American Builders prices; new notes take lion’s share of volume; Ford loses; Resideo dives

By James McCandless and Paul A. Harris

San Antonio, Oct. 23 – The high-yield new issue market continued to crank on Wednesday as the secondary market was awash with activity in new issuances.

In drive-by action American Builders & Contractors Supply Co., Inc. priced a $700 million issue of senior secured notes due Jan. 15, 2028 (B1/BB+) at par to yield 4%.

Looking to Thursday's session FXI Holdings, Inc. is on deck with a $775 million offering of seven-year non-call-three senior secured notes (B3/B-) talked to yield in the 12½% area.

Virgin Australia Holdings Ltd. is also expected to price $400 million of five-year senior bullet notes on Thursday, and Garda World Security Corp.’s $779 million offering of eight-year senior notes might also price.

In the secondary, new notes from Liberty Cablevision of Puerto Rico, Netflix, Inc. and Delta Air Lines Inc. saw the majority of trading.

Automotive name Ford Motor Co.’s issues were losing after the company reported third-quarter results.

Elsewhere, Resideo Technologies, Inc.’s paper dived amid a management change and a guidance cut.

Chemicals name Chemours Co.’s notes moved down after a former DuPont executive made comments about its liabilities.

ABC Supply 4% print

In drive-by action American Builders & Contractors Supply Co., Inc. priced a $700 million issue of senior secured notes due Jan. 15, 2028 (B1/BB+) at par to yield 4%.

The yield printed at the tight end of the 4% to 4¼% yield talk.

Looking to Thursday's session FXI Holdings, Inc. is on deck with a $775 million offering of seven-year non-call-three senior secured notes (B3/B-) talked to yield in the 12½% area, including approximately two points of original issue discount.

Along with price talk came covenant changes.

Among them, a special call provision that would have enabled the issuer to redeem 10% of the notes annually at 103, during the non-call period, was removed. Other changes primarily bear upon how the company may disburse cash and incur additional debt.

Books close at 11 a.m. ET Thursday, and the Rule 144A and Regulation S for life deal is set to price thereafter.

Jefferies LLC, Barclays, SunTrust Robinson Humphrey Inc. and Deutsche Bank Securities Inc. are the joint bookrunners.

Virgin Australia Holdings is also expected to price its $400 million offering of five-year senior bullet notes on Thursday.

The notes were talked to yield 8¼% to 8½% on Wednesday.

Meanwhile Garda World Security's $779 million offering of eight-year senior notes might also price on Thursday, a trader said.

With official price talk pending, the deal has been in the market with initial talk in the low 9% area.

Clarivate Analytics plc took a place aboard a sizable calendar expected to clear ahead of the coming weekend.

The Philadelphia-based provider of intellectual property and scientific information, formerly known as the Thomson Reuters’ Intellectual Property & Science business, plans to price a $500 million offering of seven-year senior secured notes (B2/B) on Friday.

Ziggo Returns

The European new issue market continued to generate news on Wednesday.

Less than a week after it priced approximately €975 million equivalent of senior secured notes due January 2030, in dollar- and euro-denominated tranches, Netherlands-based cable operator VodafoneZiggo is back in the high-yield primary market with an upsized €500 million offering of 4.25-year vendor financing notes.

The deal, which is expected to garner low-to-mid single B credit ratings, is upsized from €400 million.

Final talk is 2½%, tight to earlier price talk of 2½% to 2¾%.

And in a deal that has hung around the market for a fortnight London-based networking services provider Kantar restructured approximately $3 billion equivalent of debt financing in moves that saw the euro-denominated portions grow while the dollar-denominated portions shrunk, and the bond portions increase at the expense of the bank loan tranches, according to a market source.

Mixed Tuesday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Tuesday, the most recent session for which data was available, according to a market source.

High-yield ETFs sustained $181 million of outflows on the day, while actively managed high-yield funds saw a modest $35 million of inflows on Tuesday, the source said.

With only Wednesday’s daily fund flows number remaining to be tabulated the combined funds are tracking $1.09 billion of net inflows for the week to Wednesday's close, the source added.

New notes active

New issuance saw the majority of activity on Wednesday, traders said.

San Juan, Puerto Rico-based cable and wireless operator Liberty Cablevision’s new 6¾% senior secured notes due 2027 finished their first day at 103 bid.

About $96 million of the notes were traded.

The $1.2 billion issue, upsized from $1 billion, priced on Tuesday.

Los Gatos, Calif.-based entertainment company Netflix’s new 4 7/8% senior notes due 2030 closed at 100¾ bid.

By the close, about $38 million changed hands.

The $2.23 billion two-tranche offering priced in an upsized sale in dollar and euro-denominated notes on Tuesday.

Meanwhile, Atlanta-based commercial airline name Delta’s 3¾% senior paper due 2029 softened to 99.456 bid.

About $36 million of the paper traded.

The $1.5 billion deal came to market on Monday at 99.595 bid.

Ford loses

Auto name Ford’s notes were seen losing, market sources said.

The 5.113% senior notes due 2029 shaved off ¾ point to close at 98¾ bid.

The Dearborn, Mich.-based automotive company’s notes saw increased attention after it released its third-quarter earnings results.

Earnings per share were pegged at 34 cents, better than what analysts had predicted at 26 cents per share.

The company also slashed its guidance for the year, citing high domestic warranty costs and sluggish sales abroad.

Resideo dives

Elsewhere, Resideo’s paper took a dive, traders said.

The 6 1/8% senior paper due 2026 flopped 6¼ points to close at 99¾ bid.

The Austin, Texas-based security technology company released third-quarter results after the close on Tuesday, showing disappointing revenue of $1.22 billion.

Concurrently, the name also announced the resignation of chief financial officer Joseph Ragan and that it would be conducting an operational and financial review with the expressed goal of finding solutions to increase its margins.

Chemours down

In the chemicals space, Chemours’ notes moved downward, market sources said.

The 5 3/8% senior notes due 2027 lost 1½ points to close at 88½ bid.

The Wilmington, Del.-based chemicals producer’s issues were under pressure after a former DuPont executive said in a court filing that the company, a 2015 spinoff of DuPont, was never meant to assume “unlimited exposure” from its former parent.

Former chairman and CEO Ellen Kullman said that when the spinoff was executed under her watch, it was never the company’s intention to have the company assume responsibility for an unlimited amount of DuPont’s historical liabilities.

Chemours filed a lawsuit against DuPont in May, accusing executives of misleading it about the extent of the liabilities it faces over recent environmental hazards.

“It’s a fight that they’ve been having for basically its entire existence,” a trader said. “The question of how much liability they can sustain will weigh on them for the foreseeable future.”

Indexes better

Three high-yield indexes moved into better positions on Wednesday.

The KDP High Yield Daily index inched up 2 basis points on Wednesday, closing at 71.25 with the yield slackening to 5.53%.

The index picked up 5 bps on Tuesday, trailed by 5 bps on Monday and finished unchanged on Friday.

The ICE BofAML US High Yield index gained 4.8 bps with the year-to-date return now at 11.903%.

The index picked up 1.5 bps on Tuesday, gained 5.9 bps on Monday and tacked on 1.7 bps on Friday.

The CDX High Yield 30 index rose 33.32 bps to 107.4197.

The index dipped 33.52 bps on Tuesday, reached up 33.29 bps on Monday and rose 33.74 bps on Friday.

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