Category: High Yield Weekly

19 May 2017

CAM High Yield Weekly Insights

Fund Flows & Issuance: According to Wells Fargo, flows week to date were $0.4 billion and year to date flows stand at -$4.1 billion. New issuance for the week was $2.4 billion and year to date HY is at $110 billion.

(Reuters) Oil rises after Saudi and Russia back longer supply cut

  • Oil jumped more than 2 percent to its highest in more than three weeks, topping $52 a barrel after Saudi Arabia and Russia said that supply cuts need to last into 2018, a step toward extending an OPEC-led deal to support prices for longer than first agreed.
  • Energy ministers from the world’s two top producers said that supply cuts should be prolonged for nine months, until March 2018. That is longer than the optional six-month extension specified in the deal.
  • Oil traders were surprised by the strong wording of the announcement, though it remained to be seen whether all countries participating in the deal would agree with the Saudi-Russian stance. Some analysts said that U.S. production could still threaten to disrupt the market balance unless the cuts were deepened.

(Globe Newswire) Avis Budget Group Announces Resignation of David Wyshner, President and CFO

  • Avis Budget Group, Inc. (NASDAQ:CAR) today announced the resignation of David B. Wyshner, President and Chief Financial Officer. Mr. Wyshner, who has served as the Company’s chief financial officer since 2006 and its president since January 2016, will leave the Company in June to pursue other opportunities.
  • “During his tenure at the Company, David consistently delivered results, and was instrumental in growing our global footprint and deploying our cash flow to enhance shareholder value,” said Larry De Shon, Avis Budget Group Chief Executive Officer. “We thank David for the work he has done and his dedication to our Company, which have positively impacted our strategies and contributed to our success, and wish him all the best in the future.”
  • “I am proud of what the Company has done to drive its evolution as a leading global player in its industry,” said Mr. Wyshner. “I look forward to moving on to new opportunities. At the same time, I am immensely grateful for the opportunity to have played a role in Avis Budget Group’s development and to have worked with so many talented colleagues.”
  • The Company intends to appoint Martyn Smith, who previously served as finance director of the Company’s Avis Budget EMEA subsidiary and of Avis Europe plc, to serve as interim chief financial officer and is conducting a search to fill the CFO position on a permanent basis.

(Business Wire) Thomas J. Aaron Named Chief Financial Officer of Community Health Systems

  • Aaron joined Community Health Systems in November 2016 following a 32-year career at Deloitte & Touche LLP where he retired as Tennessee Managing Partner. He led teams for many of the firm’s largest national healthcare provider and payer clients, including Community Health Systems, most recently in 2013.
  • Aaron succeeds W. Larry Cash, who retired May 16, 2017, after 20 years of service as the Company’s Chief Financial Officer.

(Benzinga) Signs A Sprint, T-Mobile Tie-Up Is Gaining Momentum

  • A long awaited Sprint Corp merger may be closer to completion than previously anticipated.
  • Sprint’s parent company SoftBank may be starting informal deal discussions with Deutsche Telekom, T-Mobile’s parent company, according to several recent press reports.
  • Softbank Group CEO Masayoshi Son previously stated that the preferred option of a Sprint merger was with T-Mobile.
  • According to Barclays’ analyst Amir Rozwadowski, the deal will ultimately come down to whether both parent companies can close a complicated and wide bid-ask spread.
  • Based on recent Barclays’ meetings with company management, T-Mobile has expressed it wants clear operational ownership in order to make sure a potential deal does not disrupt its three-year growth plan.
  • Rozwadowski believes Softbank is more flexible to get the deal done, especially after expressing a clear preference for a deal with T-Mobile. “We believe core considerations for Sprint would include value attribution to its expected margin expansion/and cash flow improvement, and significant 2.5 GHz spectrum holdings. Given its admission that it would be a willing buyer or seller, we believe the company seems more flexible on ownership structure.”

(The Hill) Sinclair deal puts heat on FCC

  • The proposed acquisition by Sinclair Broadcasting Group of Tribune Media Company is inflaming criticism of the Federal Communications Commission (FCC), which helped pave the way for the deal by relaxing media ownership restrictions.
  • Sinclair announced earlier this month that it had reached an agreement to buy Tribune for $3.9 billion. The announcement came several weeks after the FCC voted to ease restrictions on the amount of local television stations that broadcasters can own.
  • Broadcasters are now limited to serving 39 percent of the country’s households. Last month, the FCC reinstated what’s known as the UHF discount, which makes stations that used to broadcast on ultra-high frequency count less toward the 39 percent ownership limit.
  • Without the discount, Sinclair already reaches 38 percent of U.S. households, according to an analysis from Fitch Ratings. Once the discount goes into effect, the Fitch study finds, Sinclair’s share will drop to 25 percent — giving the company more room to buy local television stations.
  • The deal with Tribune is still likely to push Sinclair over the media limit, and the company has said that it will explore ways to avoid exceeding the cap.
12 May 2017

CAM High Yield Weekly Insights

Fund Flows & Issuance: According to Wells Fargo, flows week to date were -$1.6 billion and year to date flows stand at -$2.4 billion. New issuance for the week was $7.1 billion and year to date HY is at $108 billion.

(Variety) AMC Entertainment Quarterly Revenues Beat Estimates, but Buying Spree Takes Bite Out of Profits

  • Earnings at the world’s largest exhibition chain fell more than 70% to $8.4 million, which the company attributed to costs associated with its purchase of Odeon Cinemas Group and Carmike Cinemas, two deals that expanded its presence in Europe and the United States. Revenue for the three-month period ending in March rose 67.6% to $1.28 billion. Analysts had projected that the company would do $1.25 billion in sales.
  • Excluding merger and acquisition costs, AMC said its net earnings increased 7.5% to $34.6 million. Box office hits such as “Beauty and the Beast” and “Logan” helped goose attendance at the chain, with admissions revenues climbing nearly 70% to $817.3 million. AMC has invested heavily in updating its menu and moving beyond popcorn and soda. It has added alcoholic beverages and more inventive snacks at many locations. The strategy appears to be working — food and beverage revenues at the chain rose 63% to $397.9 million.
  • In a statement, AMC CEO Adam Aron said the company will continue to invest in sprucing up its food offerings and in outfitting theaters with recliner seats. He also predicted that the theater chain’s acquisitions would result in certain cost synergies.
  • “We are only just beginning to unlock the growth potential of our recent acquisitions,” Aron said. “The initial integration efforts of creating a transformed AMC have been done quickly and have been very smooth.”

(CNBC) Mortgage applications rise 2% as more buyers hit the spring market

  • Total mortgage application volume increased 2.4 percent on a seasonally adjusted basis last week from the previous week. Volume is still nearly 14 percent below year-ago levels because of weaker refinancing, according to the Mortgage Bankers Association .
  • Even as buyers complain of high home prices and limited listings, mortgage applications to purchase a home gained 2 percent for the week and are 6 percent higher than a year ago.
  • “Continuing strength in the job market and improving consumer confidence drove overall purchase applications to increase last week,” said MBA economist Joel Kan. “The index for purchase applications reached its highest level since the beginning of October 2015, which was the week prior to the implementation of the federal government’s ‘know before you owe’ rule.”

(Business Wire) AES Reports First Quarter 2017 Financial Results; Reaffirms 2017 Guidance and Long-Term Expectations

  • AES reported financial results for the three months ended March 31, 2017. Compared with last year, these results primarily reflect higher margins at the Company’s: Mexico, Central America and the Caribbean (MCAC) Strategic Business Unit (SBU). The positive contributions were partially offset by lower margins at the Company’s Europe SBU, due to the restructuring of the Power Purchase Agreement at Maritza in Bulgaria in the second quarter of 2016.
  • Consolidated Net Cash Provided by Operating Activities for the first quarter of 2017 was $703 million, an increase of $63 million compared to the first quarter of 2016. The increase was primarily driven by higher margins, as well as lower tax. First quarter 2017 Consolidated Free Cash Flow increased $56 million to $546 million compared to the first quarter of 2016.
  • “During the first quarter we made meaningful progress on our objectives for 2017, including restructuring our 531 MW Alto Maipo hydroelectric project in Chile, prepaying $300 million in Parent debt and reshaping our portfolio by exiting 3.7 GW of merchant coal-fired generation in Kazakhstan and Ohio,” said Andrés Gluski, AES President and Chief Executive Officer. “We secured final permits for our 1.4 GW Southland repowering project in California and agreed to acquire 386 MW of wind generation in Brazil. Along with our 3.4 GW currently under construction and expected to come on-line through 2019, we expect these projects to be significant contributors to our future growth.”
  • “Based on our first quarter results and our future outlook, we are reaffirming our 2017 guidance for all metrics, as well as our 8% to 10% average annual growth rate through 2020,” said Tom O’Flynn, AES Executive Vice President and Chief Financial Officer. “Our strong cash flow and continued Parent debt paydown keep us on track to achieve investment grade credit statistics.”

(Houston Business Journal) Calpine Corp. reportedly considers selling itself

  • People familiar with the matter told the Wall Street Journal that the company is working with investment bankers at Lazard Ltd. (NYSE: LAZ). A variety of private equity firms have expressed interest in Calpine, per the WSJ. However, the process is in the early stages, and there’s no guarantee a deal will be reached.
05 May 2017

CAM High Yield Weekly Insights

Fund Flows & Issuance: According to Wells Fargo, flows week to date were -$0.3 billion and year to date flows stand at -$0.8 billion. New issuance for the week was $3.9 billion and year to date HY is at $101 billion.

(New York Post) Almost 500K drop pay TV in Q1

  • Almost half a million subscribers stopped paying for cable, satellite and other pay TV formats in the first quarter
  • Charter Communications, which is integrating Time Warner Cable and Bright House Networks, lost 100,000 TV subscribers in the first quarter, on top of 105,000 in the prior quarter.
  • Charter, backed by John Malone’s Liberty Broadband, has said new pricing has led to customer departures, though it added 428,000 broadband subscribers.
  • The picture at Charlie Ergen’s satellite service Dish is even bleaker. The satellite provider lost 143,000 TV subscribers versus Street estimates for a loss of 72,000.
  • AT&T, which operates DirecTV and U-Verse, said its satellite TV service DirecTV was flat, while its U-Verse service lost 233,000.
  • Only Comcast managed to eke out subscriber growth, adding 32,000 TV accounts.

(Business Wire) Frontier Communications Reports 2017 First Quarter Results

  • Frontier Communications Corporation reported its first quarter 2017 results, and announced that the Board of Directors has revised the Company’s capital allocation strategy, which includes a reduction in the quarterly dividend to $0.04 per share, to enhance financial flexibility and achieve a targeted leverage ratio of 3.5x by year-end 2021, down from the current ratio of 4.39x.
  • Dan McCarthy, President and CEO, stated, “During the quarter, we continued to realize our targeted efficiencies and synergies, and I am also pleased to have achieved our third consecutive quarter of improved FiOS gross additions in the California, Texas and Florida (CTF) markets. We are executing on a number of initiatives with the goal of enhancing customer experience, reducing churn, stabilizing revenues and generating cash flow.
  • “Our Board regularly reviews the Company’s long-term capital allocation strategy, and it has determined to reduce the dividend at this time to provide additional financial flexibility, while still returning a meaningful cash dividend to shareholders. As we continue to execute on our strategy to deliver on the full potential of our strong assets and generate additional cash flow, we will optimize our capital allocation to ensure we strike a balance between investing in the business, paying down debt and returning capital to shareholders,” said McCarthy.

(Business Wire) Community Health Systems, Inc. Announces First Quarter 2017 Results

  • Net operating revenues for the three months ended March 31, 2017, totaled $4.486 billion, a 10.3 percent decrease, compared with $4.999 billion for the same period in 2016.
  • During the three months ended March 31, 2017, the Company recorded a non-cash expense totaling $250 million related to impairment charges to reduce the value of long-lived assets, primarily allocated goodwill, at hospitals that the Company has identified for sale. The impairment charges do not have an impact on the calculation of the Company’s financial covenants under the Company’s Credit Facility.
  • Commenting on the results, Wayne T. Smith, chairman and chief executive officer of Community Health Systems, Inc., said, “We continue to make good progress on our strategic and operational initiatives, and we are pleased to see these efforts reflected in our first quarter results. We are focused on performance improvements that we believe will yield additional efficiencies as we move through 2017. At the same time, we are making progress with our portfolio rationalization strategy as we work to create a stronger, more sustainable company for the future and further reduce our debt.”

(Globe Newswire) Avis Budget Group Reports First Quarter 2017 Results

  • For the quarter, the Company reported revenue of $1.8 billion and a net loss of $107 million, or $1.25 per share. The Company reported an Adjusted EBITDA loss of $27 million and an adjusted net loss of $81 million, or $0.94 per diluted share, in the quarter.
  • “Our first quarter results reflect higher-than-expected fleet costs, continued pricing pressures and a shift of Easter traffic to the second quarter,” said Larry De Shon, Avis Budget Group Chief Executive Officer. “We have taken meaningful actions to reduce costs by more than $50 million to mitigate the effects of weak vehicle residual values. We are optimistic that our results will be stronger over the balance of the year as used-car values began to improve near the end of the quarter and our strategic initiatives continue to gain momentum.”
  • Revenue declined 2% in first quarter 2017 primarily due to a 5% decline in pricing partially offset by a 3% increase in rental days. Our first quarter net loss was $107 million, and our Adjusted EBITDA loss was $27 million. Results were impacted by lower pricing and higher per-unit fleet costs in the Americas, and by the shift in Easter from March last year to April this year.

(Business Wire) The GEO Group Reports First Quarter 2017 Results

  • GEO reported first quarter 2017 Normalized Funds From Operations of $58.1 million compared to $48.7 million for the first quarter 2016. GEO reported first quarter 2017 Net Operating Income of $142.4 million compared to $136.3 million for the first quarter 2016.
  • George C. Zoley, Chairman and Chief Executive Officer of GEO, said, “We are pleased with our strong first quarter results, which were driven by robust financial and operational performance across our diversified platform of real estate, management and programmatic services. Our diversified platform has allowed us to provide cost-effective, high quality services for our government partners while delivering industry-leading, evidence-based rehabilitation programs to the men and women who have been entrusted to our care. We’re also pleased to have been able to confirm our split-adjusted Normalized FFO and AFFO guidance for the full-year despite our recent equity offering of 10.4 million split-adjusted shares in March of this year. We remain focused on expanding the delivery of our services and programs and on the effective allocation of capital to continue to enhance value for our shareholders.”
  • GEO reported total revenues for the first quarter 2017 of $550.6 million up from $510.2 million for the first quarter 2016. First quarter 2017 revenues reflect $57.2 million in construction revenues associated with the development of the 1,300-bed Ravenhall Facility in Australia compared to $40.8 million in construction revenues for the first quarter 2016.
28 Apr 2017

CAM High Yield Weekly Insights

Fund Flows & Issuance: According to Wells Fargo, flows week to date were $0.8 billion and year to date flows stand at -$0.5 billion. New issuance for the week was $4.2 billion and year to date HY is at $97 billion.

(Modern Healthcare) Some hospitals want to end mandatory bundled pay programs

  • Several hospitals have called on the CMS to turn bundled-payment initiatives for cardiac and orthopedic care into voluntary programs, as they don’t have the financial resources to invest in the changes.
  • The bundled-payment initiatives pose a serious hardship for safety net hospitals that rely mostly on the Medicare, Medicaid and disproportionate-share hospital payments, according to the Greater New York Hospital Association.
  • “Medicare and Medicaid rates no longer cover an adequate level of operating and capital costs, and the resulting lack of margins for safety net hospitals does not allow for capital investment,” the trade group said in an April 19 comment letter.
  • Pennsylvania-based Geisinger Health System said it is against making the models voluntary, as some hospitals may game the system by selectively referring or transferring complex patients to providers not participating in the model.
  • The American Hospital Association said it supported the models’ overall goal to make providers more accountable for coordinating patients’ care. However, it has voiced concerns in the past over the CMS’ pace of rolling out the models. The AHA supports an implementation delay through Jan. 1, 2018. However, the agency should not delay the models beyond that, the group said.

(Globe Newswire) PULTEGROUP, INC. REPORTS FIRST QUARTER 2017 RESULTS

  • “Reflecting our increased business investment over the past few years and the ongoing execution of our Value Creation strategy, PulteGroup delivered another quarter of significant operating and financial gains that drove a 17% increase in earnings to $0.28 per share,” said Ryan Marshall, President and CEO of PulteGroup. “Consistent with our focus on delivering superior returns over the housing cycle, we continue to realize strong operating margins, improve our asset efficiency and return excess funds to our shareholders.”
  • “Buyer interest during the spring selling season of 2017 has been high and points to the ongoing strength in recovery for the housing industry,” added Marshall. “Strong buyer demand continues to be supported by an improving economy and resulting employment and wage gains, high consumer confidence, a low inventory of new and existing homes, and the powerful demographic forces of Millennials and Baby Boomers. Given the strength of our land pipeline and our disciplined investment practices, PulteGroup is well positioned to grow its market presence and improve its financial performance within this operating environment.”
  • Home sale revenues for the first quarter totaled $1.6 billion, an increase of 14% over the prior year. Higher revenues for the quarter were driven by a 7% increase in closings to 4,225 homes, in combination with a 6% increase in average selling price to $375,000.
  • PulteGroup’s backlog at quarter end totaled 9,323 homes valued at $3.8 billion, compared with prior year backlog of 8,755 homes valued at $3.4 billion. The average sales price in backlog of $408,000 is up 6% over the prior year and reflects the ongoing shift in both the mix of homes sold toward more move-up product and toward higher prices within the buyer category.

(Reuters) Trump’s plan to slash business taxes seen as ‘guidepost’

  • President Donald Trump unveiled a one-page plan proposing deep U.S. tax cuts, many for businesses, that would make the federal deficit balloon if enacted, drawing a cautious welcome from fiscal conservatives and financial markets.
  • Trump’s package fell far short of the kind of comprehensive tax reform that both parties in Washington have sought for years
  • Investors, who had been awaiting tax-plan details for months, largely shrugged off the news, with many saying it was still short on specifics and faced a long road to enactment.
  • House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell and the top Republicans on the congressional tax-writing committees welcomed the Trump proposals, while leaving space for details to change as legislation evolves.
  • “The principles outlined by the Trump administration today will serve as critical guideposts” as Congress and the administration work on tax changes, they said in a statement.

(PR Newswire) Graphic Packaging Holding Company Reports First Quarter 2017 Results

  • Graphic Packaging reported Net Income for first quarter 2017 of $37.0 million. This compares to first quarter 2016 Net Income of $57.5 million.
  • “Our first quarter Adjusted EBITDA was lower as expected at $161 million compared to $193 million in the prior year period. Net sales were up 2.7%, reflecting recent acquisitions and stable core volumes, consistent with the trends we experienced in 2016. Operating efficiencies improved during the quarter and we successfully upgraded two headboxes on the number six paper machine at our West Monroe, Louisiana mill” said President and CEO Michael Doss. “The quarter was negatively impacted by accelerating commodity input costs, primarily recycled fiber, and the planned downtime costs associated with the upgrade of the two headboxes.”
  • “We are executing price increases to offset the unprecedented recycled fiber input cost inflation we are experiencing and expect margins to improve from our pricing actions during the second half of 2017, and in 2018. Our focus on meeting cash flow commitments, growing cash flow, and returning more of it to stockholders over time has not changed.”
21 Apr 2017

CAM High Yield Weekly Insights

Fund Flows & Issuance: According to Wells Fargo, flows week to date were -$21 million and year to date flows stand at -$1.3 billion. New issuance for the week was $1.4 billion and year to date HY is at $93 billion.

(Company Release) GEO Group Awarded Contract

  • GEO Group has been awarded a contract by U.S. Immigration and Customs Enforcement (“ICE”) for the development and operation of a new $110 million, company-owned 1,000-bed Detention Facility to be located in Conroe, Texas
  • GEO expects to design, finance, build, and operate the company-owned Facility under a ten-year contract with ICE, inclusive of renewal option periods. The 1,000-bed Facility is scheduled for completion in the fourth quarter of 2018 and is expected to generate approximately $44 million in annualized revenues and returns on investment consistent with GEO’s company-owned facilities.
  • “We are very appreciative of the continued confidence placed in our company by U.S. Immigration and Customs Enforcement,” said George C. Zoley, GEO’s Chairman and Chief Executive Officer.

(Fierce Cable) Sinclair, 120 Sports launching new linear sports network

  • Sinclair Broadcast Group, Silver Chalice and 120 Sports are launching a new multiplatform sports network with linear broadcast and digital offerings.
  • The companies will merge 120 Sports’ live studio operations, Silver Chalice’s Campus Insiders’ live collegiate games and Sinclair’s American Sports Network’s (ASN) distribution and live collegiate games. The companies intend to use the professional and collegiate rights from 120 Sports and Silver Chalice to increase access to post-game highlights, news, original long-form programming and full game archives provided by various partners.
  • “With this incomparable set of strategic partners, we are evolving ASN into a vastly improved network with access to exclusive content and a combined linear and premium OTT offering that is the model for the future of television,” said Chris Ripley, president and CEO of Sinclair, in a statement.
  • “Our recent focus has been on expanding our business with new digital multicast networks that leverage our broadcast spectrum and household reach,” said Ripley in a statement. “Much of the multicast market today focuses on classic TV and movie content, with little aimed at audiences for whom fresh and relevant pop culture content is important. With the launch of TBD, we aim to pair the very best premium digital-first content with the unmatched branding power of traditional television.”

(Business Wire) HCA Previews 2017 First Quarter Results

  • HCA anticipates revenues for the first quarter of 2017 to approximate $10.623 billion compared to $10.260 billion in the first quarter of 2016. Net income attributable to HCA Holdings, Inc. for the first quarter is expected to approximate $659 million, or $1.74 per diluted share, compared to $694 million, or $1.69 per diluted share, in the first quarter of 2016. Adjusted EBITDA for the first quarter of 2017 is expected to approximate $2.005 billion compared to $2.003 billion in the previous year’s first quarter.
  • Same facility admissions for the first quarter of 2017 increased 1.2 percent, while same facility equivalent admissions increased 1.6 percent when compared to the first quarter of 2016. Same facility emergency room visits for the first quarter of 2017 increased 1.1 percent from the prior year’s first quarter.
  • Results for the first quarter of 2017 were affected by changes in payer mix and the loss of one day when compared to the first quarter of 2016. Same facility Medicare admissions comprised 48.1 percent of the first quarter 2017 admissions, compared to 47.0 percent in the prior year’s first quarter. In the first quarter of 2017, same facility managed care/health exchange admissions comprised 27.4 percent of admissions, compared to 28.6 percent in the prior year’s first quarter.
  • Same facility revenue per equivalent admission is expected to increase approximately 1.7 percent in the first quarter of 2017 compared to the prior year’s first quarter.

(CNBC) US housing starts total 1.215M in March vs. 1.25M starts expected

  • U.S. homebuilding fell in March as the construction of single-family homes in the Midwest recorded its biggest decline in three years, likely reflecting bad weather.
  • Housing starts declined 6.8 percent to a seasonally adjusted annual rate of 1.22 million units, the Commerce Department said on Tuesday. February’s starts were revised up to a 1.30 million-unit pace from the previously reported 1.29 million-rate.
  • Economists polled by Reuters had forecast groundbreaking activity falling to a 1.25 million-unit pace last month. Homebuilding was up 9.2 percent compared to March 2016.
  • Construction in February was boosted by unseasonably warm temperatures. But temperatures dropped in March and a storm lashed the Northeast and Midwest regions, which could have accounted for the drop last month in homebuilding.
  • Single-family homebuilding, which accounts for the largest share of the residential housing market, fell 6.2 percent to a 821,000 unit-pace last month. Single-family starts in the Midwest declined 35 percent, the largest drop since January 2014, to their lowest level since August 2015.
  • Pointing to underlying strength in the housing market, building permits increased 3.6 percent, driven by a 13.8 percent surge in the multi-family segment.
  • A tightening labor market, which is generating steady wage growth is underpinning the housing market. The sector, however, remains constrained by a dearth of properties available for sale.
14 Apr 2017

CAM High Yield Weekly Insights

Fund Flows & Issuance: According to Wells Fargo, flows week to date were -$0.5 billion and year to date flows stand at -$0.6 billion. New issuance for the week was $5.0 billion and year to date HY is at $91.6 billion.

(Company Report) Frontier Communications Expands Broadband in Wisconsin

  • Frontier Communications announced that it has made enhanced broadband service available to an additional 8,100 households in Wisconsin. Frontier is leveraging the FCC’s Connect America Fund (CAF) program to bring broadband to approximately 5,000 households in CAF-eligible census blocks while expanding its overall service and reach to approximately 3,100 more households throughout Wisconsin.
  • “Through ongoing network investments, Frontier is providing broadband and faster speeds to residents,” John Van Ooyen, Frontier Director of Operations said. “We have been aggressively deploying and upgrading our broadband service and look forward to serving more residents.”
  • The deployments are made possible through a combination of Frontier’s capital investment and the CAF. The FCC established the CAF in 2011 to facilitate broadband deployment to the millions of Americans living in rural areas without access to broadband infrastructure. As of 2016, Frontier began receiving approximately $30 million a year from the CAF to expand and upgrade the company’s network to 77,000 locations in Wisconsin by the end of 2020.

(Fierce Cable) Charter sued for selling personal customer data without consent

  • According to the St. Louis Record, which obtained a copy of the Eastern District of Missouri court complaint filed on April 4, subscriber “A. Michael” said that between 2011 and 2013, Charter sold information such as names and addresses to unknown companies without customer consent.
  • The plaintiffs are alleging that Charter violated Missouri’s Merchandising Practices Act. Michael claims he was not provided with a copy of Charter’s privacy policy, which is required under that law. The complaint also said Charter failed to obtain written consent to sell the information or provide an opt-out provision.
  • Just as Comcast, AT&T and Verizon stated in similar messaging, Charter said the recent overturning by the Republican-led Congress of Obama-era FCC rules regulating ISP privacy does not change its position.
  • “Protecting the privacy of our consumers is one of our most important responsibilities as a broadband provider,” Charter said. “Recent activity by Congress does not change, or weaken, Charter’s commitment to the protection of our customers’ online privacy, or our rigorous privacy practices and policies. To be clear it also does not change the way in which Charter collects, uses or shares customer information.”

(New York Times) Trump Administration to Pay Health Subsidies Disputed by House

  • The Trump administration says it is willing to continue paying subsidies to health insurance companies under the Affordable Care Act even though House Republicans say the payments are illegal because Congress never authorized them.
  • The statement sends a small but potentially significant signal to insurers, encouraging them to stay in the market.
  • The Affordable Care Act requires insurers to reduce deductibles and other out-of-pocket costs for certain low-income consumers. The “cost-sharing” subsidies, which total $7 billion a year, compensate insurers for these discounts.
  • House Republicans sued the Obama administration, saying that the spending — in the absence of an appropriations law — was unconstitutional. A Federal District Court judge agreed and ordered a halt to the payments, but suspended her order to allow the government to appeal.
  • The Trump administration has not clearly indicated its position on the appeal. Asked to clarify, the Department of Health and Human Services sent a written statement on Monday: “The precedent is that while the lawsuit is being litigated, the cost-sharing subsidies will be funded. It would be fair for you to report that there has been no policy change in the current administration.”

(Moody’s) Moody’s upgrades DaVita to Ba2; outlook is stable

  • Moody’s Investors Service upgraded the ratings of DaVita, Inc. including the Corporate Family Rating to Ba2 from Ba3 and the Probability of Default Rating to Ba2-PD from Ba3-PD. Moody’s also upgraded DaVita’s senior secured credit facilities to Baa3 from Ba1 and its senior unsecured notes to Ba3 from B1. Lastly, Moody’s affirmed DaVita’s Speculative Grade Liquidity Rating of SGL-1. The outlook is stable.
  • The upgrade of DaVita’s Corporate Family Rating to Ba2 reflects Moody’s expectation that the company will benefit from US dialysis patient population growth of approximately 4% and stabilization of its integrated care business. Moody’s expects that DaVita will maintain adjusted debt to EBITDA in the mid-to-high 3 times range even in the face of several business uncertainties relating to biosimilars and the availability of charitable premium assistance.
31 Mar 2017

CAM High Yield Weekly Insights

Fund Flows & Issuance: According to Wells Fargo, flows week to date were $0.5 billion and year to date flows stand at -$2.7 billion. New issuance for the week was $2.4 billion and year to date HY is at $77.8 billion.

(Bloomberg) Huntsman Eyes Merger After Spinoff of Titanium-Dioxide Unit

  • Huntsman Corp. is considering a major merger after the planned spinoff of its paint-pigments business, Chairman Jon Huntsman Sr. said.
  • “We are looking seriously at the possibility of doing a merger or doing something that would double or triple our revenues,” Huntsman, 79, said Tuesday after speaking at a breakfast during an AFPM chemical conference in San Antonio. The company wants to “expand our horizons” to increase shareholder value, he said.
  • Seven or eight specialty chemical companies would make suitable business partners with Huntsman, some of which have already been in contact about a potential merger, the chairman said without naming them. Huntsman’s annual revenue will drop to $4.5 billion to $5 billion and profit margins will be higher after the midyear spinoff of the titanium-dioxide unit, which will be named Venator, Huntsman said.

(Business Wire) B&G Foods Announces Public Offering of Senior Notes

  • B&G Foods intends to use the proceeds of the offering to repay all of the outstanding borrowings under B&G Foods’ revolving credit facility and all of the outstanding amounts due in respect of B&G Foods’ tranche A term loans, and to pay related fees and expenses. B&G Foods intends to use any remaining net proceeds for general corporate purposes, which could include, among other things, repayment of other long term debt or possible acquisitions.
  • The $500.0 million aggregate principal amount of senior notes due 2025 priced at $100 with a 5.25% coupon

(Reuters) Trump, conservatives try to put aside bitterness to cut tax deal

  • Raw feelings and mistrust could pose an obstacle to President Donald Trump and hard-line conservative lawmakers in his Republican Party as they seek to rebound from defeat on healthcare legislation by launching into an overhaul of the U.S. tax code.
  • Trump has accused the Freedom Caucus lawmakers of snatching a “defeat from the jaws of victory” with their rejection of the White House-backed healthcare bill to replace President Barack Obama’s 2010 healthcare reform bill.
  • In interviews with 10 of the roughly three dozen House Freedom Caucus members, the lawmakers said they were eager to put aside tensions over the healthcare debacle and seek common ground on tax reform.
  • But there is no consensus, even within the conservative faction, on details of a tax-reform bill, with some members open to discussing ideas such as the border tax plan supported by House leaders and others opposed to it.

(CNBC) Homebuilders struggle to fill jobs

  • Homes in Denver take about two months longer than normal to build, and, in some cases, contractors are doubling their wages just to keep workers from skipping to the next site.
  • “The labor shortage has basically grown and accelerated. It’s the top challenge in the building industry right now,” said Rob Dietz, chief economist with the National Association of Home Builders.
  • “Because the building industry is highly decentralized you do see poaching. There are situations where you can recruit a worker, and they can work for you for a quarter or two, and then they’re working for another subcontractor down the road,” Dietz said.
  • Wages in the residential building industry are growing at twice the rate of wages in the overall economy. Labor is the top concern among the nation’s builders, according to an NAHB survey, and worry over its cost and availability is growing.

(Multichannel News) Spectrum Auction Ends with a Total Take of $19.8B

  • “Today’s conclusion of the assignment phase formally brings all bidding activity in this multi-phase auction to a close,” said Gary Epstein, chair of the FCC’s Incentive Auction Task Force. “The incentive auction has required unprecedented commitment from bidders as well as Commission staff, who from the moment that broadcasters made their initial commitments to the final bids processed this afternoon have worked each day to assist bidders and ensure a fair and successful auction. We are excited to share the results of the reverse and forward auctions and extensive information about the post-auction transition in the next few weeks.”
  • That is when the FCC will announce which stations and forward auction bidders got what and start the clock on the 39-month repack of TV stations and turning over the licenses for the reclaimed broadcast spectrum—84 MHz minus 14 MHz for unlicensed wireless—to those forward auction bidders.
  • The day after the mid-April release of the Auction Closing and Channel Reassignment Public Notice, which will identify the winning TV station bidders, the FCC will release “complete forward auction round-by-round results, including bidder identities.”
24 Mar 2017

CAM High Yield Weekly Insights

Fund Flows & Issuance: According to Wells Fargo, flows week to date were -$0.9 billion and year to date flows stand at -$3.3 billion. New issuance for the week was $9.2 billion and year to date HY is at $75.4 billion.

(CNBC) Housing Market is Quite Strong Across the United States

  • Consumer sentiment in both the economy and the housing market is rising and that is translating into strong demand from homebuyers. The trouble is, the supply of homes for sale is incredibly weak and getting weaker. What is for sale is selling fast.
  • The typical home that sold last month went under contract in 60 days, eight days faster than one year ago, according to a new report from Redfin, a real estate brokerage. Nearly 15 percent of all homes listed for sale in February were off the market within two weeks, up from 11.7 percent last year. This is the fastest February market Redfin has recorded since it began tracking in 2010.

(Business Wire) B&G Foods Announces CFO Resigns to Pursue Other Opportunities

  • Thomas P. Crimmins, the Company’s Chief Financial Officer, has resigned to pursue other opportunities. Mr. Crimmins’ decision was not the result of any dispute or disagreement with the Company on any matter relating to the Company’s accounting practices or financial statements.
  • The Company has initiated a search for a new Chief Financial Officer and until one is appointed, Amy Chiovari, currently the Company’s Corporate Controller, will serve as Interim Chief Financial Officer.
  • “On behalf of our entire team, I want to thank Tom for his contributions to B&G Foods’ success over the past two years and wish him continued success in his future endeavors,” said Robert C. Cantwell, President and Chief Executive Officer of B&G Foods. “I am also pleased to report Amy Chiovari will serve as Interim Chief Financial Officer. Amy has been an invaluable member of the B&G Foods family since joining the Company in 1996. Amy has served in various capacities within our accounting and finance department and over the years has been responsible for many functions, including, corporate accounting, corporate finance, financial reporting, treasury, tax and internal control over financial reporting.

(The American Institute of Architects) Architecture Billings Index rebounds into positive territory

  • Business conditions projected to solidify moving into the spring and summer
  • The American Institute of Architects (AIA) reported the February ABI score was 50.7, up from a score of 49.5 in the previous month. This score reflects a minor increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 61.5, up from a reading of 60.0 the previous month, while the new design contracts index climbed from 52.1 to 54.7.
  • “The sluggish start to the year in architecture firm billings should give way to stronger design activity as the year progresses,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “New project inquiries have been very strong through the first two months of the year, and in February new design contracts at architecture firms posted their largest monthly gain in over two years.”

(Bloomberg) Ally Adds Fuel to Avis’ and Hertz’ Fire on Residual Credit Risk

  • Ally Financial Inc. warned profit may grow less than anticipated only a few months ago, the latest sign that automakers’ heavy discounting and aggressive use of leasing to boost sales has created a supply glut hurting lenders and rental-car companies.
  • Ally Financial’s comments that used-car prices were down 7% in 1Q vs. its forecast of 5% adds fuel to the fire on the topic of residual values. Issuers such as Avis and Hertz, as well as automotive OEMs such as Ford and GM, are exposed to potential higher depreciation and writedowns if asset values decline faster than previously anticipated.
  • The National Automobile Dealers Association’s Used Car Guide index declined 3.8 percent in February, the eighth consecutive drop and the steepest since November 2008.

(Bloomberg) Trump Digs in Heels on Gambit for GOP to Vote on Health Bill

  • The Trump administration doubled down on its demand that House Republican leaders hold a vote Friday on their embattled health-care bill without any changes and with lingering uncertainty about whether they have enough support to pass the measure.
  • If the high-stakes gamble works and the House manages to pass the Obamacare replacement bill, it will be an important win for Trump and House Speaker Paul Ryan who have formed an uneasy alliance to repeal former President Barack Obama’s signature health-care law.
  • If the measure is blocked, it will be an embarrassing setback that casts doubt on Trump and Ryan’s ability to deliver on their ambitious agenda, including taxes and infrastructure, both of which are being closely watched by Wall Street.
  • “He wants to do this and he wants to do it now,” White House budget director Mick Mulvaney said of Trump on ABC Friday morning. “He also wants to move on to things like tax reform, infrastructure, restructuring the government, putting people back to work. He’s not willing to wait the several months an ordinary president would.”
  • The Trump administration made a last-minute deal with House conservatives to change the bill — by removing Obamacare’s requirements that certain essential benefits be covered by insurance — in an effort to win over holdouts, who had forced GOP leaders to delay a vote originally scheduled for Thursday.
  • Then Trump aides, including senior strategist Steve Bannon, went to Capitol Hill to deliver a message in person to House leaders and the Republican caucus that the president has run out of patience: Trump wanted a vote Friday, win or lose, even if that means leaving Obamacare in place.
10 Mar 2017

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
03 Mar 2017

CAM High Yield Weekly Insights

Fund Flows & Issuance: According to Wells Fargo, flows week to date were $0.5 billion and year to date flows stand at $8 billion. New issuance for the week was $2.3 billion and year to date HY is at $40 billion.

(Reuters) Sinclair approaches Tribune Media about possible deal

  • A deal between Sinclair and Tribune Media, which have market capitalizations of $3.8 billion and $3.3 billion respectively, would combine two of the largest U.S. local TV station owners and face regulatory curbs on how many households they can reach
  • Analysts have said the broadcast industry hopes President Donald Trump will lift caps on ownership concentration, allowing it to compete for audiences and advertising dollars against Facebook Inc and Alphabet Inc’s Google
  • The discussions between the companies are preliminary and there is no certainty they will lead to any deal, the sources said

(Business Wire) Frontier Communications Reports Financial Results

  • Dan McCarthy, President and CEO, stated, “During the quarter we made significant progress in positioning our company to deliver a better customer experience and improved financial performance, with greater financial flexibility. Our reorganization into separate Commercial and Consumer business units will result in a more customer-centric approach, while reducing expenses and enabling more efficient capital deployment.”
  • “Results for the fourth quarter were impacted by our intensified efforts to resolve acquired accounts in California, Texas and Florida that we have determined to be non-paying. This process is almost complete, and we expect to return to a normalized trend by the start of the second quarter. I am pleased that underlying CTF customer trends improved in Q4 and continue to improve in Q1.”

(Business Wire) Intelsat and OneWeb Announce Conditional Combination Agreement

  • Intelsat and OneWeb today announced that they have entered into a definitive combination agreement pursuant to which Intelsat and OneWeb will merge in a share-for-share transaction. Intelsat and SoftBank Group also entered into a definitive share purchase agreement pursuant to which SoftBank will invest $1.7 billion in newly issued common and preferred shares of the combined company
  • Both the merger and the SoftBank investment are subject to, among other conditions, successful completion of debt exchange offers to certain existing Intelsat bondholders as well as receipt of certain regulatory approvals

(Industrial Distribution) U.S. Oil Rig Count Now Above 600, Up 50% Year-Over-Year

  • The U.S. total active rig count made a small gain last week, adding three total. It was the sixth straight week the combined oil and gas rig total has increased. Friday’s rig count provided by oilfield services provider Baker Hughes, checked in at 754 — its highest since Nov. 20, 2015. The total is up by 50.2 percent from a year earlier, and up 86.6 percent since bottoming out at 404 in May 2016
  • The U.S. added five oil rigs last week, pushing its current mark to 602. It was the sixth straight week that the oil rig count has grown, and the 16th week in the past 17. The U.S. lost two gas rigs last week, marking just the second week of decline in the past 16. The active gas rig count of 151
  • Texas once again dominated the overall rig count gain last week, adding eight to a total of 386. That figure is up 67.1 percent year-over-year. Wyoming added one rig, Alaska and Louisiana each lost two and North Dakota lost one

(Business Wire) AES Corp. Reports Financial Results

  • Overall results reflected the impact from the devaluation in foreign currencies, lower electricity prices, certain gains that benefited 2015 results and higher non-cash impairment losses, partially offset by a lower effective tax rate
  • Consolidated Net Cash Provided by Operating Activities for full year 2016 was $2,884 million, an increase of $750 million compared to full year 2015. The increase was primarily driven by higher collections at the Company’s distribution businesses in Brazil, Eletropaulo and Sul, and the settlement of overdue receivables at Maritza in Bulgaria. These positive contributions were offset by lower margins across the SBUs, as well as the recovery of overdue receivables in the Dominican Republic in 2015, which benefited 2015 results. Full Year 2016 Proportional Free Cash Flow (a non-GAAP financial measure) increased $176 million to $1,417 million compared to full year 2015, primarily due to the same factors as Consolidated Net Cash Provided by Operating Activities
  • “We ended 2016 on a high note, achieving our guidance for all metrics, with cash flow coming in at the high end, and Adjusted EPS well within, our ranges. We also continued to make strides on our strategic objectives by completing 3 GW of construction projects, selling non-core assets and making further cost cuts and revenue enhancements,” said Andrés Gluski, AES President and Chief Executive Officer. “The recent purchase of sPower increases our long-term contracted, U.S. Dollar-denominated, renewable portfolio, which was one of our stated objectives for 2016.”