Amkor, Ashton Woods price; Power Solutions eyed; Frontier dominates; Rite Aid jumps

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 13 – The domestic high-yield primary market continued to churn out new deals on Wednesday.

Amkor Technology, Inc. priced a $525 million issue of 6 5/8% 8.5-year senior notes (B1/BB) at 99.50 to yield 6.703%.

Ashton Woods USA LLC priced a $255 million issue of 9 7/8% eight-year senior notes (Caa1/B-) at 99.301 to yield 10% in a Wednesday drive-by.

Power Solutions set price talk for its $4.7 billion three-part megadeal, which is expected to price on Friday. The deal is already oversubscribed, sources said.

The European high-yield market also saw some action with Faurecia SE pricing €500 million of senior notes due June 15, 2026 (expected ratings Ba1/BB+/BB+) at par to yield 3 1/8% in the previous session.

Demand in the European market continues to outweigh supply with Faurecia pricing tight, sources said.

Meanwhile, the secondary space saw another strong day on Wednesday with new paper dominating trading activity.

Frontier Communications Corp.’s newly priced 8% first lien senior secured notes due 2027 (B2/B/BB) jumped in high-volume activity on Wednesday with the notes more than 1 point above their issue price.

While not reaching Frontier’s heights, Centennial Resource Production, LLC’s 6 7/8% senior notes due 2027 (B3/BB-) and Target Hospitality’s 9½% senior notes due 2024 were also trading at a premium to their issue price.

Outside of the new paper, Rite Aid Corp.’s 6 1/8% senior notes due 2023 jumped in high-volume activity after the company announced a management shake-up.

Amkor prices wide

In Wednesday's primary market, Amkor Technology priced a $525 million issue of 6 5/8% 8.5-year senior notes (B1/BB) at 99.50 to yield 6.703%.

The yield printed wide of price talk in the 6½% area. Initial guidance was 6¼% to 6½%.

The deal was announced Tuesday, so it was not an a.m. to p.m. drive-by, a trader remarked.

At 10 a.m. ET Wednesday there was still wood to chop, according to this source who added that orders for Amkor's $525 million of bonds, at that time, were heard to come to $400 million at 6¼%, the tight end of initial guidance.

Morgan Stanley and BofA were the joint bookrunners.

The Chandler, Ariz.-based semiconductor company plans to use the proceeds to refinance its existing senior notes.

Reverse inquiry brings Ashton Woods

Ashton Woods USA priced a $255 million issue of 9 7/8% eight-year senior notes (Caa1/B-) at 99.301 to yield 10% in a quick-to-market Wednesday trade.

The coupon and yield were set before the deal was announced, according to a trader who added that the bond offer was driven to market on reverse inquiry.

J.P. Morgan managed the sale.

Proceeds will be used to fund the tender offer for any and all of the Ashton Woods USA/Ashton Woods Finance Co. $250 million 6 7/8% senior notes due 2021.

Faurecia prices tight

Right now, the European high-yield market is a story of pent-up demand, which allowed French auto parts maker Faurecia to ratchet pricing tighter and tighter, sources say.

Faurecia priced €500 million of senior notes due June 15 2026 (expected ratings Ba1/BB+/BB+) at par to yield 3 1/8%, on Tuesday.

The yield printed at the tight end of yield talk in the 3¼% area. Earlier guidance was in the 3½% area.

Joint global coordinator Credit Agricole will bill and deliver. Citigroup and HSBC were also joint global coordinators.

The auto parts manufacturer, which is based in Nanterre, France, plans to use the proceeds to refinance the €500 million bridge loan which was used to finance its acquisition of Clarion Co, Ltd.

Talk on oversubscribed Power Solutions

Power Solutions set price talk in its $4.7 billion three-part megadeal on Wednesday.

It features $2 billion of seven-year senior secured notes (Ba3/B+/BB) talked to yield 6½% to 6¾%, inside of initial guidance in the 7% area.

In addition, the deal features $750 million equivalent of euro-denominated senior secured notes (Ba3/B+/BB) talked to yield 4½% to 4¾%, inside of initial guidance in the 5% area.

The sole unsecured tranche features $1.95 billion of eight-year senior notes (B3/B/B-) talked to price in the 225 basis points area behind the dollar-denominated secured notes.

Pricing is set for Friday morning.

Order books are oversubscribed, according to a trader who said that the overall $4.7 billion amount of secured and unsecured bonds was heard to be playing to demand of $7 billion to $8 billion.

Proceeds will be used to fund Brookfield Business Partners’ acquisition of Johnson Controls’ Power Solutions business.

Frontier ‘off to the races’

Frontier Communications’ new 8% senior notes due 2027 were “off to the races,” on Wednesday, a market source said.

The notes jumped more than 1 point in high-volume activity.

They were quoted at 101 1/8 bid, 101 3/8 offered early in the session and were seen changing hands at 101¼ in the late afternoon.

With more than $150 million of the bonds on the tape during Wednesday’s session, the 8% notes were the most actively traded in the secondary space.

Frontier priced a $1.65 billion issue of the 8% notes at par in a Monday drive-by.

The yield printed in the middle of initial talk in the 8% area.

Centennial active

Centennial Resource’s 6 7/8% senior notes due 2026 were also trading at a premium to their issue price in active trading.

The 6 7/8% notes were quoted at par ¼ to par 5/8 early in the session and were changing hands between par and par ¾, sources said.

More than $40 million of the bonds were in play during Wednesday’s session.

Centennial priced a $500 million issue of the 6 7/8% at 99.235 to yield 7%.

The yield printed at the wide end of yield talk in the 6 7/8% area.

Target Hospitality at a premium

Target Hospitality’s 9½% senior notes due 2024 were trading in a wide range on Wednesday.

However, the notes remained at a premium to their issue price.

The 9½% notes were trading in a range of 99½ to par throughout the session, sources said.

Volume was light in comparison to other issues, which sources attributed to the size of the deal.

About $10 million of the bonds had switched hands by the late afternoon.

Target Hospitality priced a $340 million issue of 9½% notes at 99.029 to yield 9¾%.

The yield printed 62.5 basis points beyond the wide end of yield talk in the 9% area. Initial guidance was in the high 8% area.

Rite Aid jumps

Rite Aid’s 6 1/8% senior notes due 2023 jumped in high-volume activity on Wednesday following a management shake-up.

The notes rose 3 points. They were quoted at 84¼ bid, 84½ offered and were seen changing hands at 84½ in the late afternoon, sources said.

More than $27 million of the bonds changed hands during Wednesday’s session.

The notes were making gains following news CEO John Standley, CFO Darren Karst and chief operating officer Kermit Crawford were leaving the company as part of a management shake-up.

Standley will continue in his current position until a new CEO is selected, according to a company press release.

Rite Aid also plans to slash 400 full-time positions.

Rite Aid’s junk bonds have been under pressure since the struggling drug store chain called off its proposed merger with Albertsons Cos.

The merger was met with fierce opposition with many claiming that it undervalued the company.

ETFs see second consecutive big inflow

High-yield ETFs saw daily cash inflows of $50 million on Tuesday, the most recent session for which data was available at press time, a trader said.

It was the second consecutive big inflow to the ETFs, according to the source who recounted that they saw $465 million of inflows on Monday.

The Tuesday flows were mixed.

Actively managed high yield funds sustained $20 million of outflows on the day, the trader said.

Indexes gain again

Indexes were again on the rise on Wednesday, as they have been since Monday, despite closing out last week with cumulative losses.

The KDP High Yield Daily index rose 11 bps to close Wednesday at 69.77 with the yield now 6.05%.

The index was up 13 bps on Tuesday and 5 bps on Monday after a cumulative loss of 43 bps on the week last week.

The ICE BofAML US High Yield index gained 24.8 bps with the year-to-date return now 6.512%.

The index was up 23.5 bps on Tuesday and rose 19.7 bps on Monday after a cumulative loss of 57.5 bps on the week last week.

After sinking below 6% year-to-date returns on Friday, the index popped back above it on Monday.

The index initially shot past 6% returns on Feb. 25 after passing 5% returns on Feb. 12.

The CDX High Yield 30 index rose 26 bps to close Wednesday at 106.48. The index was up 15 bps on Tuesday and 57 bps on Monday after a cumulative 93 bps drop on the week last week.

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