(^38) International Financing Review March 7 2020
companies that became a key issue in
7INDSTREAMSûBANKRUPTCYûlLINGûLASTûYEAR
Uniti bonds reacted positively to the
news, with its 8.25% 2023 notes rising by
four points to 97, according to MarketAxess.
By Thursday, it was trading just under 95.
4HEûlRMSûûûNOTES ûSOLDûLASTû
month, were up by two points to 105. They
were still at that level on Thursday.
“This agreement has substantial strategic
value for Uniti, as it immediately allows the
COMPANYûTOûEXPANDûITSûNATIONALûlBREû
FOOTPRINTûWITHûABOUTû ûNEWûlBREû
STRANDûMILESûANDûûMILLIONûOFûEXISTINGûlBREû
strand miles that are able to be leased by
Uniti to a third party,” said Kenny
Gunderman, president and chief executive
OFlCERûOFû5NITI
Windstream had been arguing in court
that the 15-year lease agreement between
the two companies should be
RECHARACTERISEDûASûAûlNANCINGûARRANGEMENT û
which would have pushed Uniti
bondholders further down in the credit
structure and led to weaker recoveries.
Uniti bonds were the second most heavily
traded in the market on Monday, according
to MarketAxess.
Windstream also said on Monday it had
REACHEDûANûAGREEMENTûWITHûITSûlRSTûLIENû
CREDITORSûREGARDINGûITSûlNANCIALû
restructuring.
The agreement will reduce its funded debt
by more than US$4bn, the company said,
ANDûALLOWûITûACCESSûTOûEXITûlNANCING
7INDSTREAMûPLANSûTOûlLEûITSû#HAPTERûû
bankruptcy protection plan of
reorganisation, with a proposed new capital
structure, for approval by the end of March.
It is aiming to emerge from restructuring by
mid-year.
SAIC LANDS ACQUISITION BOND
SCIENCE APPLICATIONS INTERNATIONAL CORP priced
a US$400m high-yield bond on Wednesday
as investors looked to put cash to work after
a primary market shutdown the previous
week.
All-in funding levels remain attractive for
companies to raise cash, even if average
spreads have gapped out somewhat since
last month.
SAIC got a strong reception and was able
to bring pricing on a B1/BB– rated eight-year
non-call three senior unsecured at 4.875%,
inside talk of 5.25%.
That was roughly at the mid-point of
average Double B yields of 4.03% and
average Single B yields of 5.95%, according
to ICE BofA indices.
The notes were trading at 102.25 on
Thursday.
Average junk bond yields of 6.48% are off
the lows of 5.70% seen in January, but still
well inside the 8.30% levels of December
2018, according to JP Morgan researchers on
Wednesday.
Citigroup was lead-left on the debt
offering, with Bank of America, MUFG, PNC,
SunTrust, US Bank and Wells Fargo also on the
ticket.
The company provides technical,
engineering and enterprise IT services to the
US federal government.
Over 95% of SAIC’s US$6.3bn revenues are
derived from contracts with the US
government, the company said in an
offering memo.
SAIC will use proceeds as part of the
lNANCINGûFORûITSû53BNûACQUISITIONûOFû
Unisys’s federal business, which provides IT
solutions for several US federal agencies.
The acquisition will add around US$700m
of revenue and take pro forma adjusted
Ebitda to US$616m, up from US$499m as a
standalone entity, according to SAIC.
4HEûCOMPANYûISûlNANCINGûTHEûRESTûOFûTHEû
deal through a senior secured Term Loan B,
a US$200m receivables factoring facility and
US$46m of cash on hand.
Moody’s expects leverage to increase from
around 3.8x debt-to-Ebitda to around 4.8x as
a result of the acquisition, but said the deal
was competitively valuable and it expects
leverage to come down to the mid-3x range
by the end of January 2022.
MILLENNIAL DEMAND PROVING SOLID
FOUNDATION FOR HOMEBUILDERS
High-yield bond investors see
HOMEBUILDERSûASûWELLûPLACEDûTOûBENElTû
from growing demand for housing from
MILLENNIALûBUYERS ûWHOûAREûBENElTINGû
from lower mortgage rates but face a
shortage of supply.
Historically low mortgage rates, coupled
with strong employment levels, are pushing
more people to look to buy homes,
particularly millennials. This is drawing the
attention of bond investors.
The homebuilding sector was the best
performer in high-yield last year,
delivering over 17% through November,
according to JP Morgan’s review of 2019.
Data from the US Census Bureau in
January showed an increase in home-
ownership in the under-35 cohort over the
past year, rising from 36.5% in the fourth
quarter of 2018 to 37.6% in the fourth
quarter of 2019, while other age groups
REMAINEDûBROADLYûmAT
“As more and more people are employed,
younger people are able to move out of
apartments and apartment dwellers are
doing the math between escalating rental
rates and more affordable mortgages as a
result of the collapse in rates,” said Michael
Temple, director of US credit research at
Amundi Pioneer.
h4HATûISûDRIVINGûAûSIGNIlCANTûINCREASEûINû
homebuilding orders, and this virtuous
feedback loop is allowing them to put up
some pretty strong numbers.”
The shortage of available housing stock -
PARTICULARLYûFORûlRST
TIMEûBUYERSû
ûISû
underpinning increased demand for
homebuilders.
“There is underlying demand that is not
being met for the millennial buyer,” said
ALL INTL AUSTRALIAN DOLLAR BONDS
BOOKRUNNERS: 1/1/2020 TO DATE
Managing No of Total Share
bank or group issues A$(m) (%)
Including preferreds. Excluding equity-related debt.
Source: Refinitiv SDC code: K1
1 ANZ 4 1,090.70 17.7
2 CBA 2 800.00 12.9
3 Deutsche Bank 3 731.42 11.8
4 Nomura 6 569.95 9.2
5 Westpac 2 466.13 7.5
6 Citigroup 2 438.98 7.1
7 Mizuho 5 300.54 4.9
8 RBC 2 200.91 3.3
9 TD Securities 6 183.52 3.0
10 Emirates NBD 1 174.03 2.8
Total 32 6,179.30
GLOBAL DIM SUM BONDS
BOOKRUNNERS: 1/1/2020 TO DATE
Managing No of Total Share
bank or group issues Rmb(m) (%)
Including preferreds. Excluding equity-related debt.
Source: Refinitiv SDC code: AS24a
1 SG 2 2,155.00 13.0
2 HSBC 5 2,100.00 12.7
3 Standard Chartered 4 1,346.29 8.1
4 Credit Agricole 3 1,262.29 7.6
5 JP Morgan 1 1,000.00 6.0
6 Goldman Sachs 1 1,000.00 6.0
7 Natixis 1 1,000.00 6.0
8 Nomura 1 1,000.00 6.0
9 BNP Paribas 1 1,000.00 6.0
10 LBBW 1 1,000.00 6.0
Total 23 16,596.53
ALL INTL CANADIAN DOLLAR BONDS
BOOKRUNNERS: 1/1/2020 TO DATE
Managing No of Total Share
bank or group issues C$(m) (%)
Including preferreds. Excluding equity-related debt.
Source: Refinitiv SDC code: K2
1 TD Securities 5 711.51 16.8
2 Scotiabank 5 492.33 11.6
3 BMO 4 486.51 11.5
4 Morgan Stanley 1 250.00 5.9
5 CIBC 4 242.33 5.7
6 RBC 4 242.33 5.7
7 NBC 3 217.36 5.1
8 Industrial Alliance 1 11.54 0.3
9 Desjardins Group 1 11.54 0.3
10 BFIN Securities 1 11.54 0.3
Total 9 4,229.85
6 IFR Bonds 2323 p 25 - 53 .indd 38 06 / 03 / 2020 19 : 18 : 08
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