Realogy, MGM upsize; Cable & Wireless prices add-on; Darling on tap; Allison Transmission in focus

By Abigail W. Adams and Paul A. Harris

Portland, Me., March 27 – The domestic high-yield primary market saw an active session with two upsized offerings and an upsized add-on pricing.

MGM Resorts International doubled the size of its drive-by offering of eight-year senior notes (existing ratings Ba3/BB-) to $1 billion and priced the notes at par to yield 5½%.

Realogy Group LLC priced an upsized $550 million issue of eight-year senior notes (B2) at par to yield 9 3/8%.

Cable & Wireless Communications plc priced an upsized $300 million fungible add-on to the C&W Senior Financing Designated Activity Co. 6 7/8% senior notes due 2027 (B2/BB-/BB-) at 99.205 to yield 7%.

One more deal also joined the forward calendar.

Darling Ingredients Inc. plans to price a $500 million offering of eight-year senior notes (expected ratings Ba3/BB+) during Thursday’s session.

Meanwhile, the secondary space was largely unchanged on Wednesday after firming during the previous session.

Allison Transmission, Inc.’s newly priced 5 7/8% senior notes due 2029 (Ba3//BB) were putting in a strong performance in the secondary space.

Pacific Gas & Electric’s 6.05% senior notes due 2034 jumped in high-volume activity following court approval of bankruptcy financing.

CBL & Associates Properties junk bonds tanked on Wednesday following the settlement of a class action lawsuit and news it would suspend dividend payments.

MGM doubles deal-size

In drive-by action on Wednesday, MGM Resorts International doubled the size of its deal to $1 billion from $500 million and priced the issue of eight-year senior bullet notes (existing ratings Ba3/BB-) at par to yield 5½%.

The yield printed in the middle of yield talk in the 5½% area and inside of initial talk in the 5¾% area.

BofA, Barclays, Citigroup, Deutsche Bank, JP Morgan, SMBC Nikko, Fifth Third and Morgan Stanley were the joint bookrunners for the debt refinancing deal.

Realogy driven by reverse inquiry

At the conclusion of an investor roadshow, Realogy Group priced an upsized $550 million issue of eight-year senior notes (B2) at par to yield 9 3/8%.

The initial size of the deal was $400 million.

The yield printed 12.5 basis points beneath the tight end of the 9½% to 9¾% yield talk, which had come in line with initial guidance in the mid-to-high 9% area.

The deal was driven to market on reverse inquiry for the full amount of the offer, sources said.

JP Morgan managed the debt refinancing deal.

Cable & Wireless taps 6 7/8% notes

Cable & Wireless Communications priced an upsized $300 million fungible add-on to the C&W Senior Financing Designated Activity Co. 6 7/8% senior notes due 2027 (B2/BB-/BB-) at 99.205 to yield 7% in a Wednesday drive-by.

The issue size increased from $180 million.

The issue price and yield came on top of talk and tight to early yield talk in the low 7% area.

Citigroup was the left lead bookrunner.

The London-based telecom plans to use the proceeds to repay amounts drawn from its revolving credit facility for the purpose of funding its acquisition of United Telecommunication Services NV.

Darling expected Thursday

Darling Ingredients plans to price a $500 million offering of eight-year senior notes (expected ratings Ba3/BB+) on Thursday.

Initial price talk has the deal coming with a yield in the high 5% area.

BofA Securities is leading the debt refinancing deal.

Allison Transmission trades up

Allison Transmission’s newly priced 5 7/8% senior notes due 2029 were putting in a strong performance in the secondary space.

The notes traded in a range of par ½ to 101¼ in high-volume activity, a market source said.

They were seen changing hands between par ¾ and 101 in the late afternoon.

More than $68 million of the bonds were on the tape during Wednesday’s session.

The deal from the Indianapolis-based automatic transmission company was oversubscribed during bookbuilding.

The demand for the notes followed them into the secondary space with accounts chasing the double B credit.

Allison Transmission priced a $500 million issue of the 5 7/8% notes at par in a Tuesday drive-by.

The yield printed at the tight end of yield talk in the 6% area and tighter than initial guidance in the low 6% area.

The deal was playing to $1.5 billion of orders during the bookbuilding process, sources said.

Pacific Gas & Electric jumps

Pacific Gas & Electric’s 6.05% senior notes due 2034 were again among the major volume movers in the secondary space.

The notes jumped on Wednesday following court approval of the embattled utility company’s bankruptcy filings.

The 6.05% notes gained 1½ points to trade up to 97, according to a market source.

More than $24.5 million of the bonds changed hands during Wednesday’s session.

The notes were again in focus after Pacific Gas & Electric was allowed to access $5.5 billion in financing.

The approval came despite the objections of victims of the California wildfires that have been blamed on PG&E’s equipment.

CBL tanks

CBL & Associates’ junk bonds tanked on Wednesday following the settlement of a lawsuit and the company’s announcement that it would be suspending dividend payments.

CBL’s 5.95% senior notes due 2026 dropped 7½ points to 70¾, according to a market source.

The real estate investment trust’s 5¼% senior notes due 2023 dropped 5½ points to 75¾.

CBL announced on Monday that it had settled a class action lawsuit alleging it had overcharged tenants at its commercial properties.

Under the terms of the settlement, CBL will set aside $90 million to disburse to class members.

The company also agreed to suspend dividend payments on its common shares for the third and fourth quarters, according to a company press release.

Tuesday outflows

The cash flows of the dedicated high-yield bond funds were negative on Tuesday, the most recent session for which data was available at press time, a trader said.

High-yield ETFs sustained $162 million of outflows on the day.

Actively managed high-yield funds saw $65 million of outflows on Tuesday, the trader said.

Indexes mixed

Indexes were mixed on Wednesday with some posting modest gains and others losses.

The KDP High Yield Daily index rose 4 bps to close Wednesday at 70.10 with the yield now 5.91%. The index gained 1 bp on Tuesday and dropped 7 bps on Monday.

The index saw a cumulative gain of 23 bps on the week.

The ICE BofAML US High Yield index climbed further above the 7% threshold on Wednesday.

The index rose 2.8 bps with the year-to-date return now 7.098%.

The index rose 20.7 bps on Tuesday with the year-to-date return again surpassing 7%.

The index dropped 9.1 bps on Monday.

The index has been flirting with 7% returns for the past several sessions. It sank below 7% returns on March 22 after surpassing it just the day before.

The index just recently passed 6% year-to-date returns on March 11.

The CDX High Yield 30 index dropped 19 bps to close Wednesday at 105.97. The index gave back its gains from Tuesday’s session when it rose 19 bps.

The index dropped 14 bps on Monday after a cumulative loss of 36 bps on the week last week.

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