Morning Commentary: Junk opens firm; Albertsons trades higher; Salt, Navient, Mueller Water on deck

By Paul A. Harris

Portland, Ore., June 7 – The high-yield bond market was firm an mid-morning, traders said.

Strength in oil prices was boosting energy names, a New York-based trader remarked.

Technology, media and telecommunications (TMT) bonds were also higher, the source added.

In the energy sector, bonds of Murray Energy Corp. continued to move higher on news that the company is proceeding with its debt restructuring, the trader said, adding that the bonds were up multiple points on the week and trading in the 50s on Thursday.

In TMT, bonds of Intelsat SA were a lot better on news that the Luxembourg-based satellite telecommunications company filed a common stock shelf offering.

Intelsat Jackson Holdings SA’s 5½% senior notes due August 2023 traded at 88¾, up 3/8 of a point to ¾ of a point on the day, the trader said.

Meanwhile new secured floating-rate paper priced on Wednesday by Albertsons Cos., Inc. was trading at a nice premium to its new issue price.

The Albertsons Libor plus 375 basis points senior secured floating-rate notes due January 2024 (Ba2/BB-) were par ¼ bid, par ¾ offered and moving higher on Thursday morning.

The $750 million issue of 5.5-year notes, upsized from $500 million, priced at 99.5 on Wednesday.

Thursday primary

The Thursday session is set to be an active one in the primary market.

Mueller Water Products, Inc. talked its $425 million offering of eight-year senior notes (Ba3/BB) to yield in the 5 5/8% area.

Official talk on the deal, which is heard to be substantially oversubscribed, came tight to initial guidance in the high 5% to 6% area.

Books close at 2 p.m. ET on Thursday, and the offering is set to price thereafter.

The session also features a drive-by deal from Navient Corp., which plans to price a $500 million offering of eight-year senior bullet notes (existing ratings Ba3/B+/BB).

Joint active bookrunner Barclays will bill and deliver. BofA Merrill Lynch and RBC Capital Markets LLC are also joint active bookrunners.

Elsewhere on the dollar-denominated new deal calendar, as the market awaits official word on the Aleris International, Inc. $400 million offering of five-year senior secured junior priority notes (Caa2/CCC+), initial guidance remains in the 11¼% area, a buyside source said.

The deal is heard to be two-times oversubscribed and is seeing a significant roll from investors being taken out of the company's 7 7/8% senior notes due 2020 and 9½% senior secured notes due 2021, which are being redeemed in the refinancing deal.

People also like the coupon, the investor said.

Meanwhile in Europe Salt Mobile SA is on deck with CHF 2,085,000,000 equivalent of senior secured notes (B2/B+) in four tranches, including euro-denominated seven-year floating rate notes (talk Euribor plus 350 bps to 375 bps with a 0% Euribor floor), Swiss franc-denominated seven-year fixed-rate notes (talk 4% to 4¼%), euro-denominated eight-year fixed-rate notes (talk 4¾% area) and dollar-denominated eight-year fixed-rate notes (talk 7% area).

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