Mohegan prices; TransDigm comes in; SBA flat; Mercer, California Resources soar

By Abigail W. Adams

Portland, Me., Jan. 15 – The domestic high-yield primary market slowed its pace on Friday with only one deal pricing after the torrent of drive-by activity the previous session.

However, the coming week promises to be active with a few deals joining the forward calendar.

Following a roadshow, Mohegan Gaming & Entertainment priced $1.175 billion five-year senior secured notes (Caa1/B-).

Looking ahead, Truck Hero Inc. began marketing a $550 million offering of eight-year non-call three-year senior notes (Caa2/CCC) and Ineos Quattro began a roadshow for a €2 billion equivalent dual-currency four-tranche megadeal on Friday.

The offerings join Park River Holdings Inc. on the forward calendar.

Meanwhile, the secondary space was soft on Friday as investors digested the stimulus plan laid out by President-elect Joseph R. Biden.

New paper remained in focus although performances were mixed.

TransDigm Inc.’s 4 5/8% senior notes due 2029 (B3/B-) were in focus with the notes coming in from the heights reached after breaking for trade.

SBA Communications Corp.’s 3 1/8% senior notes due 2029 (B1/BB-) fell flat in the aftermarket, which sources attributed to their tight pricing.

However, Mercer International Inc.’s 5 1/8% senior notes due 2029 (Ba3/B+) and California Resources Corp.’s 7 1/8% senior notes due 2026 (B2/B+) were putting in strong performances with both issues trading up to a 102-handle.

Friday’s primary

Mohegan Gaming & Entertainment priced $1.175 billion of five-year senior secured notes (Caa1/B-) at par to yield 8% on Friday, according to a market source.

Initial guidance was in the low 8% area.

The notes were marked at par bid, par ½ offered shortly after breaking for trade, a source said.

While Mohegan was the sole new deal of the day, two more deals joined the forward calendar.

Ineos Quattro began marketing a €2 billion equivalent dual-currency four-tranche offering of secured and unsecured notes in a roadshow scheduled to run until Jan. 20 with pricing expected thereafter, according to a market source.

The deal consists of a €1 billion equivalent five-year non-call two-year offering of first-lien senior secured notes to be split into euro-denominated and dollar-denominated tranches.

Initial talk is for a yield in the 4% area for the dollar-denominated secured tranche and 3% to 3¼% for the euro-denominated secured tranche.

The deal also consists of a €1 billion equivalent long five-year non-call two-year offering of unsecured notes, which will also be split into euro-denominated and dollar-denominated tranches.

Initial talk is for a yield in the low 5% area for the dollar-denominated tranche and the mid-4% area for the euro-denominated tranche.

Truck Hero began marketing a $550 million offering of eight-year non-call three-year senior notes (Caa2/CCC) with an early whisper for a yield in the 7% area, according to a market source.

An investor call is scheduled for Tuesday with pricing expected Wednesday.

Proceeds, together with a concurrent first-lien term loan, will be used to fund the acquisition of Truck Hero by L Catterton and CCMP Capital.

The deals join Park River Holdings on the forward calendar. Park River is expected to price its $345 million offering of eight-year senior notes (Caa1/CCC+/CCC+) on Tuesday.

TransDigm comes in

TransDigm’s 4 5/8% senior notes were in focus in the secondary space on Friday with the notes coming in from their highs.

The notes were marked at par bid, par ¼ offered early in the session, a source said.

However, they gained some strength as the session progressed and closed the day wrapped around par ½.

There was more than $168 million in reported volume heading into the close.

While the notes gained strength into the close, they were still down from the heights reached after breaking for trade.

The notes closed Thursday at par ¾ bid, 101 offered.

The notes were trading “okay,” a source said. However, their pricing was a little tight.

TransDigm priced a $1.2 billion issue of the 4 5/8% notes at par in a Thursday drive-by.

Pricing came at the tight end of the 4 5/8% to 4¾% yield talk.

The deal was heard to have played to $2.75 billion of orders.

SBA too tight

SBA Communications’ 3 1/8% senior notes due 2029 saw a lackluster reception in the secondary space.

The notes were wrapped around par in active trading on Friday, which is largely the level they have traded at since breaking for trade on Thursday, sources said.

There was more than $45 million in reported volume during Friday’s session.

The notes priced too tightly, a source said.

The 3 1/8% notes came with a spread of 218. “It should have been more like 400,” a source said.

The company priced a $1.5 billion issue of the 3 1/8% notes at par on Thursday.

The yield printed in the middle of the 3% to 3¼% yield talk. Initial guidance was in the mid-3% area.

102-handle

The deals to price during Thursday’s session with higher yields were putting in stronger performances in the secondary space – a byproduct of investors hunting for yield in a tight market.

California Resources’ 7 1/8% senior notes due 2026 were marked at 102 bid, 102¼ offered on Friday.

More than $99 million of the bonds were on the tape.

California Resources priced a $600 million issue of the 7 1/8% notes at par on Thursday.

The yield printed tighter than the 7¼% to 7½% yield talk.

Mercer International’s 5 1/8% senior notes due 2029 were also on a 102-handle.

The notes were changing hands in the 102 to 102¼ context heading into the market close.

There was more than $102 million of the bonds on the tape during Friday’s session.

Mercer priced an upsized $875 million, from $500 million, issue of the 5 1/8% notes at par on Thursday.

Pricing came tighter than the 5¼% to 5½% yield talk.

Fund flows

Fund flows were positive on Thursday, the most recent session where information was available.

High-yield exchange-traded funds saw inflows of $206 million and actively managed funds had inflows of $30 million, according to a market source.

The inflows follow news that $1.26 billion left the space in the week through Wednesday’s close, according to the Refinitiv Lipper Fund Flow report.

Indexes mixed

Indexes were again mixed on Friday with some flat, some posting nominal gains, and others losses.

The KDP High Yield Daily index closed Friday at 69.16, flush with Thursday’s close. However, the yield shaved off 1 basis point with the yield now 4.25%.

The index gained 6 points on Thursday and 4 points on Wednesday after falling 9 points on Tuesday and 5 points on Monday.

The index was down a cumulative 4 points on the week.

The ICE BofAML US High Yield index was up 5.8 bps with the year-to-date return now 0.367%.

The index gained 16.9 bps on Thursday and 13.7 bps on Wednesday after falling 9.7 bps on Tuesday and 13 bps on Monday.

The index posted a cumulative gain of 13.7 bps on the week.

The CDX High Yield 30 index dropped 38 bps to close Friday at 108.73.

The index was flat on Thursday, rose 25 bps on Wednesday and fell 7 bps on Tuesday and 40 bps on Monday.

The index posted a cumulative loss of 60 bps on the week.

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