High-yield deals pushed back due to market volatility

(Recasts, adds quotes, details)

By Natalie Harrison

NEW YORK, Aug 6 (IFR) - Plans for a late summer issuance spree in the high-yield market have been derailed this week, with at least two deals postponed as a burst of volatility has pushed borrowers to the sidelines.

Spurred by the largest outflows from the asset class in a year, the market choppiness is forcing issuers to pay up to get deals over the line - and others to put their plans on hold.

More than US$5.5bn of cash was pulled from high-yield funds in July alone, according to Lipper, and the yield-to-worst on the Barclays (LSE: BARC.L - news) high-yield index has increased by almost 100bp to 5.75% from 4.83% on June 20.

"The market feels pretty rough, and it's all about price discovery right now and trying to see where deals will clear," said one senior leveraged finance banker.

"With summer setting in, there's a lot of apathy in the market, and people are not really feeling a need to put money to work."

Some corporate treasurers are now hoping for more stable market conditions in September once people return from the summer holidays.

Aircraft leasing company Milestone Aviation became the latest Wednesday to scupper its plans, pulling a US$350m high-yield bond due to the volatile market conditions.

"The company is an opportunistic issuer and the sloppiness of the market made it an easy decision to come back when things are more rational," said one market source.

Whispers on the three-year senior note, heard at 4.25% initially, were widened out to 4.75%-4.875% before the deal was yanked altogether.

Another source said that the issuer could have printed the trade but was sensitive about pricing.

JP Morgan is left-lead on the trade, while Bank of America Merrill Lynch, Deutsche Bank (Xetra: 514000 - news) , Nomura, SunTrust, Hunter and Jefferies are bookrunners.

NOT ALONE

Milestone is not the only would-be borrower coping with pushback from investors.

A much larger US$1.125bn eight-year issue for Jupiter Resources, which was expected to price last week, has also been delayed, market sources said. It is now not expected to come to market until after Labor Day, they said.

The deal, which will finance private equity company Apollo's purchase of Encana Corp's Bighorn energy properties in Alberta, had already seen whispers widened to 8.5% from 7.5%.

Credit Suisse (NYSE: CS - news) is left-lead, while bookrunners are TD Securities, RBC, Barclays, Goldman Sachs (NYSE: GS-PB - news) , UBS (NYSEArca: FBGX - news) , Deutsche Bank and Nomura.

There are nevertheless still some deals in the pipeline expected to price this week.

Container manufacturer BWAY Intermediate is on target to price a Triple C rated US$770m senior unsecured note on Thursday.

Bank of America Merrill Lynch is left-lead.

The bond, part of a broader financing that includes a US$1.1bn term loan, will repay its existing term loan, senior notes, and payment-in-kind (PIK) notes, as well as paying a US$200 million dividend to its shareholders.

Whispers on the deal are heard at 9% area.

Goldman Sachs and RBC are meanwhile aiming to price a US$310m senior secured five-year bond for NCSG Crane & Heavy Haul Corporation, but the issuer will have to pay more than it initially expected.

Whispers on that deal have widened out to 9% from 7.5%-8%. (Reporting by Natalie Harrison; Editing by Marc Carnegie)