Americas Primary Weekly
Market Surges With $7.5B of Issuance in Advance of Consumer Price Index, Fed Releases
Fri 03/08/2024 12:25 PM
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High-yield primary activity accelerated this week, with 10 deals pricing for a total of $7.5 billion. The market was dominated by issuers seeking to refinance upcoming maturities, with proceeds from all deals but three being used to redeem bonds and loans due in 2024, 2025 or 2026.
Today’s February nonfarm payroll report showed an unemployment rate of 3.9% - higher than the 3.7% recorded in January. The U.S. economy added 275,000 jobs in February, down from the upwardly revised 353,000 reported in January and beating market expectations of 198,000. The perception of a weaker labor market has prompted a greater sense that the Federal Reserve will be able to cut rates sooner rather than later.
The next round of Consumer Price Index figures will be released on Tuesday, March 12, providing further insight into the Fed’s next move. The figures follow recent comments from Fed Chair Jerome Powell, who said this week that the Fed is “not far” from having the confidence to cut rates.
Quotes for this week’s new issues are shown below:
High-Yield Issuance Summaries
Xerox Holdings Corp. issued $500 million - upsized from $400 million - of B1/BB senior unsecured notes due in 2029 to yield 8.875%. Proceeds will be used to repay upcoming bond maturities. Reorg’s financial analysis on the deal is HERE, and our covenant analysis is HERE.
New Fortress Energy issued $750 million - upsized from $500 million - of B1/BB senior secured notes due in 2029 to yield 8.75%. Proceeds will be used to partially repay amounts outstanding under the group’s senior secured notes due in 2025 and under its RCF. Reorg’s financial analysis of the deal is HERE, and our covenant analysis is HERE.
Clear Channel Outdoor priced its $865 million offering of six-year senior secured notes. Proceeds from the B2/B rated deal will be used to repay outstanding borrowings under the group’s term loan B due in 2026. Reorg’s financial analysis on Clear Channel Outdoor’s deal is HERE, and our covenant analysis is HERE.
United Rentals issued $1.1 billion of senior unsecured notes in a drive-by deal on Thursday, March 7. The notes were issued at par to yield 6.125%. Proceeds from the Ba2/BB+ notes will be used to fund the acquisition of Yak Access LLC.
USA Compression Partners also issued $1 billion of senior unsecured notes in a drive-by deal on Monday, March 4. The B2/B+ notes were issued at par to yield 7.125%, and proceeds will be used to redeem the group’s notes due 2026, with any remaining amount to be used to pay down a portion of the ABL facility.
Cleveland-Cliffs priced $825 million, upsized from $750 million, of eight-year senior unsecured notes. The Ba3/BB- notes priced at par to yield 7%, and proceeds will be used to redeem the company’s 6.75% secured notes due 2026.
Rithm Capital Corp. priced $775 million of five-year B3/B- senior unsecured notes on Tuesday, March 5. The 8% notes priced with an OID of 98.981 to yield 8.25%. Proceeds from the deal will be used for general corporate purposes and to fund a partial tender offer for up to $275 million of the company’s 6.25% senior notes due 2025.
Red Rock Resorts issued $500 million of senior unsecured notes, downsized from $750 million, on March 7. The notes were issued at par to yield 6.625% in a drive-by deal. Proceeds from the B3/B notes will be used, together with proceeds of the new term B loan (upsized by $250 million) and borrowings under the group’s new RCF, to refinance all loans outstanding under the existing credit agreement and for general corporate purposes.
The calendar is shown below:
Covenant Loan Coverage
In the primary loan markets, we completed loan document reviews of the term sheets and draft credit agreements for Truist Insurance, Pacific Dental, Groundworks, StubHub, EPIC Y-Grade, Fertitta Entertainment, Cengage Learning and Accuride.
To see our analyses of these documents or to talk to one of our legal analysts, click HERE. You can access an analysis if you have a copy of the applicable credit agreement.
Excel Download
High-yield primary activity accelerated this week, with 10 deals pricing for a total of $7.5 billion. The market was dominated by issuers seeking to refinance upcoming maturities, with proceeds from all deals but three being used to redeem bonds and loans due in 2024, 2025 or 2026.
Today’s February nonfarm payroll report showed an unemployment rate of 3.9% - higher than the 3.7% recorded in January. The U.S. economy added 275,000 jobs in February, down from the upwardly revised 353,000 reported in January and beating market expectations of 198,000. The perception of a weaker labor market has prompted a greater sense that the Federal Reserve will be able to cut rates sooner rather than later.
The next round of Consumer Price Index figures will be released on Tuesday, March 12, providing further insight into the Fed’s next move. The figures follow recent comments from Fed Chair Jerome Powell, who said this week that the Fed is “not far” from having the confidence to cut rates.
Quotes for this week’s new issues are shown below:
High-Yield Issuance Summaries
Xerox Holdings Corp. issued $500 million - upsized from $400 million - of B1/BB senior unsecured notes due in 2029 to yield 8.875%. Proceeds will be used to repay upcoming bond maturities. Reorg’s financial analysis on the deal is HERE, and our covenant analysis is HERE.
New Fortress Energy issued $750 million - upsized from $500 million - of B1/BB senior secured notes due in 2029 to yield 8.75%. Proceeds will be used to partially repay amounts outstanding under the group’s senior secured notes due in 2025 and under its RCF. Reorg’s financial analysis of the deal is HERE, and our covenant analysis is HERE.
Clear Channel Outdoor priced its $865 million offering of six-year senior secured notes. Proceeds from the B2/B rated deal will be used to repay outstanding borrowings under the group’s term loan B due in 2026. Reorg’s financial analysis on Clear Channel Outdoor’s deal is HERE, and our covenant analysis is HERE.
United Rentals issued $1.1 billion of senior unsecured notes in a drive-by deal on Thursday, March 7. The notes were issued at par to yield 6.125%. Proceeds from the Ba2/BB+ notes will be used to fund the acquisition of Yak Access LLC.
USA Compression Partners also issued $1 billion of senior unsecured notes in a drive-by deal on Monday, March 4. The B2/B+ notes were issued at par to yield 7.125%, and proceeds will be used to redeem the group’s notes due 2026, with any remaining amount to be used to pay down a portion of the ABL facility.
Cleveland-Cliffs priced $825 million, upsized from $750 million, of eight-year senior unsecured notes. The Ba3/BB- notes priced at par to yield 7%, and proceeds will be used to redeem the company’s 6.75% secured notes due 2026.
Rithm Capital Corp. priced $775 million of five-year B3/B- senior unsecured notes on Tuesday, March 5. The 8% notes priced with an OID of 98.981 to yield 8.25%. Proceeds from the deal will be used for general corporate purposes and to fund a partial tender offer for up to $275 million of the company’s 6.25% senior notes due 2025.
Red Rock Resorts issued $500 million of senior unsecured notes, downsized from $750 million, on March 7. The notes were issued at par to yield 6.625% in a drive-by deal. Proceeds from the B3/B notes will be used, together with proceeds of the new term B loan (upsized by $250 million) and borrowings under the group’s new RCF, to refinance all loans outstanding under the existing credit agreement and for general corporate purposes.
The calendar is shown below:
(Click HERE to enlarge.)
Covenant Loan Coverage
In the primary loan markets, we completed loan document reviews of the term sheets and draft credit agreements for Truist Insurance, Pacific Dental, Groundworks, StubHub, EPIC Y-Grade, Fertitta Entertainment, Cengage Learning and Accuride.
To see our analyses of these documents or to talk to one of our legal analysts, click HERE. You can access an analysis if you have a copy of the applicable credit agreement.
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