Wesco, Builders FirstSource drive-by; Clear Channel joins calendar; Altice/CSC Holdings surges

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 26 – A busy Monday session in the new-issue junk market saw two drive-by issuers bring a combined three tranches to raise an overall total of $2.75 billion.

Builders FirstSource, Inc. priced a massively upsized $1 billion issue of 10-year senior notes (Ba2/BB-) and Wesco Distribution, Inc. priced an upsized $1.75 billion amount of senior notes (Ba3/BB/BB+).

Clear Channel Outdoor Holdings, Inc. joined the calendar with an $865 million offering of senior secured notes due 2030 (B1/B) with pricing expected next Monday.

Away from routine business, Altice Financing SA privately placed $375 million of 9 5/8% senior secured notes due July 15, 2027.

Meanwhile, it was a flat day in the secondary space on Monday with the cash bond market either side of unchanged with a heavy week of macro data in store.

The quarterly GDP figures due Wednesday and the Personal Consumption Expenditures Report due Thursday will be closely watched, especially after the surprise uptick in inflation reflected in the last CPI print, sources said.

Deteriorating economic conditions combined with a continued uptick in inflation would be a nightmare scenario that markets have not priced in, a source said.

While markets looked to the coming macro data as the next big catalyst for movement, new paper and topical news were moving the market on Monday.

First Quantum Minerals Ltd.’s new 9 3/8% second-lien senior secured notes due 2029 (B/B) maintained their blockbuster gains with the notes continuing to trade on a 103-handle in heavy volume.

However, Royal Caribbean Cruises Ltd.’s 6¼% senior notes due 2032 (Ba2/BB+) came in slightly although they were able to maintain a nominal premium.

Outside of new and recent issues, takeover chatter was again sparking outsized moves in outstanding issues with news that Charter Communications was considering a takeover of Altice USA Inc. reverberating through the market.

The takeover chatter sent Altice USA subsidiary CSC Holdings LLC’s senior notes soaring.

Drive-by

A busy Monday session in the new-issue market saw two drive-by issuers bring a combined three tranches to raise an overall total of $2.75 billion.

Both issuers elected to vastly upsize their deals.

Builders FirstSource priced a massively upsized $1 billion issue of 10-year senior notes (Ba2/BB-) at par to yield 6 3/8%.

The deal size increased from $600 million.

The yield printed in the middle of talk.

Meantime, Wesco Distribution priced an upsized $1.75 billion amount of senior notes (Ba3/BB/BB+) in two tranches.

The deal included an upsized $900 million tranche (from $750 million) of five-year notes that priced at par to yield 6 3/8%, at the tight end of talk.

The deal also included an upsized $850 million tranche (from $750 million) of eight-year notes that priced at par to yield 6 5/8%, also at the tight end of talk.

Away from Monday’s routine drive-by deals Altice Financing privately placed $375 million of 9 5/8% senior secured notes due July 15, 2027.

On the active forward calendar Clear Channel Outdoor Holdings began marketing an $865 million offering of senior secured notes due 2030 (B1/B) on Monday.

The deal is in the market with initial guidance of 8¼% to 8½% and is expected to price March 4.

First Quantum holds gains

First Quantum’s 9 3/8% second-lien senior secured notes due 2029 were unchanged on the day with the notes holding onto the strong gains made since hitting the secondary space.

The 9 3/8% notes continued to trade on a 103-handle in the 103½ to 103¾ context, a source said.

The notes jumped to a 102-handle after breaking for trade on Feb. 22 and closed last Friday on a 103-handle.

First Quantum priced a $1.6 billion issue of the 9 3/8% notes at par on Feb. 22 in a refinancing deal to take out the company’s 2025 and 2026 senior notes.

While the beleaguered mining company’s shorter-duration debt rallied on the refinancing, the company’s 8 5/8% senior notes due 2031 were unchanged to slightly softer on the heels of the new offering, which primed over the notes.

However, First Quantum’s 8 5/8% notes shot as high as a 95-handle last Friday with the 2031 notes still trading with an attractive yield compared to the latest offering, according to a market source.

The 8 5/8% notes came in ¼ to ½ point on Monday to trade in the 94½ to 94¾ context with the yield about 9 5/8%, a source said.

Royal Caribbean softer

Royal Caribbean’s 6¼% senior notes due 2032 were softer on Monday although they continued to trade with a nominal premium to their issue price.

The 6¼% notes came in 1/8 to ¼ point to trade in the par 1/8 to par 3/8 context.

They closed the previous session in the par 3/8 to par 5/8 context.

The cruise line operator priced the $1.25 billion issue at par on Feb. 22.

CSC Holdings soars

News that Charter was considering a takeover of Altice USA reverberated through the market on Monday and sent Altice subsidiary CSC Holdings’ senior notes soaring.

CSC Holdings’ 11¾% senior guaranteed notes due 2029 (B2/B) shot up 4 points to trade as high as 105 after the headlines hit mid-session, a source said.

However, they settled into the 104 to 104½ context heading into the market close with the yield about 10 3/8%.

CSC Holdings’ 7½% senior notes due 2028 (Caa2/CCC+) jumped 12 points.

The 7½% notes opened the day on a 61-handle and jumped to trade as high as 74 after the news hit.

The yield tightened to 16½%.

CSC was catapulted higher by headlines that Charter was weighing a potential takeover of the struggling telecom.

However, any potential takeover is in the earliest stage with Charter yet to approach Altice USA, a source said.

Indexes

The KDP High Yield Daily index was down 12 basis point to close Monday at 50.42 with the yield 6.96%.

The ICE BofAML US High Yield index inched up 2.8 bps with the year-to-date return now 0.298%.

The CDX High Yield 30 index was off 14 bps to close Monday at 106.22.

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