Colgate, TechnipFMC price; NGL on tap; Beasley, Concrete Pumping over 102; Murphy USA flat

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 22 – Two issuers from the energy sector cleared the primary market on Friday, despite a sell-off in the junk bonds of exploration and production companies.

TechnipFMC plc priced an upsized $1 billion issue of five-year senior guaranteed notes (Ba1/BB+) at the tight end of talk.

However, Colgate Energy Partners III, LLC priced a restructured $300 million issue of five-year notes (B3/B) at a discount.

One more deal, also from the energy sector, remains on the forward calendar – the NGL Energy Partners $2.05 billion offering of five-year senior secured notes (B1/BB-).

Meanwhile, the secondary space was soft on Friday with the energy sector taking a beating on the heels of the new Interior Secretary’s moratorium on gas and oil drilling leases on federal land.

New paper continued to dominate the tape although several recent deals continued to follow different trajectories.

While Beasley Broadcast Group, Inc.’s 8 5/8% senior secured notes due 2026 (B3/B-) were coming in from the heights reached after breaking for trade, they continued to trade with a large premium.

Brundage-Bone Concrete Pumping Holdings Inc.’s 6¼% senior secured second-lien notes due 2026 also outperformed with the notes on a 102-handle.

US LBM’s 7¾% PIK toggle notes due April 1, 2027 (Caa3/CCC+/CCC-) were trading at a premium to their discounted issue price.

Ineos Quattro’s 3 3/8% senior notes due 2026 (Ba3/BB/BB+) were also at a slight premium.

However, Murphy Oil USA Inc.’s 3¾% senior notes due 2031 (Ba2/BB+) fell flat in high-volume activity.

While Murphy USA’s newly priced 3¾% notes due 2031 were holding at par, the junk bonds of the gas station operator’s former parent company, Murphy Oil Corp., continued to sell off alongside the broader energy sector.

Friday’s primary

With high yield energy issuers being buffeted on news that the U.S. Department of Interior issued a 60-day moratorium on gas leases and drilling on federal lands – with some junk energy names down one point to four points on Friday morning – two issuers from the sector priced new bonds in the primary market.

The results differed notably.

TechnipFMC priced an upsized $1 billion issue (from $850 million) of 6½% five-year senior guaranteed notes (Ba1/BB+) at par, at the tight end talk.

The deal was heard to be playing to $3.6 billion of demand at midmorning on Friday, a trader said.

Meanwhile, Colgate Energy Partners, heard to have engendered some investor pushback, priced a restructured $300 million issue of 7¾% five-year unsecured notes (B3/B) at 98.97 to yield 8%, on top of revised talk, but wide to earlier official talk in the 7¾% area.

The notes were higher approaching Friday's close, with a trader marking them at 99½ bid, par ½ offered.

Elsewhere, NGL Energy Partners had been heard to be contemplating a foreshortened timeline for its $2.05 billion offering of five-year senior secured notes (B1/BB-).

Dealers were contemplating pushing the execution into the Friday session, a market source said.

The deal, in the market with early guidance of 7¾% to 8%, had previously been announced as business for the early part of the Jan. 25 week.

No updates had materialized approaching Friday's close, the source said.

Beasley comes in

Beasley Broadcast Group’s 8 5/8% senior notes due 2026 were coming in from the heights reached after breaking for trade on Thursday.

However, the notes continued to trade with a large premium.

The notes fell back to a 102-handle on Friday. They were changing hands in the 102½ to 102¾ context heading into the market close, a source said.

There was more than $28 million in reported volume during Friday’s session.

The notes closed the previous session at 103 bid, 103½ offered.

The notes carried a hefty coupon for a single-B credit given the market, a source said.

Beasley priced an upsized $300 million, from $280 million, issue of the 8 5/8% notes on Thursday.

Pricing came tight to the 8¾% to 9% yield talk.

The offering was heavily oversubscribed and played to at least $1.5 billion of orders.

102-handle

Concrete Pumping’s 6% senior secured second-lien notes due 2026 also outperformed.

The 6% notes rose to a 102-handle and were changing hands in the 102 to 102½ context heading into the market close, a source said.

Concrete Pumping priced a $375 million issue of the 6% notes at par on Thursday.

At a premium

While the notes did not reach the same heights as some of the other deals to price during Thursday’s session, US LBM’s 7¾% PIK toggle notes due 2027 were trading at a premium to their discounted issue price.

The 7¾% notes traded in a range of 99¼ to par 3/8 during Friday’s session with the notes changing hands in the par ¼ to par 3/8 context heading into the close, a source said.

US LBM priced a $400 million issue of the PIK toggle notes at 99.364 to yield 7 7/8% on Thursday.

The notes priced with a 7¾% cash coupon, which steps up by 75 basis points to 8½% for PIK payments.

The yield printed tighter than the 8% to 8¼% yield talk.

The issue price came in line with price talk that specified up to 1 point of original issue discount.

Ineos Quattro’s 3 3/8% senior secured first-lien notes due 2026 were also trading with a premium to their issue price, although the notes remained on a par handle.

The notes were trading in the par 3/8 to par ¾ context heading into the market close. There was more than $41 million on the tape.

The company is a high-quality issuer, a source said.

Ineos priced a $500 million issue of the 3 3/8% notes at par on Thursday as part of a three-tranche, dual-currency offering that also included two euro-denominated tranches.

Pricing of the dollar-denominated tranche came at the tight end of yield talk in the 3½% area.

The tranche was heavily oversubscribed and heard to be playing to $4 billion in orders.

The tale of two Murphy’s

The tale of two Murphy’s continued on Friday with Murphy USA’s recently priced 3¾% senior notes due 2031 trading at par, while the junk bonds of the gas station operator’s former parent company, Murphy Oil Corp., tanked.

Murphy USA’s 3¾% notes traded in a range of 99 7/8 to par 5/8 during Friday’s session with the final prints between par 1/8 and par ½, a source said.

There was more than $55 million on the tape.

The notes priced tight and “didn’t have a lot of meat left to them,” a source said.

However, Murphy USA was not under the same pressure as exploration and production companies on Friday.

Their exposure to the new leasing moratorium on federal lands was negligible.

“For them, it’s more a question of volume and margin,” a source said, referring to the margin between the cost of buying the gasoline and selling it at their gas stations.

“It’s a very different business,” the source said.

However, the sell-off in the junk bonds of Murphy USA’s former parent company, Murphy Oil Corp., accelerated on Friday.

Murphy Oil’s 5¾% senior notes due 2025 dropped more than 5 points on Friday. After trading at par ¼ the previous session, the 5¾% notes traded as low as 94, a source said.

The company’s 6 3/8% senior notes due 2042 traded down to 89 on Friday. Their previous level was 95.

Exploration and production companies have been under pressure since Thursday when the incoming Secretary of the Interior announced a temporary moratorium on new oil and gas drilling leases on federal land.

$275 million Thursday inflows

The dedicated high-yield bond funds saw $275 million of net daily inflows on Thursday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds saw $260 million of inflows on the day.

High yield ETFs saw $15 million of inflows on Thursday, the source said.

News of Thursday's daily flows follows a late Thursday report that the combined funds sustained $905 million of net outflows in the week to the Wednesday, Jan. 20 close, according to the Refinitiv Lipper Fund Flow Report Newsline.

It's the fifth outflow in six weeks, the market source said.

The cash flows of the combined high-yield funds are negative-$2.3 billion, year to date, the source related, adding that the negative flows in the early part of 2021 come on the heels of a record $44.9 billion of net inflows to the dedicated high-yield bond funds in 2020.

Indexes mixed

Indexes were mixed on Friday with some squeaking out gains while others had losses.

The KDP High Yield Daily index gained 1 point to close Friday at 69.38 with the yield now 4.16%.

The index rose 7 points on Thursday, 10 points on Wednesday and 4 points on Tuesday.

The index posted a cumulative gain of 22 points on the week.

The CDX High Yield 30 index dropped 32 bps to close Friday at 108.66.

The index was down 7 bps on Thursday after gaining 4 bps on Wednesday and 27 bps on Tuesday.

The index posted a cumulative loss of 8 bps on the week.

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