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.