Altice International, Altice France and Allied Universal term loans dip with downgrades

By Sara Rosenberg

New York, June 15 – Altice International and Altice France saw their term loans head lower in the secondary market on Thursday as both companies received a downgrade in ratings from Moody’s Investors Service, and Allied Universal’s term loan was softer with downgrade news as well.

Meanwhile, in the primary market, Helix Gen Funding LLC and Cyanco Intermediate 2 Corp. released price talk on their term loans in connection with their lender calls.

Altice International dips

Altice International’s term loan fell to 94¾ bid, 95¾ offered on Thursday from 95½ bid, 96½ offered on Wednesday as Moody’s cut the company’s corporate family and senior secured debt ratings to B3 from B2, and senior unsecured rating to Caa2 from Caa1, according to a market source. The outlook was changed to stable from negative.

“The ratings downgrade reflects the prolonged deterioration in Altice International’s credit metrics and the expectation that they will not improve to levels commensurate with the exiting B2 ratings over the next 12 to 24 months, despite the company’s steady operating performance,” says Ernesto Bisagno, a Moody’s vice president – senior credit officer – and lead analyst for Altice International, in the ratings release.

“The rating action also takes into account the company’s reduced financial flexibility owing to the recent €320 million dividend payment, and its ongoing weak free cash flow generation which will be further pressured by the increased cost of debt,” Bisagno added in the release.

Altice International is a cable, telecommunications and entertainment company.

Altice France softens

Altice France’s term loan slid to 87½ bid, 88½ offered from 88 5/8 bid, 89 5/8 offered on Wednesday with Moody’s decision to downgrade the company’s corporate family rating to B3 from B2 and senior unsecured debt rating to Caa2 from Caa1, a market source remarked. The senior secured debt rating was affirmed at B2 and the outlook was changed to stable from negative.

The downgrade was prompted by decline in the company’s credit metrics and the anticipation that they will not improve over the next 12 to 24 months to levels within the B2 ratings category, the rating release said.

“The rating action also takes into account the company’s weaker than expected operating performance and the ongoing negative free cash flow generation, which will be further pressured by the increased cost of debt,” Ernesto Bisagno, added in the rating release.

Altice France is a telecom operator in France.

Allied Universal slides

Allied Universal’s term loan dipped to 96 1/8 bid, 96 5/8 offered from 96½ bid, 96¾ offered after the company’s corporate family and senior secured instruments ratings were downgraded by Moody’s to B3 from B2, and senior unsecured debt rating was trimmed to Caa2 from Caa1, a trader said. The outlook was changed to stable.

Moody’s explained that the downgrade reflects the company’s persistently high leverage, the expectation of negative levered free cash flow for this year and aggressive financial strategies that includes frequent debt funded acquisitions.

The rating agency expects that despite solid revenue growth and stable margins, the company will likely continue to execute on debt funded acquisitions that will cause debt-to-EBITDA leverage to remain above 7x over the next 12-18 months. The company’s Moody’s adjusted debt to EBITDA as of March was 8.5x.

Allied Universal is a Conshohocken, Pa. and Santa Ana, Calif.-based provider of security services.

Helix guidance

Helix Gen Funding held its lender call on Thursday afternoon and announced talk on its $700 million senior secured term loan due Dec. 31, 2027 at SOFR plus 450 basis points to 475 bps with a 0.5% floor and an original issue discount of 98, according to a market source.

The term loan has 101 soft call protection for six months.

Commitments are due at noon ET on June 28, the source added.

Barclays, Goldman Sachs Bank USA, RBC Capital Markets, BMO Capital Markets, MUFG, Mizuho and SMBC are leading the deal that will be used to amend and extend the company’s existing term loan B due June 30, 2024.

Helix is an independent power producer with about 2 GW of clean, high-quality dual-fuel generation located in the NYISO Zone J market.

Cyanco proposed terms

Cyanco came out with talk of SOFR plus 475 bps to 500 bps with a 0% floor and an original issue discount of 97 on its $420 million five-year covenant-lite term loan B (B2/B) that launched with a call in the afternoon, a market source remarked.

The term loan has 101 soft call protection for six months.

Commitments are due at noon ET on June 29.

Deutsche Bank Securities Inc., Morgan Stanley Senior Funding Inc., RBC Capital Markets and Societe Generale are leading the deal, which will be used to refinance an existing term loan B.

Cashless roll is available.

Cyanco is a Sugar Land, Tex.-based supplier of sodium cyanide and the only pure play provider in the market with world-scale capabilities in both liquid and solid-form NaCN.

Fund flows

In other news, actively managed loan fund flows on Wednesday were negative $122 million and loan ETFs were negative $21 million, market sources said.

The tracking estimate for Thursday night’s weekly Lipper numbers for loans are outflows totaling $70 million, sources added.

Loan indices rise

IHS Markit’s iBoxx loan indices were stronger on Wednesday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.11% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.1%.

Month to date, the MiLLi is up 1.33% and year to date it is up 5.28%, and the LLLi is up 1.6% month to date and up 5.5% year to date.

Average secondary market bids in the U.S. on Wednesday were 91.36, up 0.03% from the previous day and down 0.57% year to date.

According to the IHS Markit data, some of the top advancers on Wednesday were EyeCare Partners’ February 2020 covenant-lite term loan B at 72.94, up from 69.57, Packers Sanitation Services/PSSI’s March 2021 covenant-lite term loan at 63.04, up from 60.19, and American Tire Distributors’ October 2021 covenant-lite term loan B at 86.19, up from 84.5.

Some top decliners on Wednesday were Trilliant Food’s April 2018 covenant-lite term loan B at 73, down from 75, Jo-Ann Stores’ July 2021 covenant-lite term loan B at 50.8, down from 52.06, and Houghton Mifflin’s April 2022 covenant-lite term loan B at 84.83, down from 86.85.

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