Occidental, FirstCash, Black Knight, Booz Allen price; Windstream lags; Albertsons flat

By Abigail W. Adams

Portland, Me., Aug. 12 – The domestic high-yield primary market marked another $5 billion plus day with four deals totaling $5.2 billion clearing the market.

New deal activity was led by Occidental Petroleum Corp., which priced an upsized $3 billion three-tranche offering of senior notes (Ba2/BB+/BB).

Black Knight InfoServ, LLC also priced an upsized $1 billion, Booz Allen Hamilton Inc. priced an upsized $700 million, and FirstCash, Inc. priced an upsized $500 million issue on Wednesday.

Thursday also promises to be another active session with Veritas US Inc. and Veritas Bermuda Ltd., ANGI Homeservices Inc., and QVC, Inc. all slated to price offerings.

Meanwhile, new paper continued to dominate activity in the secondary space. However, with pricing tight, new deals were increasingly falling flat or trading below their issue prices.

Windstream Communications’ 7¾% first-lien senior secured notes due 2028 (B3/B) gave back their premium after a strong break and dropped below par heading into Wednesday’s close.

Albertsons Cos. Inc.’s two tranches of senior notes (B2/BB-) and Targa Resources Partners LP and Targa Resources Partners Finance Corp.’s 4 7/8% senior notes due 2031 also fell flat in high-volume activity.

However, WillScot Mobile Mini Holdings Corp.’s 4 5/8% senior notes due 2028 (B3/B+) were holding a nominal premium in active trading.

Ball Corp.’s record-setting 2 7/8% senior notes due 2030 (Ba1/BB+) continued to trade off on Wednesday with the notes sinking further below their issue price.

Wednesday’s session

Another day, another $5 billion ($5.2 billion, in fact) of new junk bonds cleared the market on Wednesday, as the red-hot high-yield new issue bourse maintained a blistering $5 billion-per-day pace for the week to Wednesday's close.

Although Wednesday's executions appeared to vary somewhat, hot market earmarks generally continued, as the session was replete with accelerated timelines and deals upsizing and pricing through talk.

The colossus in the center ring on Wednesday was Occidental Petroleum Corp.

On the heels of a Tuesday report that the energy giant sustained a loss of $8.4 billion for the second quarter of 2020 the company priced an upsized $3 billion (from $1.5 billion) of senior notes (Ba2/BB+/BB) in three bullet tranches including 5 7/8% five-year notes, 6 3/8% eight-year notes and 6 5/8% 10-year notes, all coming at par.

In the wake of pricing the deal, the notes in all three tranches were trading somewhat sloppily in the context of 99 bid, par offered, a high-yield bond trader said late Wednesday afternoon.

In a world where orders may be padded in the hope of generating juicier allocations, some investors may have gotten all the bonds they asked for, but more than they bargained for, the source suggested.

Black Knight InfoServ, meanwhile, priced an upsized $1 billion (from $750 million) issue of 3 5/8% eight-year senior notes that came 12.5 basis points through talk!

Booz Allen Hamilton priced an upsized $700 million (from $500 million) issue of 3 7/8% eight-year senior notes (Ba2/BB-) at par to yield 3 7/8%, at the tight end of talk and on an accelerated timeline. Earlier in the day it had been announced as Thursday business.

Like Black Knight, above, FirstCash also upsized and priced through talk.

The Fort Worth pawnshop company priced an upsized $500 million (from $400 million) issue of 4 5/8% eight-year senior notes (Ba1/BB) 12.5 basis points through the 4¾% to 5% talk.

Coming next

Wednesday's action left in place a $2.65 billion active calendar, all of it expected to clear ahead of the coming weekend.

Veritas talked their $600 million offering of five-year senior secured notes (B2/B) on top of initial guidance, at 7½% to 7¾%.

ANGI Homeservices talked its $500 million offering of eight-year senior notes (Ba3/BB-) to yield in the 4% area.

Both those deals are set to price Thursday.

QVC also plans to price $500 million of eight-year senior secured bullet notes on Thursday (see related stories in this issue).

Windstream lags

Windstream’s 7¾% senior notes due 2028 were lagging their issue price in active trading on Wednesday.

After a spike after freeing for trade that saw the notes hit 101, the 7¾% notes gave back all of their gains.

The notes traded to a high of par ½ on Wednesday but grew increasingly softer as the session progressed, according to a market source.

They were seen at 99¾ offered heading into the market close, the source said.

The notes were active with more than $45 million on the tape heading into the market close.

Windstream priced a $1.4 billion issue of the 7¾% notes at par on Tuesday as part of its financing to exit bankruptcy.

Pricing came at the tight end of the 7¾% to 8% yield talk, which was revised from earlier talk in the 8% area.

Windstream filed for bankruptcy in February 2019 after losing a court battle related to its spinoff of its wire and fiber-optic cable business into real estate investment trust Uniti.

The restructured telecommunications company is planning to emerge from bankruptcy at the end of August.

Albertsons flat

Albertsons’ two tranches of senior notes fell flat in the aftermarket.

The notes saw a weak break on Tuesday and remained wrapped around par in high-volume activity on Wednesday.

Albertsons’ 3¼% senior notes due 2026 briefly dipped below par on Wednesday. However, the majority of prints were in the par 1/8 to par ¼ context, a source said.

The notes had more than $72 million in reported volume during the session.

The 3½% senior notes due 2029 were roughly at the same level. They traded in a range of 99½ to par 3/8 but the majority of prints were wrapped around par.

There was about $80 million on the tape heading into the market close.

The lack of movement in the notes was attributed to their tight pricing.

The grocery store chain operator priced a $750 million tranche of the 3¼% notes due 2026 and a $750 million tranche of the 3½% notes due 2029 at par on Tuesday.

Pricing of the 3¼% notes came tight to talk for a yield in the 3 3/8% area. The 3½% notes came tight to talk for a yield talk in the 3 5/8% area.

The new offering jumpstarted activity in Albertsons’ 6 5/8% notes due 2024 with proceeds from the new offering to be used to take the notes out.

The 6 5/8% notes were trading around 103½, which was roughly their takeout price, a source said.

Targa flat

Targa Resources’ 4 7/8% senior notes due 2031 also fell flat in the aftermarket.

The 4 7/8% notes traded in a range of 99¾ to par 3/8 on Wednesday. However, most trades were between par to par ¼, a source said.

The bonds were active with more than $61.5 million on the tape heading into the market close, a source said.

While the coupon was heftier than several other deals that came with a 3-handle, the pricing was still tight for a midstream energy company, a source said.

Targa priced an upsized $1 billion issue of the 4 7/8% notes at par on Tuesday.

The yield printed in the middle of yield talk in the 4 7/8% area.

The issue size increased from $750 million.

WillScot at a premium

While several recent deals were struggling in the aftermarket, WillScot Mobile’s 4 5/8% senior notes due 2028 (B3/B+) were trading with a premium in the aftermarket.

The 4 5/8% notes traded to a high of 101 1/8 on Wednesday.

However, they were changing hands in the par ½ to par ¾ context heading into the market close, a source said.

WillScot priced a $500 million issue of the 4 5/8% notes at par on Tuesday.

Pricing came tight to talk for a yield in the 4¾% area.

Ball trades off

Ball Corp.’s 2 7/8% senior notes due 2030 sank further below their issue price on Wednesday.

The notes shaved off another ¼ point and were changing hands in the par ¼ to par 3/8 context heading into the market close, a source said.

The 2 7/8% notes remained active with more than $20 million in reported volume on Wednesday.

They closed the previous session at 99½ bid, 99¾ offered, a source said.

Market players were not surprised by the lackluster performance of the notes given their historically tight pricing.

Ball Corp. priced a $1.3 billion issue of the 2 7/8% notes at par on Monday.

It was the lowest coupon for a 10-year junk bond in the market’s history, a source said.

Tuesday's cash flows

High-yield ETFs saw a healthy $397 million of inflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds sustained $50 million of outflows on Tuesday.

Indexes mixed

Indexes were again mixed on Wednesday.

The KDP High Yield Daily index was flat and closed Wednesday flush with Tuesday at 67.06 with a yield of 5.51%.

The index gained 1 basis point on Tuesday after shaving off 1 bp on Monday.

The ICE BofAML US High Yield index dropped 18.2 bps with the year-to-date return now 0.279%.

The index gained 9 bps on Tuesday and was up 2.1 bps on Monday.

The CDX High Yield 30 index rose 40 bps to close Wednesday at 104.72. The index dropped 34 bps on Tuesday and 17 bps on Monday.

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