IFR International - 03.11.2018

BONDS HIGH-YIELD

/NEûOFûTHEûTHINGSûTHATûMAYûHELPûSTEMû
FURTHERûWEAKNESS ûHOWEVER ûISûAûLIMITEDû
SUPPLYûPIPELINE
One large known deal in the pipeline is a
4RIPLEû#ûRATEDûBONDûTHATûWILLûHELPûlNANCEû
THEûBUYOUTûOFûHOSPITALûOPERATORûLIFEPOINT
HEALTHûBYûPRIVATEûEQUITYûlRMû!POLLOû
ûBUT û
OTHERûTHANûTHAT ûITûISûMOSTLYûRElNANCINGSû
THATûWILLûDRIVEûSUPPLY
)NûTIMESûOFûMARKETûVOLATILITY ûINVESTORSû
tend to have more luck demanding higher
YIELDSûONûACQUISITIONûlNANCINGS ûASûISSUERSû
HAVEûLESSûmEXIBILITYûONûTIMING
)TûREMAINSûTOûBEûSEENûHOWû,IFE0OINTûFARES û
THOUGHûAûLARGEûPARTûOFûTHATûBONDûHASûALREADYû
BEENûPRE
PLACED ûBANKERSûSAID
"UTûRECENTûLEVERAGEDûBUYOUTûBONDû
lNANCINGS ûTHOUGHûOFFûTHEIRûHIGHS ûAREû
HOLDINGûUPûREASONABLYûWELLû
ûWHICHûISû
helping keep fears contained.
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WHICHûNOWûOWNSû)&2 ûAREûQUOTEDûAROUNDû
ûû.OVEMBERû ûANDûû
û-AYû ûACCORDINGûTOû-ARKET!XESSû
4HEYûPRICEDûATûPARûINû3EPTEMBER
“I’m not panicking over this market.
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NERVOUSûTHISûCYCLEûMIGHTûPLAYûOUTûDIFFERENTLYv

BANKERS READY LIFEPOINT
BUYOUT FINANCING

"ANKERSûAREûREADYINGûAûMULTI
BILLIONûDOLLARû
lNANCINGûFORûREGIONALCARESû53BNû
ACQUISITIONûOFûHOSPITALûOPERATORûLIFEPOINT HEALTH.
4HEû53BNûCOVENANT
LITEûLOANûPORTIONû
OFûTHEûlNANCINGûLAUNCHEDûLASTû4UESDAY û
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53BNûHIGH
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MERGEûTHEûTWOûBUSINESSES ûISûALSOûlNANCINGû
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CitigroupûISûLEADINGûTHEûLOAN ûWHILEûBarclays
ISûLEADINGûTHEûBOND ûSOURCESûTOLDû)&2
4HEûDEALûISûTHEûFOURTHûLARGEûBUYOUTûlNANCINGû
to test investor appetite in the past few months.
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.OBELûANDû%NVISION ûWHICHûWEREûALLûWELLû
received despite weak covenants.
h4HEûBANKSûDIDûAûGOODûJOBûONûTHOSEûDEALS û
BUTûTHEYûHITûTHEûMARKETûATûTHEûRIGHTûTIME vû
said one investor.
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BEGUNûTOûSHYûAWAYûFROMûRISKIERûCREDITSû
4HOSEûBUYOUTûBONDSûAREûALSOûOFFûTHEIRûHIGHSû
after the recent weakening.
But not all of the US$1.575bn bond deal
FORû,IFE0OINTûWILLûHAVEûTOûBEûSOLDû/NEûSOURCEû

with knowledge of the deal told IFR a

SIGNIlCANTûPORTIONûHADûALREADYûBEENû

PRIVATELYûPLACED

“That helped provide a massive order

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30ûSAIDûTHEûPROûFORMAûADJUSTEDûNETû

leverage for the merged business would be

XûFORûûDECLININGûTOûAROUNDûXû

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AROUNDûX

4HOSEûLEVELSûAREûMEANINGFULLYûHIGHERûTHANû

,IFE0OINTSûHISTORICALûLEVERAGEûLEVELSûINûTHEû

HIGHûXûTOûLOWûXûRANGEû30ûSAID

/NEûINVESTORûWHOûHASûOWNEDû,IFE0OINTû

bonds for some time said it is a stable

business.

,IFE0OINTSûEXISTINGûSENIORûSECUREDûANDû

unsecured bonds are expected to be

REDEEMEDûASûAûRESULTûOFûTHEûACQUISITION

“We expected to be taken out at a

PREMIUMvûSAIDûTHEûINVESTORûh)TSûMOREûOFûAû

rural hospital operator but it is based in

good markets where there is not much

COMPETITIONv

EUROPE/MIDDLE EAST/

AFRICA

HEATHROW FLY-BY ADDS HY TO BREXIT

PRE-FUNDING

HEATHROWûADDEDûAûHIGH

YIELDûBONDûTOûITSûPRE

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DEALû

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LONGûlVE

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CALLABLEûSENIORûSECUREDûNOTE

4HEûBONDûPRICEDûATûûONûTHEûBACKûOFû

orders of around £500m – tighter than the

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HASûAûûYIELDûONûAûBONDûWITHûAûMATURITYû

THREEûYEARSûLONGERûTHEûaMûû-ARCHû

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h)TSûAûVERYû"YZANTINEûSTRUCTUREûFORûAû

DRIVE

BYûORûRATHERûmY

BYûTRADEvûSAIDûANû

investor.

The bond is being issued through holdco

Heathrow Finance.

The investor also said that the Brexit

premium was pushing coupons higher in

Heathrow’s capital structure.

The deal comes after Heathrow said on

&RIDAYûINûITSûQUARTERLYûRESULTSûTHATûITûHASû

RAISEDûAROUNDûaBNûINûûINûORDERûTOû

BOOSTûITSûlNANCIALûRESILIENCEûINûCASEûOFûAûNO

deal Brexit.

4HEûFUNDSûWILLûALSOûHELPûlNANCEûITSû

EXPANSIONûPROJECT

3ENTIMENTûISûSOURINGûAROUNDû5+ûAVIATIONû

ASûTHEû"REXITûNEGOTIATIONSûLINGERû-OODYSû

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HARDû"REXITûCOULDûAFFECTûMOREûTHANûûOFû

AIRûPASSENGERûTRAFlCûOUTûOFû"RITISHûAIRPORTS

-OODYSûADDEDûTHATûhINûTHEûUNLIKELYûEVENTû

OFûAûNOûAVIATIONûDEALûSCENARIOûASSOCIATEDû

DISRUPTIONSûWOULDûONLYûBEûTEMPORARYûDUEûTOû

the critical importance of air travel across

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Heathrow also stressed its position as the

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QUARTERLYûRESULTSû)TûSAIDûTHATûTHEûVASTûMAJORITYû

OFûSERVICESûWOULDûNOTûBEûIMPACTEDûBYûTHEû

5+

%5ûRELATIONSHIPûANDûITûEXPECTSûBILATERALûAIRû

service agreements to be put in place with EU

countries well in advance of Brexit.

Heathrow follows Eurotunnel holdco

'ETLINKSûDEBUTûHIGH

YIELDûBONDûINûLATEû

3EPTEMBERûANOTHERûDEALûWHEREû"REXITûWASû

in focus.

Getlink’s €550m 5NC2 senior secured

BONDûPRICEDûATûûWITHûAûSIMILARûSECURITYû

STRUCTUREû)FûSWAPPEDû(EATHROWûWOULDûBEû

YIELDINGûAROUNDûûINûEUROSûACCORDINGûTOû

IFR calculations.

!TûTHEûTIMEû(EATHROWûWASûIDENTIlEDûASû

THEûONLYûCOMPARABLEûFORû'ETLINKûTHOUGHûAû

lead stressed that Heathrow is far more

DIVERSIlED

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CHALLENGESûAGAINSTûTHEû5+ûGOVERNMENTSû

EXPANSIONûPLANSûFORûTHEûAIRPORTûONûWHICHûITû

will face a hearing in March.

(EATHROWû&INANCEûISûRATEDû"A""

BNP Paribas "$    ûCredit Suisse, ICBC and

ING were active bookrunners.

DIA COMPLIES WITH COVENANTS,

WORKING ON RESTRUCTURING

DIAûTOLDûANALYSTSûONû4UESDAYûTHATûITûHASûNOTû

BREACHEDûTHEûKEYûLEVERAGEûCOVENANTûONûITSû

CREDITûFACILITYûANDûISûWORKINGûONû

restructuring its debt.

h!SûOFûTODAYûWEûHAVEûNOTûBREACHEDûANYû

COVENANTûYETûBUTûOFûCOURSEûWEûKNOWûOURû

balance sheet and we are working to

RESTRUCTUREûDEBTvûCHIEFûEXECUTIVEû!NTONIOû

#OTOûTOLDûANALYSTSûONûAûCONFERENCEûCALLûTHATû

FOLLOWEDûQUARTERLYûRESULTS

4HEûCOMPANYûSUFFEREDûMULTI

NOTCHû

DOWNGRADESûTOûJUNKûEARLIERûTHISûMONTHûDUEûTOû

its struggles since Spain returned to economic

GROWTHû)TSûLATESTûRESULTSûSHOWEDûAûûPLUNGEû

INûITSûNINE

MONTHûADJUSTEDû%BITDAûLEVELûTOû

õMûDUEûTOûFALLûINû)BERIANûSALESûANDû

CURRENCYûDEPRECIATIONûINû!RGENTINAûANDû"RAZIL

!NALYSTSûHAVEûBEENûFOCUSEDûONûWHETHERûORû

NOTû$)!ûWILLûBEûABLEûTOûCOMPLYûWITHû

maintenance covenants on its revolving

CREDITûFACILITYûWHICHûREQUIRESûITûTOûMEETûAû

XûLEVERAGEûRATIOûTESTû4HEûCOMPANYûSAIDû

LEVERAGEûWASûATûXûFORûTHEûLASTûYEAR

$)!ûHASûHIREDûADVISORYûlRMû2OTHSCHILDûTOû

EVALUATEûITSûOPTIONSû.EITHERû$)!SûBANKSûNORû

bondholders have appointed advisers.

$)!ûALSOûREITERATEDûITSûFULL

YEARûPROlTû

EXPECTATIONSûOFûõM

õMûFORûûTHATû

WEREûRELEASEDûTOûMARKETûONû/CTOBERûûINû

ITSûTHIRDûPROlTûWARNINGûINûûMONTHSûANDû

restated 2017 results.