Largest YTD US dollar-only financing in 2014; Dynegy places $5.1B high yield bond offering

150px-Dynegy_Logo.svgDynegy Finance this afternoon completed its jumbo $5.1 billion, three-tranche offering of senior notes via Morgan Stanley, Barclays, Credit Suisse, RBC and UBS. Terms on the B+/B3 deal were finalized at the middle of talk for two tranches and the tight end of talk for the 10-year series, though wide of whispers amid the market downturn this week. Sources said at the talk level, interest was strong and it was oversubscribed despite deteriorating market conditions. The transaction was initially lumped on the backlog in late August, when the iconic issuer announced that it agreed to acquire certain Midwest generation assets from Duke Energy for $2.8 billion, as well as EquiPower Resources and Brayton Point Holdings from Energy Capital Partners for $3.45 billion. The deals are expected to close in the first quarter of 2015, according to the firm.

Take note that this is the 10th largest high-yield deal on record, and it’s the largest U.S. dollar-only financing in completed in the year to date. Terms:

Issuer Dynegy
Ratings B+/B3
Amount $2.1 billion
Issue senior notes (144A)
Coupon 6.75%
Price 100
Yield 6.75%
Spread T+511
Maturity Nov. 1, 2019
Call nc2.5
Trade Oct. 10, 2014
Settle Oct. 27, 2014 (t+10)
Bookrunners MS/Barc/CS/RBC/UBS
Price talk 6.75% area
Notes first call par+50% coupon.
Issuer Dynegy
Ratings B+/B3
Amount $1.75 billion
Issue senior notes (144A)
Coupon 7.375%
Price 100
Yield 7.375%
Spread T+523
Maturity Nov. 1, 2022
Call nc4
Trade Oct. 10, 2014
Settle Oct. 27, 2014 (t+10)
Bookrunners MS/Barc/CS/RBC/UBS
Price talk 7.375% area
Notes first call par+50% coupon.
Issuer Dynegy
Ratings B+/B3
Amount $1.25 billion
Issue senior notes (144A)
Coupon 7.625%
Price 100
Yield 7.625%
Spread T+531
Maturity Nov. 1, 2024
Call nc5
Trade Oct. 10, 2014
Settle Oct. 27, 2014 (t+10)
Bookrunners MS/Barc/CS/RBC/UBS
Price talk 7.75% area
Notes first call par+50% coupon.

Even as take-private deals thin, private equity taps high yield bond, leveraged loan marts

While public-to-private buyouts – the signature deal for private equity firms – have been rare this year, sponsors hardly have been sitting on their hands.

Via a combination of non-P2P LBO and M&A-related transactions, as well as recaps and refinancing deals, PE-backed issuers have tapped the leveraged credit markets for $314.4 billion of new financing this year, including $260.4 billion of loans and $54.1 billion of high-yield bonds. That is down just slightly from last year’s record pace of $343.7 billion, split between $271.2 billion of loans and $72.5 billion of bonds.

– Steve Miller

Follow Steve on Twitter for an early look at LCD analysis, plus market commentary.


BreitBurn Energy shelves $400M high yield bond offering; 10th scrapped deal YTD

BreitBurn Energy Partners has shelved its plans to offer $400 million of 8.5-year senior notes due to market conditions. Price talk was in the 8.25% area, and proceeds were to fund an RC-repayment effort.

This is the tenth cancelled bond deal in the year to date, for a net $4.3 billion of withdrawn offerings, according to LCD. Most were opportunistic refinancing deals that couldn’t secure an appropriate rate, and one M&A deal, the Jupiter Resources financing, was successful in an eventual return to market.

BreitBurn was in market with the B-/B3 transaction via a Citi-led bookrunner team that includes BMO, Credit Suisse, J.P. Morgan, RBC, RBS, and Wells Fargo. Amid the marketing efforts there was a small revision to the call schedule. The initial pitch was for the new classic, with a first call premium at par plus 75% coupon after three years, but it was rejiggered to a first call at par plus 50% coupon after 4.25 years, according to sources.

Los Angeles-based BreitBurn is an independent oil-and-gas company with properties in Michigan, California, Wyoming, Florida, and Kentucky. The company trades on the Nasdaq under the symbol BBEP, with an approximate market capitalization of $2.4 billion. – Matt Fuller

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


Jefferies Finance $425M upsized high yield bonds (B/B1) price to yield 7.5%

jefferies_logo_1950Jefferies Finance this afternoon completed an offering of senior notes under Rule 144A for life via sole lead Jefferies, according to sources. The commercial finance firm is back in the market after seven months with another offering to support general corporate purposes. Take note that ratings of B/B1 that were assigned this week came with an S&P revision of the outlook for the credit to positive due to reduced leverage and improved liquidity.


Issuer Jefferies Finance
Ratings B/B1
Amount $425 million
Issue senior notes (144A-life)
Coupon 7.5%
Price 100
Yield 7.5%
Spread T+549 / 7-year
Maturity April 15, 2021
Call nc3 @ par+75% coupon
Trade Oct. 8, 2014
Settle Oct. 14, 2014 (t+3)
Bookrunners Jefferies
Price talk 7.5% area
Notes upsized by $25 million; first call par+75% coupon

High Yield Bond Funds Hit With $2.28B Investor Cash Withdrawal

high yield bond flow

Retail-cash flow turned negative for U.S. high-yield funds in the week ended Oct. 1, with a net outflow of $2.28 billion, according to Lipper. This is the largest withdrawal in eight weeks and the fourth over the past five weeks, for a net outflow of $3.9 billion over that span.

Mutual fund outflows made up the lion’s share, at 95% of the sum, or $2.17 billion, with exchange-traded funds filling out the 5% balance. That’s a sharp reversal from last week, when the $405 million mutual fund redemption was outweighed by an inflow of $584 million to the ETF segment.

The fresh outflow deepens the trailing-four-week reading to negative $926 million, from negative $406 million last week. This is the deepest reading for the measure in six weeks.

The full-year reading deepens to a $6.25 billion outflow, with 32% of the withdrawals tied to ETFs. One year ago at this time outflows totaled $1.65 billion, with inverse 9% linked to the ETF segment.

On top of the outflow, change due to market conditions was negative for the fourth week in a row, at $846 million, for roughly a 0.5% decrease of total assets, which stood at $175.2 billion at the end of the observation period, with 20% tied to ETFs, or $34.5 billion.

Total assets are up $5.7 billion year to date, reflecting a gain of roughly 3% in 2014. – Matt Fuller


NII Holdings creditors committee appointed, full list



The U.S. Trustee for the bankruptcy court in Manhattan on Sept. 29 appointed an official creditors’ committee in the Chapter 11 proceedings of NII Holdings, court filings show.

The members of the committee and their contact information are as follows:


  • Wilmington Trust, National Association (Attn: Peter Finkel (612) 217-5629)
  • Capital Research and Management Company (Attn: David Daigle (212) 581-5000)
  • Aurelius Capital Management, LP (Attn: Dan Gropper (646) 445-6570)
  • Wilmington Savings Fund Society (Attn: Patrick Healy (302) 888-7420)
  • American Tower do Brasil-Cessao de Infraestructuras LTDA (Attn: Susanne M. Kandel (617) 585-7752)

– Alan Zimmerman




Distressed Debt: Three New Additions to LCD’s Restructuring Watchlist

Gun-maker Colt Defense, Arch Coal and high-tech security concern Altegrity recently joined S&P Capital IQ/LCD’s Restructuring Watchlist, which tracks companies with recent credit defaults or downgrades into junk territory, issuers with debt trading at deeply distressed levels, as well as those that have recently hired restructuring advisers or entered into creditor negotiations.

Colt Defense, the 160 year-old gun manufacturing icon, joined the list as its bonds fell eight points last week after the company missed Street expectations for second-quarter results, according to LCD’s Matt Fuller. Management cited lower commercial and law enforcement rifle sales, as well as lower sales to the U.S. government. In the second-quarter report Colt said that, if not for an amendment, it would have been in violation of covenants as of June 29, and warned it may also be in default on a term loan at the end of the year.

Arch Coal joined the Watchlist last week as it saw its bonds fall more than four points, to a record low near 60, writes LCD’s Rachelle Kakouris. This followed a report by Nomura cautioning that fundamentals for the U.S. thermal coal market could deteriorate in 2015. The Nomura report was particularly bearish on Powder River Basin coal producers, of which Arch is second-largest.  (Of all those cited in the Nomura report, the hardest hit was Walter Energy, whose debt dropped nearly six points and whose name has already been on the Watchlist for weeks.)

Altegrity provides information, security, training, investigations, analytics, and technology services to governmental and commercial clients. It will be providing less of that in the near future, however, with the announcement that it has lost two government contracts, according to Kakouris. This prompted a downgrade of its credit rating by Moody’s, and further prompted a move onto LCD’s Restructuring Watchlist.

Moving off the Watchlist was RAAM Global Energy. Despite troubled times for many energy credits, RAAM managed to clear itself off the list with a leveraged loan deal which refinanced its revolver maturing July 1, 2015.

– Steve Richardson

Contact Marc Auerbach for questions on the Watchlist or LCD Research.





Trump Taj Mahal unsecured creditor committee appointed; full list, contacts

trumptajThe U.S. Trustee for the bankruptcy court in Wilmington, Del., appointed an unsecured creditors’ committee in the Chapter 11 proceedings of Trump Entertainment Resorts, which as reported owns the Trump Taj Mahal in Atlantic City, N.J., court filings show.

The members of the committee and their contact information are as follows:

  • Thermal Energy Limited Partnership I (Attn: Patrick Towbin, 609-572-7107)
  • Bally Gaming, Inc. (Attn: A.C. Ansani, 702-532-7515)
  • Unite Here Local 54 (Attn: Donna DeCaprio, 609-344-5400 x139)
  • National Retirement Fund (Attn: Richard N. Rust, 401-334-4155)
  • Atlantic City Linen Supply, LLC (Attn: Eric Goldberg, 609-345-5888)
  • South New Jersey Paper Products (Attn: Martin Spector, 856-691-2605)
  • Conner Strong & Buckelew Companies, Inc. (Attn: Heather A. Steinmiller, Esq., 267-702-1366)

– Alan Zimmerman



RSP Permian high yield bonds (B-/B3) price to yield 6.625%

rspRSP Permian this afternoon completed its debut offering of senior notes via Barclays, RBC, J.P. Morgan, and UBS. Terms were finalized at the tight end of guidance, along with a $50 million upsize. Proceeds will be used to repay amounts drawn under the revolving credit facility, with the balance used for general corporate purposes. Dallas, Texas-based RSP Permian is an independent oil and natural gas company focused on the Permian Basin of West Texas. The company trades on the NYSE under the symbol RSPP with an approximate market capitalization of $2 billion. Terms:

Issuer RSP Permian
Ratings B-/B3
Amount $500 million
Issue senior (144A)
Coupon 6.625%
Price 100
Yield 6.625%
Spread T+423
Maturity Oct. 1, 2022
Call nc3 @par+75% coupon
Trade Sept. 23, 2014
Settle Sept. 26, 2014 (T+3)
Bookrunners Barc/RBC/JPM/UBS
Co-Managers ABN/BOSC/Citi/Comerica/USB
Price talk 6.75% area
Notes Upsized by $50 million; first call at par +75% coupon.

Walter Energy flips PIK-toggle switch on 11% high yield bonds; debt hits fresh lows

walter energy Walter Energy bonds hit fresh lows today after the company told investors that it plans to flip the switch and pay half of the Oct. 1 interest due on its PIK toggle bonds with additional securities instead of cash. The 11% second-lien PIK toggle notes due 2020 slumped around three points to a new low of 48/50, according to sources.

The uniquely structured 11%/12% partial-PIK toggle bond issue offers the issuer the choice to pay 100% in cash; at 50/50% cash/PIK; or at 75/25% cash PIK.

The company said in a filing late yesterday that it has elected the 50/50 option, and said the same will apply for the April 1 coupon, despite assurances from CEO Walter J. Scheller III during its quarterly earnings call in July that there were “no liquidity concerns in our company at this point.”

Walter Energy – which according to Nomura analysts has been burning cash at a rate of approximately $170 million a year – will save approximately $10.5 million by exercising this option.

Elsewhere in the capital structure, the company’s covenant-lite B term loan due 2018 (L+625, 1% LIBOR floor) slipped one point, to 89.5/90.5, for a net three-point loss week over week, while first-lien 9.5% notes due 2019 followed the same tack, to 90.25/91.25, according to sources. In unsecureds, the 9.875% notes due 2020 and 8.5% notes due 2021 tumbled roughly four points, to the high-20s, for an approximate net 11-point decline on the week, sources noted.

As reported, bonds backing Walter Energy initially hit a record low last week as concerns continued to mount over the company’s significant debt load and worsening fundamentals in the U.S. thermal coal market. (See “Arch Coal, Walter Energy fall to record lows on coal demand warning,” LCD News, Sept. 18, 2014).

Standard & Poor’s, which rates Walter Energy CCC+ with negative outlook, in its most recent rating report said it believes that the company’s debt burden is “unsustainable, adding that they view Walter Energy’s liquidity as “less than adequate.”

Moody’s rates the company Caa2 with stable outlook.

NYSE-listed Walter Energy produces metallurgical coal for the global steel industry, and also provides steam coal and industrial coal, anthracite, metallurgical coke, and coal-bed methane gas. The company trades under the symbol WLT, with an approximate market capitalization of $188 million. – Rachelle Kakouris