GCP prices eight-year bullet; pre-Easter calendar continues to build; Cequel 7½% notes trade up

By Paul A. Harris and Abigail W. Adams

Portland, March 26 – GCP Applied Technologies Inc. was the first to price in what promises to be a big week in the dollar-denominated new issue market. Charles River Laboratories, Inc. and W/S Packaging Holdings also announced roadshow deals on Monday.

They took their place on a pre-Easter calendar with $6 billion in deals, several of which are coming in the form of committed financing.

Coty Inc., McDermott International Inc., Ply Gem Holdings Inc., Wyndham Hotels & Resorts, Inc. and Boyne USA, Inc. all plan to price before the truncated week comes to an end.

While new paper from GCP Applied Technologies priced on Monday, market sources did not see it trading in the secondary market before the market close.

Trading volume in Junkbondland was “pretty light,” during Monday’s session. “There was a lot of dealer to dealer trading,” a market source said.

USG Corp.’s 4 7/8% senior notes due June 2027 were up half a point on news that its board unanimously rejected a takeover bid from Knauf Entities.

Cequel Communications Holdings I, LLC’s recently priced 7½% senior notes due April 2028 (Caa1/B) remained strong in the secondary market and were seen wrapped around 102 during Monday’s session, according to a market source.

While Cequel’s new notes traded up, Guitar Center, Inc.’s recently priced 9½% senior notes due 2021 continued to trade down. The notes were seen at 95 bid, 96 offer on Monday, about a ¼-point drop from Friday.

GCP’s bullet

GCP Applied Technologies Inc. priced Monday's sole deal, a $350 million drive-by issue of eight-year senior bullet notes (B1/BB-) that came at par to yield 5½%.

The yield printed in the middle of yield talk in the 5½% area. Initial talk had the deal coming to yield 5½% to 5¾%.

BofA Merrill Lynch, Deutsche Bank, Goldman Sachs, Citigroup, PNC and KeyBanc were the joint bookrunners for the debt refinancing deal.

The 5½% notes were not seen trading prior to the market close, a market source said.

Proceeds from the deal will be used to redeem GCP’s 9½% notes due 2023.

New roadshow deals

There were also a pair of roadshow deals announced on Monday.

Charles River Laboratories, Inc. plans to price $500 million of eight-year senior notes (expected ratings B1/BB+) on Wednesday.

Initial guidance has the deal coming to yield 5½% to 5¾%, a trader said.

JPMorgan is the lead.

The Wilmington, Mass-based company plans to use the proceeds to help fund its acquisition of MPI Research.

And W/S Packaging Holdings is heard to be in the market with $250 million of notes (expected ratings B3/B).

The deal, which is coming with early guidance of 8¾% to 9%, is expected to price on Wednesday.

BofA Merrill Lynch is the lead.

Big pre-Easter calendar

Charles River Laboratories and W/S Packaging took places on a $6 billion pre-Easter calendar of deals including several which are coming in the form of committed financings.

Coty Inc. is marketing $2 billion equivalent of senior notes: euro-denominated five-year notes, euro-denominated and dollar-denominated eight-year notes and dollar-denominated 10-year notes.

The dollar tranches are expected to be sized at $500 million each, with early guidance of 5¾% to 6% on the eight-year notes and 6% to 6¼% on the 10-year notes.

The deal is expected to price on Wednesday.

McDermott International Inc. is having a roadshow for $1.5 billion of senior notes (B2/B-) in two tranches: $950 million of six-year notes, initial price talk 8 3/8% to 8½%, and $550 million of eight-year notes due 2026, initial price talk 3/8% behind the six-year notes.

The deal is coming in connection with the merger of McDermott and CB&I.

Ply Gem Holdings Inc. started a roadshow last Friday for a $645 million offering of eight-year senior notes (expected ratings Caa1/CCC+).

Initial price talk is 7% to 7¼%.

Wyndham Hotels & Resorts, Inc. was slated to start a roadshow on Monday for a $500 million offering of eight-year senior notes (Ba2/BB-).

Proceeds will be used to help fund the acquisition of La Quinta Holdings Inc.’s hotel franchise and hotel management businesses for $1.95 billion in cash, and for general corporate purposes.

And Boyne USA, Inc. started a roadshow on Friday for $400 million of seven-year senior secured second-lien notes (expected ratings B2/B) via sole bookrunner Wells Fargo.

Initial price talk is 7½% to 7¾%.

Pricing is expected on Tuesday.

The Boyne Falls, Mich.-based ski resort owner and operator plans to use the proceeds to purchase seven resort properties and personal property currently owned by Och-Ziff Real Estate, but operated by Boyne, and to repay debt.

Friday outflows

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

High-yield ETFs sustained $414 million of outflow on the day.

Actively managed funds saw $105 million of outflows on Friday.

USG up

USG Corp.’s 4 7/8% senior notes due June 2027 were up half a point on news that its board unanimously rejected Knauf Entities takeover bid of the Chicago, Ill.-based manufacturer of sheetrock and ceiling tiles.

USG’s 4 7/8% senior notes due June 2027 were seen at 99 bid on Monday.

The company's biggest shareholder, Berkshire Hathaway Inc., earlier said it proposed to allow Knauf to purchase all of Berkshire's USG shares at $42 a share, a 25% premium to Friday's closing price.

Knauf currently has a 10.5% stake in USG and is the company’s second largest shareholder. USG rejected an offer from Knauf for $40.10 a share in November.

California Resources active

California Resources’ 8% notes due 2022 were among the most active of Monday’s session. The notes were seen at 78.5 bid, 79 offered early in Monday’s session and closed the day at 79.25, according to market sources.

The notes were down about ½-point early in the session but closed the day largely flat. With a little more than $47 million bonds traded, California Resources was among the top volume movers during Monday’s session.

Cequel trades up

Cequel’s recently priced 7½% notes due 2028 continued to perform well in the secondary market. They were seen at 101¾ bid, 102¼ offered early in the session and were wrapped around 102 late in the afternoon, according to market sources.

“It’s a nice coupon and a pretty big issue,” a market source.

Cequel priced $1.05 billion of the 10-year notes at par on March 22 amid last week's turbulence in the global capital markets.

The deal was said to be almost two-times oversubscribed, a trader remarked, adding that investors sought and received a pricing concession to those rugged market conditions.

While the notes continued to trade up, trading volume was light on Monday with only about $15 million of the new notes trading during Monday’s session, a market source said.

Proceeds from the 7½% notes are being used to redeem the St. Louis-based cable operator’s 6 3/8% notes due 2020. The 6 3/8% notes will be redeemed on April 23 at 101.594% of par plus accrued interest.

The 6 3/8% notes were seen trading north of 101 on Monday.

Guitar Center trades down

While Cequel’s 7½% notes continued to trade up on Monday, Guitar Center’s recently priced 9½% notes due 2021 continued to trade down. The 9½% notes were seen at 95 bid, 96 offered on Monday, a ¼-point drop from Friday.

Guitar Center priced $635 million of the 9½% notes on March 14 at 98.14.

Indexes mixed

The KDP High Yield Daily index dropped slightly to 70.19 on Monday from 70.22 on Friday although its yield held steady at 5.91%.

The Merrill Lynch High Yield index gained 1.7 bps on Monday with a negative year-to-date return of 0.999%.

The CDX high yield 29 index rebounded on Monday with gains that wiped out its losses from Friday. The CDX 29 index gained 36.2 bps on Monday after losing 35.3 bps on Friday.

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