Junk ex-energy opens slightly weaker; new Shelf Drilling 8¼% notes at 101 bid

By Paul A. Harris

Portland, Ore., Feb. 1 – Apart from bonds in the outperforming energy sector of the high-yield index, junk opened slightly weaker on Thursday, a trader said.

High-yield ETFs were flat to slightly negative at midmorning. The SPDR Blmbg Barclays High Yield Bd ETF (JNK) was 0.04% lower, down 2 cents at $36.52 per share

Bonds priced Wednesday by Dubai-based Shelf Drilling Holdings, Ltd. were turning in a strong secondary market performance on Thursday morning, the trader noted.

Shelf Drilling’z 8¼% senior notes due Feb. 15, 2025 (B2/B-) were at 101 bid at midmorning.

The deal priced tight to talk on Wednesday at par in a $600 million issue, upsized from $550 million.

JBS drive-by

In the Thursday primary market, JBS USA Lux, SA is expected to price a $700 million offering of 10-year senior notes in a quick-to-market trade.

Initial guidance has the deal coming together with a yield in the high 6% area, a trader said.

Barclays is the left bookrunner. RBC and BMO are the joint bookrunners.

The Greeley, Colo.-based animal protein products processing company plans to use the proceeds to refinance its 8¼% senior notes due 2020, which became callable at par as of Thursday.

Oceaneering talk at 6% area

Wrapping up a brief roadshow, Oceaneering International, Inc. talked its $300 million offering of eight-year senior bullet notes (Ba1/expected BBB) to yield in the 6% area.

Books close at 2:30 p.m. ET Thursday and the public offering is set to price afterwards.

Credit Suisse is the lead left bookrunner.

The Houston-based provider of engineered services and products to the offshore oil and gas industry plans to use the proceeds to repay its term loan and for general corporate purposes.

Elsewhere, Gran Tierra Energy Inc. plans to start a two-team roadshow on Monday for a dollar-denominated offering of seven-year senior notes (expected ratings S&P: B+/Fitch: B+).

Initial indications have the company coming with a deal sized at $300 million, a source said.

Credit Suisse and RBC are joint global coordinators and joint bookrunners. Scotia is also a joint bookrunner.

Wednesday outflows

Daily cash flows for dedicated high-yield bond funds were negative on Wednesday, the trader said.

High-yield ETFs sustained $390 million of outflows on the day.

Actively managed high-yield funds saw $100 million of outflows on the day.

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