Curo, Masonite price; Frontdoor on tap; Nielsen in focus; Verscend gains; BMC, HCA weaken

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 13 – Following the largest volume week for new deals year-to-date, high-yield primary market activity is expected to wane in the latter part of the month.

However, Monday remained active with $990 million pricing over two deals.

CURO Group Holdings Corp. priced an upsized $690 million issue of seven-year senior secured notes (B3/B-) and Masonite International Corp. priced a $300 million issue of eight-year senior notes (Ba3/BB+).

While the forward calendar is thin, Frontdoor, Inc. (ServiceMaster Global Holdings, Inc.) is on deck to price its $350 million offering of eight-year senior notes (B2/B-) on Tuesday.

Meanwhile, Verscend Holding Corp.’s newly priced 9¾% senior notes due 2026 (Caa2) remained a volume leader on Monday with the notes trading more than 1 point above their issue price.

BMC Software’s 9¾% senior notes due 2026 (Caa2/CCC+) were active with the notes largely trading below par during Monday’s session.

HCA Inc.’s 5 3/8% notes due 2026 and 5 5/8% notes due 2028 (Ba2/BB-) were also weaker in secondary trading on Monday with the notes also dropping below par.

While some of the new paper to price last week remained active, Nielsen Holding plc’s 5% senior notes due 2025 were the focus of trading activity on Monday.

The notes gained about 3 points after news broke activist investor Elliott Management Corp. had acquired a stake in the company to urge it to sell.

Diebold Inc.’s 8½% senior notes due 2024 pared some of their losses on Monday, gaining 17 points on news the company had retained advisers to help it seek a potential sale.

CURO upsizes

In Monday's primary market, CURO Group Holdings priced an upsized $690 million issue of seven-year senior secured notes (B3/B-) at par to yield 8¼%.

The issue size was increased from $675 million.

The yield printed at the wide end of the 8% to 8¼% yield talk, which was also the initial talk.

Jefferies was the left bookrunner for the debt refinancing deal which priced following a full roadshow.

Masonite drives by

Masonite International Corp. priced a $300 million issue of eight-year senior notes (Ba3/BB+) at par to yield 5¾% in a quick-to-market Monday trade.

The yield came tight to initial talk in the high 5% to 6% area.

BofA Merrill Lynch and Wells Fargo were the joint bookrunners.

The Tampa-based provider of building supplies and services plans to use the proceeds to redeem $125 million of its 5 5/8% senior notes due 2023.

Proceeds will also be used for general corporate purposes which may include future acquisitions, common share repurchases and working capital.

The new notes were seen at par bid after breaking for trade, a market source said.

Frontdoor on deck

The active forward calendar features one other roadshow deal carried over from the Aug. 6 week.

Frontdoor (ServiceMaster Global Holdings, Inc.) has been roadshowing a $350 million offering of eight-year senior notes (B2/B-).

It is set to price Tuesday.

Early guidance is in the low 7% area, a trader said.

Following the Aug. 6 week in which the new issue market cleared a healthy $9.83 billion amount of junk – making it the biggest week, year-to-date – new issue activity appears poised to taper offer, as is customary for mid-to-late August in the high yield primary market, sources said on Monday.

Verscend trades up

Verscend’s 9¾% senior notes due 2026 were seen trading more than 1 3/8 point above their issue price on Monday.

With more than $32 million of the bonds on the tape, the 9¾% notes were among the most actively traded of the day.

The notes were quoted at 101 bid, 101½ offered. They were seen changing hands at 101 3/8, according to a market source.

Verscend priced a downsized $1.1 billion issue of the notes at par on Friday.

The deal size was originally $1.15 billion but $50 million was shifted to a concurrent term loan.

The deal printed at the wide end of the 9½% to 9¾% yield talk and underwent covenant changes bearing primarily upon how the company may disburse cash and incur additional debt.

However, the notes were strong in the secondary space.

Below par

While Verscend continued to perform well, new paper from BMC Software and HCA Inc. continued to weaken on Monday.

BMC Software’s 9¾% senior notes due 2026, which have largely been stuck at par since breaking for trade, spent most of Monday below par.

The notes were poised to close the day at 99 7/8, according to a market source. More than $22 million of the bonds were on the tape by late afternoon.

BMC priced two tranches of eight-year senior notes (Caa2/CCC+) at par on Aug. 9, which included a $1,475,000,000 tranche.

HCA’s recently priced two-tranche offering were also largely trading below par on Monday.

HCA’s 5 3/8% notes due 2026 traded as low as 99¾ but were largely wrapped around 99 7/8, according to a market source.

HCA’s 5 5/8% senior notes due 2028 largely traded between 99¾ and 99 7/8.

Both tranches were seen at 99 7/8 bid, par offered on Friday.

HCA priced $2 billion in two-tranches on Aug. 9 at par, which included a $1 billion tranche of the 5 3/8% notes and a $1 billion tranche of the 5 5/8% notes.

Nielsen in focus

Nielsen Holdings’ 5% senior notes due 2025 were in focus and making gains in high volume trading on Monday. The notes were seen up almost 3 points to trade at 95¾%.

With more than $36 million of the bonds on the tape by late afternoon, the issue was the most actively traded of the day.

While Nielsen’s 5% senior notes due 2025 saw gains in active trading, the TV-rating agency’s 4½% senior notes due 2020 and 5% senior notes due 2022 were largely unchanged, a market source said.

Nielsen was trading up on news activist investor Elliott Management had taken a stake in the company to pressure it to sell itself, the source said.

With a potential acquisition, some of the bonds may be retired, the source said.

Diebold pares losses

Diebold’s 8½% senior notes due 2024 jumped 17 points on Monday, paring some losses after a disastrous two-weeks that have seen the bonds drop nearly 30 points.

The 8½% notes returned to the 71 to 72 range on Monday after closing Friday at about 55, sources said.

The notes jumped after the company announced it had hired Credit Suisse and Evercore as advisers to seek a potential sale.

The notes making it back to par “is a longshot,” a market source said. “The hope is to recover as much as possible.”

Diebold’s 8½% notes have been on a downward spiral since the company’s second-quarter earnings report on Aug. 1.

In addition to a large earnings miss, the company announced it was negotiating a credit agreement with its principal lenders.

Prior to the earnings announcement, the notes were trading as high as 94.

Diebold announced in a press release on Monday that a near-term resolution with its lenders was expected soon.

Indexes down

Three benchmarks for the high-yield secondary market opened the week flat to down after closing Friday with losses.

The KDP High Yield Daily index was flat on Monday closing the day at 70.44 with the yield 5.84%.

The index was down 10 basis points to close Friday at 70.44.

The Merrill Lynch High Yield index saw losses for its second consecutive day after an almost two-week stretch of consecutive gains.

The index was down 4.3 basis points with the year-to-date return now 1.436%. The index was down 15.1 bps on Friday.

The CDX High Yield 30 index was down 10 bps on Monday to close the day at 106.73. The index was down 27 bps on Friday.

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