Sizzling Platter, Chemours, Interface price; Continental gains; MultiPlan drops

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 12 – Three issuers priced deals for $1.45 billion in the high-yield primary market on Thursday.

Sizzling Platter, LLC, Chemours Co. and Interface Inc. brought three separate deals with mixed executions as pandemic concerns and capital markets looked troubled in post-holiday trades.

Meanwhile, the secondary space gave back some gains following a meteoric rise the previous week.

The cash bond market closed the day down ¼ to ½ point, a source said, as the risk-on euphoria surrounding the election results and early data from Pfizer’s Covid-19 vaccine clinical trial faded.

New paper remained the focus of trading activity.

Continental Resources Inc.’s 5¾% senior notes due 2031 (Ba1/BB+/BBB-) were in focus with the notes continuing to gain after a strong break.

However, several of the deals to price during Monday’s strong market conditions remained flat in the aftermarket.

Allison Transmission Inc.’s 3¾% senior notes due 2031 (Ba3//BB) remained wrapped around par in high-volume activity, which sources attributed to their tight pricing and large issue size.

Sunoco LP’s 4½% senior notes due 2029 (B1/BB-), in contrast, continued to outperform with the notes holding on to their gains.

Outside of new deals, MultiPlan’s 5¾% senior notes due 2028 (B3/B-) returned to focus with the notes sinking to a new low on Thursday following earnings and a short-seller report that alleged the company was on the verge of losing its largest customer.

While the rally in the secondary space was wavering on Thursday, inflows were strong over the past week with high yield mutual and exchange-traded funds adding $4.565 billion through Wednesday’s close, according to the Refinitiv Lipper US Fund Flows newsline.

Junk perseveres

Capital markets in the United States hit headwinds on Thursday, as pandemic concerns got the better of post-election investor optimism, sources said, referring to a Thursday report of 140,000 new coronavirus cases, the highest daily figure anywhere in the world since the pandemic began.

Headwinds or no, high-yield trading volumes were at or near post-election highs on Thursday, traders said.

The primary market was active with three issuers raising a combined $1.45 billion.

Executions were mixed, with one of Thursday's trio of deals pricing tight to talk, one in the middle, and one at the wide end of talk.

Chemours Co. priced an upsized $800 million issue (from $750 million) of 5¾% eight-year senior notes (B1//B) at par, at the wide end of the 5½% to 5¾% talk.

The deal was not initially trading too well, a trader said, spotting the new Chemours 5¾% notes at par 1/8 bid, par 3/8 offered.

Investors warmed to the new Chemours notes which offered a concession to the existing 5 3/8% unsecured bullet due 2027, giving up some duration, as the new bonds become callable in 2023, traders noted.

Elsewhere Thursday, Sizzling Platter, LLC returned to the high-yield primary market to price an upsized $350 offering of five-year senior secured notes (B3//B-) after postponing a similarly structured $325 million deal in late October.

The notes priced at par to yield 8½%, on top of guidance heard earlier on Thursday.

Prior to pulling the earlier offering it had been talked to yield 7¾% to 8%. The company came to market in October hoping for a yield in the 7¾% area.

In addition to the concession on the rate the company also made investor-friendly covenant changes to the revived deal, a trader noted, adding that with the extra rate and security there was no problem placing the bonds.

They were 101 bid, 102 offered in very light trading, just after the Thursday close, the trader said.

Also Interface Inc. priced a $300 million issue of 5½% eight-year senior notes (B1/B+) at the tight end of talk.

Friday calendar

The Masters golf tournament is expected to mute Friday market activity, a trader said.

Two deals are slated to clear the market ahead of the weekend.

Tenneco Inc. plans to price a $500 million offering of senior secured notes due Jan. 15, 2029 (existing ratings Ba3/B/BB), according to market sources.

The deal, in the market with initial price guidance in the high 8% area, was playing to $2 billion of orders late Thursday, a trader said.

However, the Tervita Corp. $500 million offering of five-year senior secured second-lien notes (B3/CCC+) is getting pushed around, sources say.

It was talked Thursday with an all-in yield in the 11% area, wider by 100 bps, with two points of OID.

Continental Resources gains

Continental Resources’ 5¾% senior notes due 2031 (Ba1/BB+/BBB-) continued to gain in active trading on Thursday following a strong break.

The 5¾% notes rose to a 101-handle on Thursday.

They were changing hands in the 101 1/8 to 101 3/8 context heading into the market close.

While several recent deals fell flat in the aftermarket, Continental Resources’ notes were marked at par ½ bid, par ¾ offered after breaking for trade on Tuesday.

The notes from the recent fallen angel carried a decent coupon for a higher quality credit, a source said.

Continental Resources priced an upsized $1.5 billion, from $1 billion, issue of the 5¾% notes at par in a Tuesday drive-by.

Pricing came at the midpoint of talk for a yield in the 5¾% area. Initial guidance was for a yield of 5¾% to 6%.

Recent deals

Several recent deals remained active in the secondary space albeit with different trajectories.

Allison’s 3¾% senior notes due 2031 remained wrapped around par in high-volume activity.

The notes were changing hands in the 99 7/8 to par 1/8 context on Thursday – a level they have held since pricing.

There was more than $42 million in reported volume during Thursday’s session.

The transmission and propulsion system manufacturer priced a $1 billion issue of the 3¾% notes at par in a Monday drive-by.

While Allison’s 3¾% notes joined the ranks of recent issues that priced with a 3-handle that have largely been stuck at par, Sunoco’s 4½% senior notes due 2029 held on to their large premium in active trading on Thursday.

Sunoco’s 4½% notes continued to trade in the par 7/8 to 101 1/8 context in high-volume activity.

There was more than $42 million in reported volume during Thursday’s session.

The motor fuel distributor priced an $800 million issue of the 4½% notes at par on Monday.

MultiPlan sinks

MultiPlan’s 5¾% senior notes due 2028 sank to a new low on Thursday following earnings and a short-seller report alleging it was on the verge of losing its largest customer.

The 5¾% notes sank to a 96-handle in high-volume activity and stood poised to close the day at 96¼, a source said.

There was more than $58 million in reported volume during the session.

The notes have struggled since the provider of health care cost management solutions priced a $1.3 billion issue at par on Oct. 27.

The notes dipped down to a 98-handle during their initial days in the aftermarket.

However, they closed out the previous week on a par-handle with the notes lifted as the broader market rallied on the heels of the election.

However, the notes were the subject of a sell-off on Thursday after short-seller Muddy Waters Research alleged the company was on the verge of losing United Healthcare, its largest client.

The company also announced third-quarter earnings, which were largely in line with its pre-release, a source said.

MultiPlan announced revenue of $224 million and EBITDA of $166 million for the third-quarter.

Indexes down

Indexes were down on Thursday as the secondary space gave back some gains from its meteoric rise the previous week.

The KDP High Yield Daily index was down 32 points to close Thursday at 67.42 with the yield now 5.08%. The index shaved off 12 points on Tuesday after jumping 69 points on Monday.

The ICE BofAML US High Yield index dropped below the 3% year-to-date return threshold after blowing past it as recently as Monday.

The index was down 43.8 bps with the year-to-date return now 2.796%.

The index shaved off 28.1 bps on Tuesday after jumping 122.3 bps on Monday.

The index was brushing up against negative returns just two weeks ago.

The CDX High Yield 30 index dropped 91 bps to close Thursday at 106.71. The index was up 17 bps on Tuesday after jumping 141 bps on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.