CAM High Yield Weekly Insights

Fund Flows & Issuance: According to Wells Fargo, flows week to date were -$2.7 billion and year to date flows stand at $5.2 billion. New issuance for the week was $16.7 billion and year to date HY is at $56.7 billion.

(The Hollywood Reporter) Regal CEO Backs Shortened Theatrical Windowing

• “As long as we can find a solution that grows the overall pie, we think it could be good for the overall industry,” Amy Miles told an investors conference.
• Miles confirmed discussions continue between major studios and exhibitors about possibly offering movies in a premium VOD window soon after their cinema run. She added any deal to emerge from those talks cannot eat into the existing theatrical business.

(Modern Healthcare) The battle begins as House Republicans release ACA repeal bill

• Under pressure from conservatives and the business community, House Republicans have released a bill to repeal and replace the Affordable Care Act that ditches their previous proposal to tax high-value employer health plans.
• The 123-page bill, dubbed the American Health Care Act, was released Monday night. It would replace the ACA’s income-based premium tax credits with fixed, age-based tax credits that generally would be smaller. It would end enhanced federal funding for states to expand Medicaid to low-income adults. And it would convert Medicaid from an open-ended entitlement to a program of capped, per-capita payments to the states.
• But the bill would continue funding for the Medicaid expansion until 2020, and also keep the law’s premium subsidies through the insurance exchanges until 2020. That could set up a political battle over keeping or ending Obamacare coverage expansions just as the next presidential election campaign heats up.

(Company Filing) Service Corp. reaches settlement with the IRS

• Service Corporation International reached an agreement in principle with the Internal Revenue Service to resolve the issues under audit with respect to tax years 1999 through 2005. In early March Service Corp received from the IRS Office of Appeals the fully executed Forms 870-AD, which, subject to finalization of computations, effectively settles the issues under audit for those years. As a result of this resolution, Service Corp anticipates paying approximately a net $40.0 million in tax and interest within the next few months and expects to fund this amount using available capacity under our bank credit facility. Furthermore, it is anticipated that the resolution of these tax audits will result in a reduction to current reserves for unrecognized tax benefits of approximately $100.0 million, and will result in a corresponding reduction in the 2017 tax expense.

(Bloomberg) Community Health Sells $2.2 Billion of Bonds Amid Debt Recovery

• Community Health Systems sold $2.2 billion of secured bonds on Tuesday to refinance some of its $15 billion debt load.
• Investor demand allowed the company to increase the size of its offering of 6.25 percent coupon six-year notes from a planned $1.75 billion. The bond deal is the company’s first since 2014 and comes after the hospital chain beat fourth-quarter earnings estimates and announced plans to divest more assets to lower its leverage.
• The Franklin, Tennessee-based company will use proceeds to pay down a portion of its debt, which is starting to rebound after trading at deep discounts following two consecutive quarterly losses in 2016. It will repurchase $700 million of 5.125 percent bonds due in 2018 and repay a $1.023 billion term loan

(Transcript) Spectrum Brands CFO Doug Martin makes comments at Raymond James Conference

• Now, we generate a lot of cash flow and we expect to generate a couple billion or more of operating cash flow over the next couple of years. And we have been, for the last couple of years, paying down debt. As we said, we would when we bought Global Auto Care.
• But now we have more optionality, we can continue to do bolt-on acquisitions and every few years you’ll probably see us do a transformational acquisition like Global Auto Care or like HHI, and you’re going to expect that from us. But if we don’t find attractive prices for acquisitions, we’ll pass. We haven’t bought anything in two years, because prices have just been – they’ve been too expensive. So we passed on a lot of opportunities and instead given some of that back to shareholders.
• And we’ve got a good track record of deleveraging after we do major acquisitions, and understand that there are limits to – self-imposed limits to the use of our balance sheet. And so, we’re willing to lever up as long as we have very clear line of sight to quickly delevering and integrating those acquired businesses.
• Our acquisition priorities are across all categories except for appliances and batteries. Batteries is probably not really an opportunity globally and appliances and personal care are lower EBITDA margin businesses, and they also have the lowest barriers to entry. So we probably wouldn’t do much in a way of M&A in those categories.

(Bloomberg) ADP Says Companies in U.S. Hired the Most in Almost Three Years

• Companies added the most workers in almost three years to U.S. payrolls in February on a surge in construction and manufacturing employment, data from the ADP Research Institute in Roseland, New Jersey, showed Wednesday.
• Private payrolls climbed by 298,000 (forecast was 187,000), the most since April 2014, after a revised 261,000 gain in January
• Goods-producing industries, which include manufacturers and builders, increased headcounts by 106,000, a record in data going back to 2002, after a 55,000 gain