High-yielders rev up ahead of busy couple of weeks
Several European high-yield issuers hit screens on Monday, announcing roadshows ahead of what is expected to be another busy couple of weeks for the sector.
With market sentiment improving, supply expectations should remain sustained for the rest of April and beginning of May.
“Year-end numbers are going stale in two and a half weeks, that’s why there are so many issuers looking to come to the market at the same time,” said one banker.
“It’s a good window, not as tight as it was five months ago, but these markets won’t last forever so people are trying to take advantage of them while they can.”
The yield on the iBoxx European high-yield index had crept up to 3.14% by Friday’s close, according to Thomson Reuters data, from 3.06% on April 17 but still some way from the 2018 peak of 3.31% touched on April 4.
“European HY’s spreads continued to tighten [last] week, down 9bp overall across all ratings,” wrote Benjamin Sabahi, head of credit research at Spread Research. “Returns were nevertheless close to zero due to a rebound in 10Y Bund (+8bp) to 0.5%.”
An investor also reckoned that a couple of successful trades last week, from Samsonite and Piaggio, have helped boost issuer confidence.
BULGING PIPELINE
Following in Flora’s footsteps another two Single B names - Fedrigoni and Refresco - have hit the road for bonds that form part of LBO financings.
Fedrigoni, via Fabric BC SpA, will finish investor meetings on Thursday for a debut high-yield offering. The Italian luxury paper maker is marketing a €445m November 2024 NC1 senior secured floater via BNP Paribas (B&D), HSBC, KKR and UBI Banca.
Proceeds will repay a bridge facility used to back its takeover by Bain Capital, which was announced in late December.
Moody’s has assigned a B2 rating to the bond, one notch below the corporate rating, reflecting the notes’ effective subordination to a €100m super senior revolving facility.
Dutch bottling company Refresco, via Sunshine Mid BV, also started meeting investors in London on Monday ahead of €445m 8NC3 senior notes. Global coordinators are Credit Suisse (left), BNP Paribas and JP Morgan, joined by ABN Amro, Deutsche Bank, Mizuho and Rabobank as bookrunners.
There as well, proceeds will go towards refinancing an existing bridge facility used in connection with the acquisition by Sunshine Investments.
Sunshine is a consortium consisting of PAI Partners and British Columbia Investment Management Corporation. In late December, Refresco completed €2bn-equivalent of loans backing the buyout.
La Financiere Atalian is another Single B credit on the road on Monday, targeting €610m-equivalent 7NC3 senior unsecured notes split between euro and sterling tranches via BNP Paribas and Credit Suisse (B&D) as global coordinators. Citigroup is joint bookrunner.
The facilities management company will use proceeds to repay a bridge loan backing its £550m acquisition of UK-focused Servest and refinance substantially all the target’s existing debt.
Atalian’s leverage is expected to increase to between 5.0 and 5.5 times after the acquisition. The company plans to reduce leverage to 4.5 times in the short to medium term.
The other two names kicking off roadshows on Monday are Neptune Energy and Darling Ingredients.
The former will join other energy companies tapping the US dollar market recently and is looking to issue US$500m 7NC3 senior notes via JP Morgan (physical books and B&D), Citigroup and Deutsche Bank. IPTs have been set at high 6s/7%.
The bond, rated B2 by Moody’s, will be used to partly repay, without cancelling, its reserve based lending drawdown.
Joint bookrunners are Bank of China, BNP Paribas, DNB, Goldman Sachs, HSBC, ING, Morgan Stanley, Natixis, RBC, Scotia and Societe Generale, and the investor meetings are scheduled to run until May 1.
Darling Ingredients, which manufactures food, feed and fuel solutions using organic by-products, is looking to refinance all its euro 2022 notes using proceeds from €515m 8NC3 senior notes. Bookrunners are BNP Paribas (B&D), Bank of America Merrill Lynch, Citigroup, JP Morgan and Goldman Sachs.
Meeting investors from Tuesday is Double B rated rare issuer Tele Columbus. Although the German cable operator has issued bonds in the past, it currently has none outstanding.
Tele Columbus is targeting a €500m 7NC3 to repay outstanding debt. The roadshow runs until Thursday via Bank of America Merrill Lynch as global coordinator and Deutsche Bank as joint bookrunner.
