, to 7.52%, and the average option-adjusted spread to worst edged inward by 27 bps, to T+597 bps. Year-to-date wides in late September were 8.62% and T+708, respectively. The greater decline in spread as compared to reduced yield can be linked to the sell-off in the U.S. Treasury market since Wednesday’s FOMC announcement, as rising underlying yield encourages spread-to-Treasury compression.

The spread in today’s reading is in line with the broad index, but the yield-to-worst is wider. The S&P U.S. Issued High Yield Corporate Bond Index closed the last reading on Wednesday with a yield to worst of 7.29% and an option-adjusted spread to worst of T+596.

Bonds vs. loans
The average bid of LCD’s flow-name loans dropped six basis points, at 97.58% of par, for a discounted loan yield of 4.32%. The gap between the bond yield and discounted loan yield to maturity is 320 bps. — Staff reports

The data

  • Bids rise: The average bid of the 15 flow names advanced 59 bps, to 95.07.
  • Yields fall: The average yield to worst slipped 13 bps, to 7.52%.
  • Spreads tighten: The average spread to U.S. Treasuries inched inward by 27 bps, to T+597.
  • Gainers: The largest of the six gainers was Rite Aid 6.125% notes due 2023, which rose 4.75 points to 108.
  • Decliners: The largest of the four decliners was Hexion Specialty 6.625% notes due 2020, which fell one point to 86.
  • Unchanged: There were five unchanged constituents.

 

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Level 3 Sets $900M Bond Offering to Yield 5.375%

Level 3 Financing has completed its offering of senior notes via Citi, Bank of America Merrill Lynch, Morgan Stanley, Barclays, Credit Suisse, Goldman Sachs, and J.P. Morgan. Terms were finalized at the tight end of guidance after an upsize to $900 million from $500 million. Proceeds, together with cash on hand, will be used to redeem $500 million of the borrower’s 8.625% senior notes due 2020. For reference, the bonds hit their first call date in January next year at 104.313, while the make-whole call is currently roughly 105.37. The new notes are first callable after three years at par plus 50% coupon, while the equity claw is 40% for the first three years. The company yesterday released third-quarter earnings numbers, while also firming its full-year forecasts. Having generated $675 million of adjusted EBITDA in 3Q, and $247 million of free cash flow, the firm now expects adjusted EBITDA growth of 15–17% for full-year 2015, versus its previous forecast of 14–17%, while it still expects to generate $600–650 million of free cash flow in 2015. The company also notes that net leverage as of Sept. 30, 2015, was 4x.  Terms:

Issuer Level 3 Financing
Ratings B/B1/BB
Amount $900 million
Issue senior (144A)
Coupon 5.375%
Price 100
Yield 5.375%
Spread T+350
Maturity Jan. 15, 2024
Call nc-3 @ par + 50% coupon
Trade Oct. 29, 2015
Settle Nov. 13, 2015
Bookrunners Citi/BAML/MS/Barc/CS/GS/JPM
Price talk 5.375-5.5%
Notes First call at par + 50%; 40% equity claw
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BNP Paribas hires McHale as head of high-yield origination

BNP Paribas has hired James McHale for its Corporate Debt Origination group as the head of high-yield capital markets, according to the company.

McHale joins the firm from BMO Capital Markets.

In his new role, McHale will work to further expand the BNP’s presence in the high-yield space. He has executed more than 90 leveraged bond and loan transactions totaling more than $70 billion for non-investment grade clients.

McHale was previously a senior member of the leveraged finance group at BMO and had established the high-yield bond group in Canada. — Staff reports

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BNP Paribas Hires McHale as Head of High-Yield Origination

BNP Paribas has hired James McHale for its Corporate Debt Origination group as the head of high-yield capital markets, according to the company.

McHale joins the firm from BMO Capital Markets.

In his new role, McHale will work to further expand the BNP’s presence in the high-yield space. He has executed more than 90 leveraged bond and loan transactions totaling more than $70 billion for non-investment grade clients.

McHale was previously a senior member of the leveraged finance group at BMO and had established the high-yield bond group in Canada. — Staff reports

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L Brands (Victoria’s Secret) prices $1B, 20-Year Bond Offering To Yield 6.875%

L Brands this afternoon completed its offering of 20-year senior notes via Bank of America, Citi, and J.P. Morgan, according to sources. Terms were finalized at the midpoint of talk along with a $600 million upsize. Proceeds will be used for general corporate purposes. Columbus, Ohio–based retail company L Brands, formerly known as Limited Brands, is the parent company of Victoria’s Secret, PINK, Bath & Body Works, Henri Bendel, and La Senza.Terms:

Issuer L Brands
Ratings BB+/Ba1/BB+
Amount $1 billion
Issue senior (144A)
Coupon 6.875%
Price 100
Yield 6.875%
Spread T+402 vs. 30 yr.
Maturity Nov. 1, 2035
Call nc-life
Trade Oct. 27, 2015
Settle Oct. 30, 2015
Bookrunners BAML/Citi/JPM
Sr. Co. Mgrs HSBC/WFS
Co. Mgrs KeyBanc/MUFG/Miz/US/Scotia/SC/TD/Huntington
Price talk 6.875% area
Notes Upsized by $600 million; make whole T+50

 

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Inaugural Paddle Battle Tournament charity event to be held on Nov 5

RBC Capital Markets is partnering with the private equity community to host an inaugural charity ping pong tournament to support NYC Youth, which will be held on Nov. 5, 2015.

The money raised by the event will be split evenly among four charity partners: Harlem RBI, The Opportunity Network, The TEAK Fellowship, and Youth INC. The winning two-person team of the tournament will receive a $25,000 grant in their name to a youth-oriented charity of their choice.

The Paddle Battle Tournament will be held at SPiN NYC on 23rd Street, beginning at 6 p.m. EDT. There will be a full bar and heavy hors d’oeuvres served.

Registration is open and teams should be finalized by Oct. 22. For more information and to register or donate, go to RBC Paddle Battle. — Staff reports

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High yield bonds inch up, but prices mixed

The average bid of LCD’s flow-name high-yield bonds nudged up 21 bps in today’s reading, to 94.48% of par, yielding 7.65%, from 94.27% of par, yielding 7.81%, on Oct. 22. Performance within the 15 bond sample was mixed, with 10 gainers against four decliners and one unchanged.

The small gain dents the large decline of 121 bps recorded on Thursday, for a net decrease of 100 bps week over week. Recall that big plunge was deeply tied to Valeant Pharmaceuticals International 5.875% notes due 2023, which plunged 14.5 points, to 81.5, after two days of drubbing following a damning Street research report. And in today’s observation, it was the largest gainer, up 3.5 points, at 85.

The prior week was back and forth moves that netted essentially no change, so the average is down 104 bps dating back two weeks. In a trailing-four-week observation, however, the measurement picks up on a bit more of the rebound from the September slump. The average is positive 250 bps over that span.

Those two readings flag market momentum of late, with a rebound in early October and mild waffling since then. Technical conditions have been positive recently, as supply has been thin, underlying U.S. Treasury rates remain low, and there has been fresh retail cash inflow to the asset class, including last week’s one-week inflow of $3.3 billion to the asset class, according to Lipper, the most in four years.

Recall that a four-year low of 91.98 was recorded on Sept. 29—the lowest reading in the average bid price since it was at 91.25 on Oct. 6, 2011. The average is up 250 bps since that recent trough, and it’s down 122 bps in the year to date, versus a decline of 536 bps in all of 2014.

With today’s modest gain in the average bid price, the average yield to worst slipped 16 bps, to 7.65%, and the average option-adjusted spread to worst edged inward by 14 bps, to T+624 bps. Year-to-date wides in late September were 8.62% and T+708, respectively.

The yield and spread in today’s reading are still a bit out of line with the broad index, given the small flow-name sample size and outsized influence of select credits in recent observations. To wit, the S&P U.S. Issued High Yield Corporate Bond Index closed the last reading, Monday, Oct. 26, with a yield to worst of 7.28% and an option-adjusted spread to worst of T+597.

Bonds vs. loans

The average bid of LCD’s flow-name loans jumped 46 bps, at 97.64% of par, for a discounted loan yield of 4.31%. The gap between the bond yield and discounted loan yield to maturity is 334 bps. — Staff reports

The data

Bids rise: The average bid of the 15 flow names advanced 21 bps, to 94.48.

  • Yields fall: The average yield to worst slipped 16 bps, to 7.65%.
  • Spreads tighten: The average spread to U.S. Treasuries inched inward by 14 bps, to T+624.
  • Gainers: The largest of the 10 gainers was Valeant Pharmaceuticals 5.875% notes due 2023, which jumped 3.5 points, to 85.
  • Decliners: The largest of the four decliners was California Resources 6% notes due 2024, which shed two points, to 66.
  • Unchanged: Just Hexion 6.625% notes due 2020 were unchanged, at 87.