content

Hecla Mining Pulls $500M High Yield Deal, Cancels Tender Offer

Hecla Mining Company has withdrawn its recently proposed high-yield bond offering, the company said today.

In a June 30 statement, Hecla said “that it has decided not to proceed with its previously announced offer of $500 million of senior notes due 2025, as current terms and conditions were not sufficiently attractive for the company to move forward. “

The deal, marketed via a Bank of America Merrill Lynch–led syndicate, was launched to back a tender offer for the borrower’s outstanding $506.5 million of 6.875% notes due 2021. These bonds served as the company’s market debut in April 2013, and were also the issuer’s last tap. The notes will hit their first call on July 27, 2017 at 103.44.

Coinciding with the scrapped plans for the new issue, the company has also cancelled the tender offer.

The pitched deal was structured with a first call at par, plus 50% of the coupon at year three, and an up to 35% equity claw. Sources said whispers were in the 6% area.

The would-be bond had garnered B/B3 ratings. The issuer on June 28 had also received a corporate ratings upgrade from S&P Global Ratings to B from B–, “due to increased production, lower cash costs, and higher realized silver and gold prices.”

Hecla’s cancelled deal is the third scrapped high-yield transaction of 2017. Charter Communications on June 22 withdrew a proposed offering of $1.5 billion of senior notes due to market conditions. Also, Sequa Corp. in April dropped plans to issue $300 million of 4.5-year secured notes backing a recap transaction.

Coeur d’Alene, Idaho–based Hecla Mining (NYSE: HL), together with its subsidiaries, discovers, acquires, develops, produces, and markets precious and base metal deposits worldwide. — Jakema Lewis

Try LCD for Free! News, analysis, data

Follow LCD News on Twitter.

This story is taken from analysis which first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

content

US High Yield Bond Funds See $128M Cash Withdrawal

U.S. high yield funds saw a net $128 million withdrawal the week ended June 21, ending three weeks of inflows into the asset class totaling $1.3 billion, according to Lipper weekly reporters.

US high yield fund flows

ETFs accounted for $82 million of this week’s withdrawal while high yield funds lost $46 million. Despite the dip, the four-week average rises to a $294 million net inflow, as a $567 million withdrawal the week ended May 24 rolls off this metric.

Year to date, U.S high-yield funds have seen a net $4.8 billion withdrawal, with ETFs seeing a small, $124 million net gain.

The change due to market conditions was a hefty $1.3 billion decline this week. Total assets at the end of the observation period were $207.9 billion, $46.7 billion via ETFs. — Staff reports

Try LCD for Free! News, analysis, data

Follow LCD News on Twitter.

This story is taken from analysis which first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

content

Charter Communications Scraps Plans for $1.5B High Yield Bond Offering

Charter Communications has withdrawn a proposed offering for $1.5 billion of senior notes due to market conditions, the would-be borrower said in a statement.

The cable operator pitched the Credit Suisse–led transaction at the start of Wednesday’s session. Structured as 10.5-year (non-call five) bonds, guidance for the deal was set at the 4.75% area. Proceeds were earmarked to back general corporate purposes, including a potential buyback of stock.

“Today’s debt capital market conditions did not allow this segment of investor expectations and those of Charter to align,” said Christopher Winfrey, CFO of Charter Communications, in a June 21 statement. “We will continue to be highly disciplined in our approach to financings, and will return to the broader credit markets when market conditions meet our expectations.”

On Wednesday, crude oil prices touched lows not seen since August 2016, causing volatility to spill over into broader markets. The iShares fund HYG ended the session at $87.60 versus $88.11 at Tuesday’s close. Similarly, the SPDR fund JNK also dipped, to close yesterday at $36.87, from $37.10 one day prior.

Both funds were working to retrace losses early on in Thursday’s session, with the HYG up 0.08% at $87.67, and the JNK up 0.09% at $36.90. Also, West Texas Intermediate Crude was trading at $42.84 this morning, for a 0.73% gain.

Charter’s last unsecured print had been in March, when it completed a $1.25 billion add-on to existing 5.125% notes due 2027, priced at 100.5, for a 5.057% yield. Concurrently, the company placed $1.25 billion of crossover 5.375% secured notes due 2047, priced at 99.968 for a 5.377% yield. — Jakema Lewis

Try LCD for Free! News, analysis, data

Follow LCD News on Twitter.

This story is taken from analysis which first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

content

Oil Dive Hits California Resources, Other Energy Sector High Yield Bond Names

California Resources notes tumbled today as oil hit its lowest level in more than five weeks following a steep decline in crude prices triggered by a bearish U.S. inventories report that showed stronger than expected gains in gas stockpiles alongside a sluggish reduction in crude inventories.

Crude prices fell 3.6% in midday trading, to $44.78 a barrel, based on U.S. benchmark West Texas Intermediate, after a report by the Energy Information Administration (EIA) said gas inventories for the week ended June 9 climbed 2.1 million barrels and crude stockpiles fell by 1.7 million barrels. This compares with a Reuters poll forecasting a decline of 500,000 barrels in gas inventories and drop of 2.7 million barrels in crude stockpiles.

California Resources, whose ability to delever has long hinged on a crude recovery since its ill-timed split from Occidental Petroleum in 2014, saw its 8% 2022 senior secured second-lien notes drops 3.25 points, to 65.75, in afternoon trades.

Corporate and bond ratings are CCC+/Caa2 and CCC+/Caa3, with negative outlooks and a 4 recovery rating on the second-lien notes by S&P Global Ratings.

California Resources shares (NYSE:CRC) were down 8.5% to $10.82 in midday trading.

Other major decliners in the sector included EP Energy’s 9.375% 2020 notes and 8% 2025 notes, which fell 3.75 points and 2.75 points, respectively, according to MarketAxess, to 85 and 79. MEG Energy 7% 2024 notes were also changing hands at a steady clip, losing 1.25 points, to 82, while Whiting Petroleum 5.75% 2021 notes slumped 1.25 points in an active session, to 95.

Offshore drillers also took it on the chin, as Transocean 9% 2023 notes fell 1.312 points, to 104, according to MarketAxess, and Shelf Drilling 9.5% 2020 notes slid three-quarters of a point, to 98.75. — James Passeri

Try LCD for Free! News, analysis, data

Follow LCD News on Twitter.

This story is taken from analysis which first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

content

Yum Restaurant Group Lines up $500M High Yield Offering for Dividend, Loan Repay

yum logoYum Brands has guided a $500 million offering of ten-year (non-call five) notes in the 4.75% area, sources said. Books will close at 2 p.m. EDT, with pricing expected today via bookrunners Goldman Sachs (left), J.P. Morgan, Citi, Morgan Stanley, and Wells Fargo Securities.

Proceeds from the 144A-for-life offering will be used to repay roughly $260 million drawn under the company’s revolving credit facility during the second quarter. The balance will fund a cash distribution to the company’s parent to fund share repurchases, dividend payments, and potential repayment of further debt.

The planned new issue is rated BB/B1, according to the leads.

Comparables for the new bonds are the borrower’s own 5% notes due 2024 and 5.25% notes due 2026. The 2024s closed Friday’s session at 104.6, yielding 3.97%, and the 2026s changed hands on Monday afternoon at 105.375, yielding 4.35%, trade data show.

Earlier this month, Yum Brands disclosed that it had entered into a refinancing amendment to its credit agreement dated June 16, 2016, reducing pricing on its $500 million A term loan and $1 billion revolver by 75 bps, to L+150, and extending the maturity of the TLA and revolver to June 2022, from 2019. Note that pricing includes a step-down to L+125 in the event that the total-leverage ratio is less than 2.75x. Via the amendment, the leverage-based pricing grid now ranges from L+125–175, versus L+200–250 previously, as reported. In March, Yum Brands also repriced its then $1.99 billion B term loan due June 2023.

Yum Brands (NYSE: YUM) operates and franchises quick-service restaurants in three segments: KFC, Pizza Hut, and Taco Bell. — Rachel McGovern/Jakema Lewis

Try LCD for Free! News, analysis, data

Follow LCD News on Twitter.

This story is taken from analysis which first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

 

content

S&P: US Distress Ratio Sinks to 6.8%, a 32-Month Low

The U.S. distress ratio has continued its downward trend and now stands at 6.8% as of May 15, 2017, from 7% as of April 17.

US distress ratio

This is its lowest level since September 2014 when the ratio stood at 5%, and marks a steady decline from its February 2016 peak when it reached 34%, according to S&P Global Ratings Fixed Income Research.

This decline reflects somewhat stabilized commodity pricing pressure but belies an increase in the distress ratio of the retail and restaurants sector, which now has a commanding lead of 20.6% with 21 distressed issues.

The ratio measures speculative-grade issues with option-adjusted composite spreads of more than 1,000 basis points relative to U.S. Treasuries, and indicates the level of risk the market has priced into its bonds.

By sector, retail and restaurants is followed by the oil-and-gas sector, which had the second-highest ratio at 10.6%. — Rachelle Kakouris

Try LCD for Free! News, analysis, data

Follow LCD News on Twitter.

This story is taken from analysis which first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

content

US High Yield Bond Funds, ETFs see $586M Investor Cash Inflow

U.S. high-yield funds recorded an inflow of $586 million for the week ended June 7, according to weekly reporters to Lipper only. This is the second straight week of inflows into the asset class for a total of $1.1 billion over that period.

US high yield fund flows

Mutual funds made up the bulk of the inflow this week, at $355 million, while $231 million flowed into ETFs. That compares to last week’s exit of $617 million from mutual funds against a $1.1 billion inflow into ETFs.

The year-to-date total outflow is now $4.9 billion, reflecting a $4.8 billion exodus from mutual funds and an $85 million exit from ETFs.

The four-week trailing average is now in positive territory, after being in the red for five straight weeks, climbing to positive $297 million from negative $280.5 million last week.

The change due to market conditions this past week was a rise of $154 million, making four consecutive weeks in the black. Total assets at the end of the observation period were $207 billion. ETFs account for about 23% of the total, at $47.6 billion. — James Passeri

Try LCD for Free! News, analysis, data

Follow LCD News on Twitter.

This story is taken from analysis which first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

content

Valeant High Yield Bonds Climb in Secondary on Debt Paydown News via iNova

Valeant Pharmaceuticals 6.125% notes due 2025 were the most active early movers on Thursday, climbing half a point, to 80.875, according to MarketAxess, after the debt-laden drug maker announced its sale of iNova Pharmaceuticals for $930 million, with proceeds slated to pay down a portion of Valeant’s term debt.

Asset sales have been a primary focus among creditors to the Laval, Quebec–based drug maker, which has been scrambling to shore up cash in order to pay down its substantial debt load, which totaled more than $28 billion as of March 31, according to Valeant’s quarterly filing with the Securities and Exchange Commission.

Meanwhile, the issuer’s Series F term loan (L+475, 0.75% LIBOR floor) was at a 101.5 bid today, down about an eighth of a point on the day, sources said. The paper was bracketing 102 at the start of this week, a record high for the loan. As of March 31, there was $6.83 billion outstanding on the loan, SEC filings show.

Shares of Valeant (NYSE: VRX) were also up roughly 8% in morning trading.

The iNova subsidiary has been sold to a company jointly owned by funds advised and managed by Pacific Equity Partners and the Carlyle Group, according to a company release. The transaction is expected to close in the second half of the year, subject to customary regulatory approvals.

Goldman Sachs acted as financial adviser to Valeant in the sale, and Baker McKenzie served as legal adviser.

iNova manages over-the-counter prescriptions, in areas including weight management, pain relief, cardiology and cold and cough products.

Valeant Pharmaceuticals is a specialty pharmaceutical company — James Passeri/Kelsey Butler

Try LCD for Free! News, analysis, data

Follow LCD News on Twitter.

This story is taken from analysis which first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

content

Hi-Grade Bonds: Coach Wraps $1B Offering Backing $2.4B Kate Spade Buy

Coach Inc. today locked in $1 billion of acquisition-related bond funds to finance its purchase of Kate Spade. The two-part senior offering included $400 million of 3% notes due July 15, 2022 at T+140, or 3.106%; and $600 million of 4.125% notes due July 15, 2027 at T+200, or 4.142%.

Both tranches were printed at the firm end of guidance in the T+145 and T+205 areas and through initial whispers in the areas of T+162.5 and T+225, respectively.

The New York–based luxury-goods company placed a debut senior unsecured offering in February 2015 for its acquisition of luxury-footwear company Stuart Weitzman. It printed $600 million of 4.25% 10-year notes due April 2025 at T+225, and the issue has traded over the last month at G-spreads bracketing 185 bps, before accounting for roughly 11 bps on the curve, according to MarketAxess.

In May, Coach announced that it would acquire competitor Kate Spade & Company for $18.50 per share in cash for a total transaction value of $2.4 billion. The deal is expected to close in the third quarter of this calendar year. Since then, Coach disclosed that it obtained a $2.1 billion unsecured bridge term loan credit family from BAML, and a $2 billion loan package from a group of 13 banks, the latter across a $900 million revolving loan facility; an $800 million, six-month term loan credit facility; and a $300 million, three-year term loan facility.

The acquisition will be funded with proceeds from today’s bond offering, along with cash on hand at Coach and Kate Spade, and roughly $1.1 billion in term loans (that the company expects to borrow at or around the time the merger is completed), according to regulatory filings. Additionally, Kate Spade’s $385 million term loan will be repaid with its own cash on hand, filings show.

The deal carries a special mandatory redemption at 101 if the merger is not completed by Feb. 7, 2018. Additionally, the structure offers investor protections via 25 bps coupon steps per each notch downgrade by ratings agencies below the investment-grade level, to a maximum of 200 bps, falling away on a rise at BBB+/Baa1.

Earlier today, S&P Global Ratings, Moody’s, and Fitch assigned respective BBB–/Baa2/BBB ratings to the new offering, which is expected to be $1 billion in size.

The acquisition did not trigger ratings actions from S&P Global Ratings, which only confirmed its current rating and stable outlook. “Pro forma for the new debt and acquisition, we forecast FFO to debt will decrease to mid-30% and improve to high-30% by the end of fiscal 2018 on the repayment of the $800 million term loan and continued EBITDA growth,” the agency said today.

Following the merger announcement, Moody’s reviewed its rating for a possible downgrade, but last week it confirmed the rating and revised the outlook to negative. “While the acquisition will increase the combined company’s pro forma leverage to 3.3 times from 2.0 currently, we expect leverage to decline to about 2.6 times in the next 12 months as the company plans to repay $800 million of debt using its cash balance and make additional prepayments using operating cash flow,” analysts said today.

“The negative outlook reflects the enhanced execution, integration and business risks that accompany the acquisition of Kate Spade particularly in light of the secular shifts in the overall retail business environment, the ever changing fashion trends and over promotion which could result in slowing EBITDA growth,” Moody’s said on June 1 when it revised its outlook.

Fitch—which last month placed its BBB rating on Rating Watch Negative, and anticipates a one-notch downgrade to BBB– once the merger is complete—today assigned its current rating to the new offering. “The acquisition would cause Coach’s leverage to increase from the current 2.6x level to 3.7x on a pro forma basis at closing and decline to around 3.3x at the end of FY 2018 upon the repayment of the $800 million six-month term loan. Leverage is expected to trend to under 3.0x over the following two years on EBITDA growth,” analysts said today. Terms:

Issuer Coach Inc.
Ratings BBB–/Baa2/BBB
Amount $400 million
Issue SEC-registered senior notes
Coupon 3.000%
Price 99.505
Yield 3.106%
Spread T+140
Maturity July 15, 2022
Call Make-whole T+25 until notes are callable at par from one month prior to maturity
Px Talk Guidance: T+145 area (+/– 5 bps); IPT: T+162.5 area
Issuer Coach Inc.
Ratings BBB–/Baa2/BBB
Amount $600 million
Issue SEC-registered senior notes
Coupon 4.125%
Price 99.858
Yield 4.142%
Spread T+200
Maturity July 15, 2027
Call Make-whole T+30 until notes are callable at par from three months prior to maturity
Trade June 6, 2027
Settle June 20, 2017
Books BAML/JPM(act)/HSBC(pass)
Px Talk Guidance: T+205 area (+/–5 bps); IPT: T+225 area
Notes Proceeds will be used to fund a portion of the Kate Spade acquisition
Deal includes 25 bps coupon steps per notch downgrade below investment grade
Special mandatory redemption at 101 if merger is not complete by Feb. 7, 2018


Try LCD for Free! News, analysis, data

Follow LCD News on Twitter.

This story is taken from analysis which first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan, high yield bond, and investment grade markets. You can learn more about LCD here.

content

Tenet Health Eyes $3.8B High Yield Deal to Redeem Debt

Tenet Healthcare has launched a $3.78 billion, three-tranche deal via Barclays (left), Bank of America Merrill Lynch, Goldman Sachs, Capone, Citi, RBC, SunTrust Robinson Humphrey, Wells Fargo, Morgan Stanley, and Scotia. Pricing takes place today, following an 11 a.m. EDT investor call.

The offering comprises $1.87 billion of secured first lien notes due 2024, $1.41 billion of secured second lien notes due 2025, and $500 million of unsecured notes due 2025. All three tranches are not callable for three years, and the first call will be at par plus 50% coupon.

Proceeds will be used to redeem the following tranches:

  • $1.041 billion of 6.25% secured first lien notes due 2018 (make-whole call roughly 105.9)
  • $900 million of secured first lien FRNs due 2020 (callable at 101)
  • $1.1 billion of 5% unsecured notes due 2019 (make-whole call roughly 105.3)
  • $500 million of 8% unsecured notes due 2020 (callable at 102.667).

The company was last in the market in November 2016, with 7.5% secured second-lien notes due 2022. These bonds were upsized by $250 million during marketing to $750 million, and closed on Friday at 108.75, yielding 4%.

The company has 6.875% notes due 2031 as its longest-dated outstanding bonds, and these are at 89. Otherwise, the new set of notes extends the borrower’s curve beyond the 8.125% unsecured notes due 2022, and 6.75% unsecured notes due 2023 that on closed on Friday at 106.2 yielding 6.6%, and 99.75 yielding 6.8%, according to S&P Global Market Intelligence.

No indication of ratings has been given by the leads, but the firm’s outstanding first lien notes are rated BB-/Ba3, with the unsecured bonds at CCC+/Caa1.

The Dallas-based company owns and operates general hospitals and related healthcare‎ facilities serving communities in the U.S. — Luke Millar

Try LCD for Free! News, analysis, data

Follow LCD News on Twitter.

This story is taken from analysis which first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.