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Mobile Mini High Yield Bonds Price to Yield 5.875%; terms

Mobile Mini this afternoon completed an offering of senior notes via a Deutsche Bank–led bookrunner group. Terms on the BB–/B2 offering were finalized at the tight end of talk amid the mixed market conditions today, according to sources. Proceeds will be used to refinance the borrower’s $200 million of 7.875% notes due 2020, which are currently callable at 103.938, and to repay ABL debt. Terms:

Issuer Mobile Mini
Ratings BB–/B2
Amount $250 million
Issue senior notes (144A)
Coupon 5.875%
Price 100
Yield 5.875%
Spread T+423
Maturity July 1, 2024
Call nc3 @ par+75% coupon
Trade May 4, 2016
Settle May 9, 2016 (T+3)
Bookrunners DB/BAML/JPM/Barc/BNP
Co-managers BBVA, MUFG
Price talk 6% area
Notes First call par+75% coupon.

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PTC debut bonds price inside of talk, at par to yield 6%; terms

Engineering software company PTC this afternoon completed its debut in market via J.P. Morgan as sole bookrunner. Terms on the BB–/Ba3 transaction were finalized inside of talk by 12.5 bps, at 6%, and an early read from the gray market points to follow-on demand, with quotes up at least one point on the break, according to sources. Proceeds will be used to repay a portion of the amounts outstanding under the company’s bank credit facility, filings showed. Needham, Mass.–based PTC offers software and services tied to computer-aided design products and engineering calculation solutions. Terms:

Issuer PTC Inc.
Ratings BB–/Ba3
Amount $500 million
Issue senior notes (SEC reg.)
Coupon 6%
Price 100
Yield 6%
Spread T+434
Maturity May 15, 2024
Call nc3 @ par+75% coupon
Trade May 4, 2016
Settle May 12, 2016 (T+6)
Bookrunners JPM
Co-managers Barc, FTS, HSBC, JM, Key, RBC, RBS, Sant, STRH, TD, Hunt, USB
Price talk 6.25% area
Notes First call par+75% coupon; inside of talk by 12.5 bps.
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Denbury bonds slip, shares gain after distressed bond-and-stock swap

Bonds backing Denbury Resources slipped today after the company unveiled a privately negotiated, bond-uptier and shares debt exchange roughly three months since a prior debt swap was cancelled after investor resistance. In this new deal, the net consideration worked out of about 57% of par based on participation, but not including the value of equity, according to a company statement.

All three series were lower today after suppression within the capital structure. The 5.5% subordinated notes due 2022, for one, shed three points, to 58/60, while the 4.625% notes due 2023 gave up the same amount, to 54/56, according to sources.

Denbury shares, however, edged up roughly 3% this morning on the NYSE, to $3.72.

Under terms of the transaction as announced by the company, approximately $839.4 million of the three series of subordinated notes were swapped out for roughly $482.9 million of new 9% second-lien exchange notes due 2021 and 33.6 million shares of the Denbury common stock, the filing showed.

As for the three series, consideration was on $123.4 million of the $400 million of 6.375% notes due 2021; $301.7 million of the $1.25 billion of 5.5% notes due 2022; and $414.3 million of the $1.2 billion of 4.625% notes due 2023, according to a company statement.

The exchange offer followed open market repurchases of the three series during the first quarter of a net $152.3 million. With that and the bond swap, bond debt outstandings were reduced to $2.34 billion, from $2.85 billion, according to the company.

Recall that Denbury in late January cancelled a prior debt swap (see “Denbury cancels uptier bond swap after push-back, bond price drops,” LCD News, Jan. 21, 2016).

As reported, Denbury last month disclosed that it reduced the borrowing base under its revolver due December 2019 by $450 million, to $1.05 billion. Bonds were modestly higher at the time (see “Denbury Resources cuts revolver borrowing base by $450M, to $1.05B,” LCD News, April 19, 2016). — Matt Fuller

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Hanesbrands Drives By High Yield Bond Mart with $1.5B Offering

Hanesbrands is driving by with a $1.5 billion dual-tranche offering of senior notes comprising an eight-year and 10-year tranche, neither of which is callable. J.P. Morgan, Bank of America Merrill Lynch, Barclays, HSBC, SunTrust Robinson Humphrey, and Goldman Sachs are bookrunners. Pricing will follow this afternoon, with an investor call scheduled for 11 a.m. EDT.

Proceeds from the 144A-for-life offering will be used to redeem its $1 billion 6.375% notes due 2020 and to repay revolver drawings. For reference, the bonds are currently callable at 103.188.

Those notes were issued in 2010, and mark the company’s only outstanding bonds. The borrower was last seen late last year seeking a $300 million incremental A term loan to refinance borrowings under its $1 billion revolver due April 2020

Banks comment that they envisage the new bond ratings could be BB/Ba2.

Winston-Salem, N.C.-based Hanesbrands sells a variety of apparels for men, women, and children. — Luke Millar

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United Rentals Prices $750M Bond Offering to yield 5.875%

United Rentals late last week completed an offering of 10.5-year senior notes with SEC registration via a Bank of America–led bookrunner group. Terms on the BB–/B1 transaction were finalized at the middle of talk after just intraday market efforts, according to sources. While structure is somewhat of an old classic, albeit six months longer than usual, the terms includes a larger-than-typical, but increasingly acceptable, three-year equity clawback option for up to 40% of the issue, at par plus coupon, the sources added. Proceeds from the deal, with some ABL borrowings, will redeem $550 million of the $750 million outstanding in 7.375% notes due 2020 at next month’s first call price of 103.688, and all $300 million of the 8.25% notes due 2021 at the current call price of 104.125, the filings showed. Terms:

Issuer United Rentals (North America)
Ratings BB–/B1
Amount $750 million
Issue senior notes (SEC reg.)
Coupon 5.875%
Price 100
Yield 5.875%
Spread T+404
Maturity Sept. 15, 2026
Call nc5.5 @ par+50% coupon
Trade April 29, 2016
Settle May 13, 2016 (T+10)
Bookrunners BAML/Barc/CITI/DB/JPM/MUFG/MS/Scotia/WFS
Co-managers BMO, HSBC, PNC, STRH
Price talk 5.875% area
Notes first call par+50% coupon; w/ three-year equity clawback option for up to 40% of the issue @105.875.

This story first appeared on www.lcdcomps.com, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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US high yield fund flows stay positive in week, but against ETF outflows

U.S. high-yield funds recorded an inflow of $297 million in the week ended April 27, according to Lipper. This is a fourth-consecutive infusion to the asset class, but it’s down from $410 million last week. Regardless, with larger inflows prior, the trailing-four-week measurement expands to positive $493 million per week, from positive $283 million last week.

HY fund flows April 27 2016

However, take note that it was a larger inflow to mutual funds, at $555 million, that was dented by outflows of $259 million from the ETF segment. In contrast, last week’s inflow was almost all ETF-related, at 94% of the sum, while two weeks ago, it was mutual fund outflows filled back in by ETF inflows.

Whatever that might say about fast money, hedging strategies, and other market-timing efforts, this past week is a net inflow that boosts the year-to-date total infusion to $9.7 billion, with squarely 50% ETF-related. Last year at this point, after 17 weeks, the $10.5 billion net inflow was 45% ETF-related.

The change due to market conditions this past week was positive $618 million, which is not much against total assets of $191.8 billion at the end of the observation period, at positive 0.3%. ETFs account for about 21% of the total, at $40.6 billion. — Matt Fuller

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

 

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US High Yield Bond Funds See $297M Cash Inflow, Despite ETF Withdrawals

US high yield fund flows

U.S. high-yield funds recorded an inflow of $297 million in the week ended April 27, according to Lipper. This is a fourth-consecutive infusion to the asset class, but it’s down from $410 million last week. Regardless, with larger inflows prior, the trailing-four-week measurement expands to positive $493 million per week, from positive $283 million last week.

However, take note that it was a larger inflow to mutual funds, at $555 million, that was dented by outflows of $259 million from the ETF segment. In contrast, last week’s inflow was almost all ETF-related, at 94% of the sum, while two weeks ago, it was mutual fund outflows filled back in by ETF inflows.

Whatever that might say about fast money, hedging strategies, and other market-timing efforts, this past week is a net inflow that boosts the year-to-date total infusion to $9.7 billion, with squarely 50% ETF-related. Last year at this point, after 17 weeks, the $10.5 billion net inflow was 45% ETF-related.

The change due to market conditions this past week was positive $618 million, which is not much against total assets of $191.8 billion at the end of the observation period, at positive 0.3%. ETFs account for about 21% of the total, at $40.6 billion. — Matt Fuller

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

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This story was originally published on www.lcdcomps.comLCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets.

You can learn more about LCD here.

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Bond prices rebound modestly, just shy of 2016 peak

The average bid of LCD’s flow-name high-yield bonds edged up 36 bps in today’s observation, to 96.54% of par, yielding 7.55%, from 96.18 on Tuesday, yielding 7.64%. Performance within the sample was mixed, with eight gainers against four unchanged and three lower.

The modest gain dents Tuesday’s decrease of 68 bps, for a net decline of 33 bps for the week. The average is essentially unchanged back two weeks, at negative three basis points, but it’s higher by 217 bps reaching back four weeks, as that observation includes more of the March rebound.

Recall that Tuesday was an initial reading in the red after a steady run higher over the past month to a 2016 peak of 96.87 recorded one week ago. That reading was 179 bps above the previous near-term high of 95.08 on March 22 and up 182 bps from the prior peak of 95.05 on March 3.

All said the average this week was essentially hovering just under the 2016 high, amid generally rangebound conditions amid a busy pipeline of first-quarter reports and with mixed cash flows to the asset class. The average is now up 425 bps in the year to date.

With today’s modest gain in average bid price, the average yield to worst slumped nine basis points, to 7.55%, but the average option-adjusted spread to worst cinched inward by just one basis point, to T+604. The smaller move of spread as compared to yield can be linked to the U.S. Treasury market strength of late, as falling underlying yields encourages spread-to-Treasury expansion. Take note that both 7.46% and T+593 one week ago at the 2016 peak price were appropriately the tightest levels this year but, technically, the tightest levels since late October.

Given a smaller sample of high-beta credits, the LCD flow names have been variable against broader market averages. For example, the S&P Dow Jones U.S. Issued High Yield Corporate Bond Index closed Wednesday, April 27, with a 7.31% yield to worst, but an option-adjusted spread to worst of T+895.

Bonds vs. loans 
The average bid of LCD’s flow-name loans was down eight basis points in today’s reading, to 99.15% of par, for a discounted loan yield of 4.25%. The gap between the bond yield and the discounted loan yield to maturity is 330 bps. — Staff reports

  • The data: Bids increase: The average bid of the 15 flow names advanced 36 bps, to 96.54.
  • Yields decrease: The average yield to worst slipped nine basis points, to 7.55%.
  • Spreads decrease: The average spread to U.S. Treasuries ticked lower by one basis point, to T+604.
  • Gainers: The largest of the eight gainers were equally two-point increases for Dish Network 5.875% notes due 2022, to 98, and Sprint 7.875% notes due 2023, to 78.5.
  • Decliners: The largest of the three decliners was Hexion 6.625% notes due 2020, which slipped one point, to 84.
  • Unchanged: Four of the 15 constituents were steady in today’s reading.
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McGraw-Hill Global Education bonds price at par; terms

The McGraw-Hill Global Education Holdings bond deal was completed this afternoon at the tight end of talk after the offering was downsized by $270 million, to $400 million, in favor of an increase to the concurrent B term loan, according to sources. Credit Suisse led a bookrunner team that includes Morgan Stanley, BMO, Jefferies, Barclays, Goldman Sachs, RBC, and Wells Fargo. Proceeds from the CCC+/B3 bond deal—and money from the blow-out loan effort—will be used to support a dividend recapitalization of the credit as it seeks to realign its corporate structure and refinance various subsidiary debts. To that end, recall that Apollo Management purchased the education publisher from the McGraw-Hill Cos. in 2013 for $2.4 billion, placing loans and $800 million of secured bonds at Global Education, and placing less debt on the separately siloed K-12 business, McGraw-Hill School Education. Terms:

Issuer McGraw-Hill Global Education
Ratings CCC+/B3
Amount $400 million
Issue senior notes (144A-life)
Coupon 7.875%
Price 100
Yield 7.875%
Spread T+616
Maturity May 15, 2024
Call nc3 @ par+75% coupon
Trade April 28, 2016
Settle May 4, 2016 (T+4)
Bookrunners CS/MS/BMO/JEFF/Barc/GS/RBC/WFS
Price talk 8% area
Notes First call par+75% coupon; downsized by $270 million in favor of increasing the TL; w/ three-year equity clawback option for up to 40% of the issue @par+coupon.
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Apple eyes new debt for $87B, eight-quarter capital return

Apple has again weighted a big $50 billion increase in its capital return program to debt-financed share repurchases, setting the stage for more blockbuster debt offerings after Apple printed $59 billion of debt in the U.S. since its debut deal almost three years ago, including $15.5 billion so far this year.

“As in the past, we expect to fund our capital return program with U.S. cash, future U.S. cash flow generation and borrowing from both domestic and international debt markets,” CFO Luca Maestri said yesterday on Apple’s earnings call, targeting $87 billion over the next eight quarters via buybacks and dividends. While Apple has issued in multiple currencies in recent years, the $59 billion of dollar-denominated debt accounts for the bulk of Apple’s $72 billion of term debt as of the end of March.

April has proven to be a big month for Apple bond news. Apple’s now $250 billion shareholder-return plan through March 2018—under which more than $163 billion was returned via buybacks or dividends through March—prompted Apple to make its debut bond offering on April 30, 2013, when it completed a $17 billion, six-part offering. One year later, on April 29, 2014, the company placed $12 billion in seven parts. Subsequent deals include a $6.5 billion, five-part deal in February 2015, an $8 billion, seven-part deal last May, and offerings so far this year of $12 billion in nine parts in February and $3.5 billion last month via reopenings.

The company paid relatively high costs for funds in mid-February, when the floodgates had just reopened after a harrowing early-month shutdown for the primary markets amid oil-related global volatility. But its costs have since tumbled: Apple’s 4.65% issue due Feb. 23, 2046—placed on Feb. 16 at T+205 as part of a nine-part deal—was reopened on March 17 at T+155, or well below the coupon rate at 4.24%, to raise the total amount outstanding to $4 billion. The issue stands roughly 15 bps wider week to week after the latest buyback news, but is still trading tighter since that tap in the low T+140s this morning, and at lower yields near 4.15%, trade data show.

Still, spreads are up since Apple placed 3.85% 2043 bonds in 2013 at T+100, followed by 4.45% 2044 bonds at T+100 in 2014.

Even as its first-quarter results revealed brisker-than-expected headwinds for its top line, Apple yesterday raised its overall program of direct returns to shareholders to $250 billion, from $200 billion. It boosted its share buyback authorization by $35 billion, to raise the total plan to $175 billion, as the program builds rapidly from an initial $10 billion amount announced in March 2012. Through March 26 this year, buybacks under the plan totaled $117 billion, according to S&P Capital IQ.

Apple also raised its dividend for the fourth time in less than four years, boosting the quarterly payout by 10% to $0.57 per share while stating plans for further annual increases.

For reference, Apple bought back more than $7 billion of its shares over the latest quarter and roughly $37 billion over the last 12 months, up from $34 billion over the year-earlier period. (At all-time peak levels, Apple repurchased $45 billion of its shares over the 2014 calendar year.)

Even so, the company continues to generate free cash. The combined $60 billion across buybacks, dividends, and capital spending over the last 12 months was still less than Apple’s $67.5 billion of operating cash flow. Notably, the company’s balance of cash and marketable securities increased by $17 billion over the latest quarter to roughly $233 billion, 90% of which was held offshore, the company said.

But while the pace of capital returns has been aggressive ahead of this latest boost, Apple may be tapping the brakes going forward, after operating cash flow declined 12% over the last 12 months from the year-earlier period. The company’s targeted $87 billion of investor returns over the next eight quarters compares with $94 billion over the last eight periods, filings show.

The AA+/Aa1 ratings profile on Apple senior debt includes stable outlooks on both sides, and both agencies today affirmed ratings following the boost to capital returns. “Although total shareholder returns may exceed discretionary cash flow on occasion, robust overall cash generation affords the company the flexibility to return large amounts of cash to shareholders without detracting from the overall credit quality,” S&P stated today, characterizing Apple’s financial policy as “conservative” and its financial risk as “minimal.” — John Atkins