Drive-by deals from Qorvo and Beacon; Howden prices; Inmarsat and BidFair/Sotheby’s active

By Paul A. Harris and James McCandless

Portland, Ore., Sept. 25 – The high-yield primary market saw two drive-by deals price on Wednesday and one issue came off the calendar.

Qorvo, Inc. priced an upsized $350 million issue and Beacon Roofing Supply, Inc. drove by with a $300 million issue.

Howden (Granite Holdings US Acquisition Co.) came off the calendar with a deal for $300 million.

Monday’s new issues remained active in the high-yield secondary.

Notes from Inmarsat plc and BidFair/Sotheby's were active, moving into better positions by the end of trading.

Meanwhile, Sprint Corp.’s issues traded lower amid negative headlines of an FCC investigation.

Cable TV name Charter Communications, Inc.’s notes were seen trending lower.

Qorvo, Beacon and Howden price

In a market that has seen off-the-run issuers and challenging credits taken to the woodshed or sent packing, a pair of higher rated, on-the-run junk issuers saw razor sharp executions in Wednesday drive-by deals.

Qorvo, Inc. priced an upsized $350 million issue of 10-year senior notes (Ba1/BB+) at par to yield 4 3/8%.

The issue size was increased from $300 million.

The yield printed at the tight end of yield talk in the 4½% area. Initial guidance had the deal coming to yield in the high 4% area.

And Beacon Roofing Supply, Inc. priced a $300 million issue of seven-year senior secured notes (B1/BB) at par to yield 4½%.

The yield printed at the tight end of the 4½% to 4 5/8% yield talk. Initial talk was in the 4¾% area.

Meanwhile from the woodshed, Howden (Granite Holdings US Acquisition Co.) priced $300 million of 11% eight-year senior notes (Caa1/B-) at 96.176 to yield 11¾%.

The yield printed 25 basis points beyond the wide end of the 11% to 11½% final price talk. Earlier talk was 10¾% to 11%, sources say, adding that the deal came into the market during the Sept. 16 week with initial guidance in the 10% area.

Cirsa upsizes PIK toggle notes

In the European high-yield primary, where the appetite for risk traditionally runs much shallower than that of its counterpart in the United States, brave, yield-hungry investors got a plateful on Wednesday.

It came in the form of one of the high-yield bond market's most challenging structures, a PIK toggle issue funding a sponsor dividend.

Madrid-based Grupo Cirsa priced an upsized €400 million issue of LHMC Finco 2 six-year 7¼%/8% senior PIK toggle notes (CCC+) at par to yield 7¼%.

The issue size increased from €375 million.

The yield printed at the tight end of the 7¼% to 7½% yield talk.

The cash, including the upsized amount, goes to sponsor Blackstone Group which completed its acquisition of Cirsa in July 2018.

Newer notes better

In the secondary market, newer issues which priced on Monday continued to dominate the secondary well into Wednesday, traders said.

London-based satellite operator Inmarsat’s new 6¾% senior secured notes due 2026 inched up ¼ point to close at 102 bid.

$32 million of the notes changed hands.

The deal was priced at a twice-upsized $2,075,000,000 via Connect Finco Sarl and Connect Finco LLC.

Also positive, New York City-based auctioneer BidFair/Sotheby’s new 7 3/8% senior secured notes due 2027, while trending higher, settled back down to the previous day’s level of 101¾ bid.

At the close, about $18 million of the new notes traded.

The $600 million deal came to market at the same time as a term loan in order to fund BidFair’s acquisition of Sotheby’s.

“Those continued to eclipse others in the space,” a trader said.

Sprint lower

In telecom, Sprint’s issues traded to lower levels, market sources said.

The 7 7/8% senior notes due 2023 shaved off ¾ point to close at 109¾ bid.

The notes saw about $18 million trading.

The Overland Park, Kan.-based mobile phone network name has been marred by negative headlines after the Federal Communications Commission said that it was investigating the company over alleged misuse of low-income subsidies.

As of Wednesday, the agency has yet to complete its review of the name’s proposed merger with T-Mobile, with some commissioners holding off on voting.

Charter trails

Cable TV name Charter’s notes were trending lower, market sources said.

The CCO Holdings, LLC/CCO Holdings Capital Corp. 4¾% senior notes due 2030, while being pushed to 101¼ bid during the day, ended unchanged at 101½ bid. The 4.2% senior secured notes due 2028 fell 1 point to close at 104½ bid.

Both tranches combined to see about $31 million on the tape.

The 4¾% notes priced at an upsized $1.35 billion last week after being originally talked at $1 billion.

Mixed Tuesday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $491 million of outflows on the day.

However, actively managed high yield funds saw $75 million of inflows on Tuesday, the source said.

With only Wednesday's daily flows remaining to go into the tally, the combined funds are tracking $126 million of inflows for the Wednesday's close.

Notwithstanding the fact that it is a positive number, $126 million pales in comparison to recent weekly flows.

During the two weeks leading up to the Wednesday, Sept. 18 close the combined high-yield funds saw a total of $5.2 billion of net inflows, the source noted.

Indexes trend lower

Two high-yield indexes saw sharp drops while one experienced an increase.

The KDP High Yield Daily index dropped 14 basis points on Wednesday, ending the session at 71.66 with the yield shifting up to 5.37%.

The index went unchanged on Tuesday, added 1 bp on Monday and gained 9 bps on Friday.

The ICE BofAML US High Yield index slid 21.3 bps on Wednesday with the year-to-date return now at 11.674%.

The index fell 1.2 bps on Tuesday, garnered 1.6 bps on Monday and inched up 0.2 bp on Friday.

The CDX High Yield 30 index improved by 32.58 bps to 107.2302.

The index declined by 32.86 bps on Tuesday, increased by 32.39 bps on Monday and lost 32.60 bps on Friday.

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