Kraton Polymers, Ford price; forward calendar grows; Radiology Partners jumps; Cheniere active

By Paul A. Harris and Abigail W. Adams

Portland, Me., Dec. 7 – The Dec. 7 week got off to a big start on Monday with two issuers pricing a total of three tranches of dollar-denominated notes and dealers pushing the active forward calendar to $3.93 billion.

In a deal that bore some earmarks of an investment-grade trade, but was talked at yields, Ford Motor Credit Co. LLC priced $1.25 billion and £750 million of fixed-rate notes (expected ratings Ba2/BB+/BB+) in three tranches.

Kraton Corp. priced a $400 million issue of five-year senior notes (existing ratings B2/BB-).

Meanwhile, the forward calendar ballooned with Occidental Petroleum Corp., GrafTech International Ltd., Rayonier A.M. Products Inc. and Guitar Center, Inc. all launching offerings.

Meanwhile, the secondary space was largely unchanged on Monday after closing out last week at its tightest level since February.

New paper remained in focus and continued to perform well.

Radiology Partners, Inc.’s 5¼% senior secured notes due 2025 (B3/B-) continued to gain in active trading after a strong break.

Outside of recent issues, Cheniere Energy Inc.’s 4 5/8% senior notes due 2028 (Ba3/BB) saw renewed attention in the secondary space with the notes slightly improved despite a drop in natural gas futures.

Diamond Sports Group LLC and Diamond Sports Finance Co.’s 5 3/8% senior secured notes due 2026 continued to recover in active trading as the prospects for the sports network improve.

Monday’s primary

The Dec. 7 week got off to a big start on Monday with two issuers pricing a total of three tranches of dollar-denominated notes and dealers pushing the active forward calendar to $3.93 billion.

In a deal that bore some earmarks of an investment-grade trade, but was talked at yields, Ford Motor Credit priced $1.25 billion and £750 million of fixed-rate notes (expected ratings Ba2/BB+/BB+) in three tranches.

The deal included a $600 million add-on to the 3 3/8% senior notes due Nov. 13, 2025, which priced at 101.904 to yield 2.95%, tight to the 3% guidance.

The dollar-denominated portion also included a $650 million add-on to the 4% senior notes due Nov. 13, 2030, which priced at 102.832 to yield 3.65% tight to the 3.7% guidance.

In a sterling-denominated tranche the company priced £750 million of 2.748% at 99.403 to yield 2¾%, tight to the 2¾% to 2 7/8% guidance.

Elsewhere, Kraton priced a $400 million issue of 4¼% five-year senior notes (existing ratings B2/BB-) at par, at the tight end of talk.

The new paper saw a strong break and was changing hands in the 101 to 101½ context heading into the close.

Meanwhile, in deals announced on Monday, Occidental Petroleum disclosed plans to price $1.5 billion of senior notes (expected ratings Ba2/BB-/BB) in two bullet tranches on Tuesday.

The public offering is coming in notes set to mature in December 2025 and notes set to mature in January 2031.

GrafTech International is in the market with a $500 million offering of eight-year senior secured notes with initial guidance of 5¼% to 5½%.

Rayonier A.M. Products began a roadshow for a $500 million offering of senior secured notes due Jan. 15, 2026, which are being sold with a springing maturity.

And Guitar Center plans to sell $335 million of five-year senior secured notes related to its November bankruptcy filing and restructuring (see related stories in this issue).

Those deals take places aboard an active forward calendar that already contained four proposed tranches from three issuers.

LBM Acquisition is selling $390 million of eight-year senior notes with initial guidance in the 7% area, and pricing set for Wednesday.

Virtusa is selling $300 million of eight-year notes with initial guidance in the 8% area. The roadshow runs through Wednesday.

And Empire Communities is having a roadshow for new five-year senior notes (B-/B-) in tranches of $400 million and C$150 million. Initial guidance on both tranches is 7¾% to 8%.

Noting that Empire Communities is a debut issuer, a trader remarked that at the initial talk the notes appear to be coming with a good deal of yield, for a home builder, and forecast that, on that basis, investors will almost certainly have a look.

Radiology gains

Radiology Partners’ 5¼% senior secured notes due 2025 continued to gain in active trading on Monday following a strong break.

The 5¼% notes were changing hands in the 102 5/8 to 103 1/8 context heading into the close.

There was more than $48 million in reported volume.

The notes were on the rise after a strong break that saw them quickly trade up to 102.

The deal was heavily oversubscribed with the demand seen during bookbuilding following the notes into the secondary space.

The radiology services provider priced an upsized $800 million, from $650 million, issue of the 5¼% notes at par on Friday.

The yield printed at the tight end of yield talk in the 5 3/8% area.

Proceeds will be used to fund the acquisition of the Mednax Radiology Solutions business.

Cheniere active

Cheniere Energy’s 4 5/8% senior secured notes due 2028 (Ba3/BB) were active on Monday with the notes slightly improved despite a drop in natural gas futures.

The 4 5/8% notes closed Monday up ¼ point at 104½, according to a market source.

There was more than $25 million of the bonds on the tape.

The notes from the natural gas company were active as January natural gas futures dropped $0.169 to settle at $2.406, according to Natural Gas Intelligence.

While natural gas futures were down on an anticipated mild winter, Cheniere’s notes were moderately improved after the company announced its first commissioning cargo for train 3 at its Corpus Christie location.

Cheniere continued to operate at or near capacity at its Sabine Pass export terminal, S&P Global reported.

The company has an aggressive plan to deleverage itself to achieve investment grade ratings in five years, Prospect News previously reported.

Diamond Sports rebounds

Diamond Sports’ 5 3/8% senior secured notes due 2026 continued to rebound in active trading on Monday.

The notes traded up another 1 point to close the session at 84 5/8, according to a market source.

There was more than $15 million on the tape heading into the close.

The notes have gained about 7 points since last Monday as the prospects for the struggling sports network, a subsidiary of Sinclair Broadcasting, improved.

The notes traded to a low of 55 as recently as late October as rumors about a potential restructuring circulated the market.

While less active, Diamond Sports’ 6 5/8% senior notes due 2027 were also improved.

The notes were up about ½ point to 64¾.

They gained about 6 points over the past week.

The notes were in the low 40s in late October.

Diamond Sports secured and unsecured notes have improved over the past two weeks after Sinclair struck a sports betting and iGaming partnership with Bally’s that will lead to a rebranding of Diamond Sports.

Sinclair also recently announced that it would offer a direct-to-consumer streaming option to customers.

Friday flows

High-yield ETFs sustained $26 million of outflows on Friday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds saw $10 million of inflows on the day, the source added.

Indexes mixed

Indexes opened the week mixed after posting strong gains the previous week.

The KDP High Yield Daily index was up 8 points to close the day at 68.52 with the yield now 4.54%.

The ICE BofAML US High Yield index climbed further above 5% returns after shooting past the threshold last Friday.

The index gained another 12 bps with the year-to-date return now 5.159%.

The CDX High Yield 30 index shaved off 11 bps to close Monday at 109.46.

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