GoDaddy, Hudbay, Coeur Mining price; Spectrum flat; Carnival rebound continues

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 22 – With some issuers having now cleared an earnings blackout that kept the new issue market generally quiet last week, news volume intensified on Monday, with four issuers appearing at the drive-through window.

They included GoDaddy Inc., which priced an $800 million issue of 3½% eight-year senior notes.

Hudbay Minerals Inc. priced a $600 million issue of 4½% five-year senior notes.

And in a drive-by deal heard to be playing to a substantial amount of reverse inquiry Coeur Mining priced an upsized $375 million issue (from $350 million) of 5 1/8% eight-year senior notes.

There was also a build up of the forward calendar.

TriNet Group, Inc. plans to price a $500 million offering of eight-year senior notes on Tuesday.

Meanwhile, the secondary space was soft on Monday as rising Treasuries continued to put pressure on risk assets.

The cash bond market was down an 1/8 to ¼ point with low-coupon junk bonds particularly sensitive to the rising Treasury yields, a source said.

Spectrum Brands Inc.’s 3 7/8% senior notes due 2031 (B2/B/BB) were a case-in-point with the notes falling flat in the aftermarket.

While the overall market was soft on Monday, Carnival Corp.’s 5¾% senior notes due 2027 (B2/B+) continued to bounce higher with the notes trading up to a 101-handle after the company announced a new secondary offering.

Drive-by deals

GoDaddy priced an $800 million issue of 3½% eight-year senior notes (Ba3/BB-) at par, in the middle of talk.

The deal was heard to be playing to $1.4 billion of orders, at one point on Monday.

Hudbay Minerals priced a $600 million issue of 4½% five-year senior notes (B3/B/B+) at par, on the tight end of the talk.

Hudbay was heard to be playing to $2.2 billion of demand, a trader said.

And in a drive-by deal heard to be playing to a substantial amount of reverse inquiry Coeur Mining priced an upsized $375 million issue (from $350 million) of 5 1/8% eight-year senior notes (B3/B) at par, inside of talk.

There was also a build up of the forward calendar.

TriNet Group plans to price a $500 million offering of eight-year senior notes on Tuesday.

Initial guidance has the notes coming to yield in the mid-to-high 3% area.

TriNet was heard to have been driven into the market by reverse inquiry amounting to twice the size of the deal, a trader said.

$257 million Friday outflows

The dedicated high-yield bond funds sustained $257 million of net 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 $145 million of outflows on the day.

High-yield ETFs sustained $112 million of outflows on Friday, the source said.

Spectrum flat

Spectrum Brands 3 7/8% senior notes due 2031 fell flat in the aftermarket with sources calling the coupon for the single B credit “obscene.”

The 3 7/8% notes traded as low as 99½ during Monday’s session.

However, the notes were largely wrapped around par and were changing hands in the 99 7/8 to par context heading into the market close, according to a market source.

There was more than $52 million in reported volume.

Spectrum priced an upsized $500 million, from $400 million, issue of the 3 7/8% notes at par on Friday.

Pricing came at the tight end of the 3 7/8% to 4% yield talk.

Carnival rebounds

Carnival’s 5¾% senior notes due 2027 continued to bounce higher on Monday with the notes trading up to a 101-handle.

After breaking par last Friday, the notes climbed as high as 101¾ late Monday afternoon.

They were changing hands in the 101 to 101 3/8 context heading into the market close, according to a market source.

The large, liquid issue continued to dominate the tape with $61 million in reported volume.

The notes’ upward momentum gained strength after the cruise line operator announced plans to price a $1 billion secondary offering.

The equity raise was good news for the company’s bonds and will provide an additional cushion to the balance sheet, a source said.

Indexes

The KDP High Yield Daily index shaved off 2 points to close Monday at 69.86 with the yield now 3.8%.

The index posted a cumulative gain of 3 points on the week last week.

The ICE BofAML US High Yield index dropped 8.7 bps with the year-to-date return now 1.25%.

The index posted a cumulative loss of 4.8 bps on the week last week.

The CDX High Yield 30 index dropped 40 bps to close Monday at 108.6.

The index posted a cumulative loss of 46 bps on the week last week.

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