Fortress prices add-on; CommScope, Clear Channel to price Thursday; KB Home lags; Altice USA gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 6 – A single issue cleared the high-yield primary market on Wednesday with Thursday gearing up to be a high-volume day for new deal activity.

Fortress Transportation & Infrastructure Investors LLC priced an upsized $150 million add-on to its 6¾% senior notes due March 15, 2022 (B1/B+) in a Wednesday drive-by.

CommScope Inc. is expected to price its $3 billion offering and Clear Channel Outdoor Holdings, Inc. is expected to price its $2.2 billion offering on Thursday with official price talk circulating the market.

Meanwhile, the secondary space was flat to slightly improved on Wednesday after seeing large gains throughout the week and the latter part of last week, sources said.

New paper remained in focus in the secondary space.

KB Home’s two tranches of recently priced senior notes were mixed in secondary activity.

The 6 7/8% senior notes due 2027 (B1/BB-) were lagging their issue price in high-volume activity in the secondary space.

However, the company’s add-on notes to its 7 5/8% senior notes due 2023 were posting large gains to their reoffer price.

Altice USA Inc.’s 6½% senior notes due 2029 (Ba2/BB-) returned to focus in the secondary space with the notes riding the general strength of the market to post large gains on the week.

TransDigm Inc.’s 6¼% senior secured notes due 2026 (Ba3/B+) again saw high-volume activity in the secondary space. However, the notes were largely trading flat on Wednesday.

Fortress upsizes

Fortress Transportation & Infrastructure Investors priced an upsized $150 million add-on to its 6¾% senior notes due March 15, 2022 (B1/B+) at 98.50 to yield 7.294% in a quick-to-market Wednesday trade, according to market sources.

The issue size was increased from $100 million.

The reoffer price came on top of price talk and at the rich end of the 98 to 98.5 initial guidance.

Left lead bookrunner Barclays will bill and deliver. JP Morgan and Morgan Stanley were joint bookrunners.

The New York-based holding company plans to use the proceeds, including the additional proceeds resulting from the $50 million upsizing of the deal, for general corporate purposes including the repayment of borrowings under its revolving credit facility.

Proceeds will also be used to fund future investments including aviation investments.

CommScope talks $3 billion

The Thursday session is set to be a big one with two issuers bringing a total $5.2 billion of announced business in four tranches.

Three of those four tranches come from CommScope, which talked all three inside of initial guidance on Wednesday.

A $1 billion tranche of five-year senior secured notes (Ba1/BB) is talked to yield 5½% to 5¾%, inside of initial talk in the 6% area.

A $1 billion tranche of seven-year senior secured notes (Ba1/BB) is talked to yield 6% to 6¼%, inside of initial talk in the 6½% area.

A $1 billion amount of eight-year senior unsecured notes (B1/B+) is talked to yield in the 8½% area, tight to initial guidance in the high 8% area.

Proceeds will be used to help fund the acquisition of Arris International plc.

Clear Channel talk 9¼% to 9½%

Clear Channel Outdoor Holdings, also on deck for Thursday, talked $2.2 billion of five-year senior subordinated notes (Caa1/CCC+/CCC+) to yield 9¼% to 9½% on Wednesday.

Official talk comes tight to earlier guidance in the 9½% area, according to a trader who added that initial talk was in the 10% area.

The San Antonio-based outdoor advertising company plans to use the proceeds to refinance its 7 5/8% series A and series B senior subordinated notes due 2020.

As part of its restructuring under Chapter 11 bankruptcy in January, iHeartMedia Inc. spun off Clear Channel Outdoor to become its own independent publicly traded company.

KB Home mixed

KB Home’s recently priced senior notes were mixed in active trading in the secondary space with its 6 7/8% senior notes trading well below their issue price while the add-on to its 7 5/8% notes traded well above their reoffer price.

KB Home’s 6 7/8% opened the day at par ¼ and traded down from there, a market source said. The notes were quoted at 99 3/8 bid, 99 7/8 in the early afternoon, according to a market source.

They were changing hands between 99¼ and 99½ in the late afternoon and stood poised to close the day at 99½, sources said.

With almost $60 million of the bonds on the tape by the late afternoon, the 6 7/8% notes were the most actively traded of Wednesday’s session.

The notes priced at the tight end of talk, which may have contributed to their lackluster performance in the secondary space, a market source said.

While KB Home’s 6 7/8% senior notes were trading down, the home building company’s 7 5/8% senior notes due 2023 were trading well above their 105.25 reoffer price.

The 7 5/8% senior notes due 2023 were quoted at 105 3/8 bid, 106 3/8 offered and were seen changing hands between 106¼ and 106½, sources said.

About $17 million of the bonds were on the tape by the late afternoon, according to a market source.

KB Home priced $400 million senior notes in two tranches in a Tuesday drive-by.

The company priced a $300 million tranche of the 6 7/8% notes at par.

The yield printed at the tight end of yield talk in the 7% area and inside of initial guidance in the 7¼% area.

The company also priced a $100 million add-on to its 7 5/8% senior notes due 2023 at 105.25 to yield 6.03%.

The price came at the rich end of the 105 to 105.25 price talk. Initial guidance was 104.5.

Altice USA active

Altice USA’s recently priced 6½% senior notes due 2029 were back in focus on Wednesday with the notes second only to KB Home in trading volume.

The 6½% notes rose another 3/8 point on Wednesday to close the day at 102¾, according to a market source.

More than $44 million of the bonds were on the tape by Wednesday’s close.

The notes have been on the rise since the start of the week, riding the general strength of the market.

The notes closed Monday at 101 5/8, a market source said.

Altice USA is a well-liked name and the market is hungry for new paper, a source said of the recent performance of the notes.

Altice USA priced an upsized $1.5 billion issue of the 6½% notes at par on Jan. 24.

TransDigm active

TransDigm’s 6¼% senior notes due 2026 remained major volume movers in the secondary space, as they have been since pricing.

While the notes were active, they were largely unchanged from Tuesday’s levels when they jumped following the company’s earnings report.

The 6¼% notes were again quoted at 101½ bid, 102½ offered and were seen changing hands between 101 7/8 and 102 on Wednesday, sources said.

More than $27 million of the bonds were on the tape by the late afternoon.

The notes were weaker on Monday following the pricing of an add-on but jumped following a positive earnings report on Tuesday.

While volume was light on Wednesday, TransDigm’s 7½% notes due 2027 were also unchanged with most trades at par.

The notes were trading below par on Monday prior to the earnings report.

TransDigm initially priced a $3.8 billion issue of the 6¼% notes at par on Jan. 30 but returned to the market on Feb. 1 to price a $200 million tap of the notes at 101.

TransDigm priced $550 million of the 7½% notes at par on Feb. 1.

Tuesday inflows

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

High-yield ETFs saw $203 million of inflows on the day.

Actively managed high-yield funds saw $125 million of inflows on Tuesday.

The combined funds are tracking $3.7 billion of inflows on the week beginning at the Thursday, Jan. 31 open to Tuesday's close.

Indexes mixed

Indexes were mixed on Wednesday after posting strong gains at the launch of the week.

The KDP High Yield Daily index rose 8 basis points to close Wednesday at 69.75 with the yield now 6.18%.

The index was up 21 bps on Tuesday and 6 bps on Monday after a cumulative gain of 60 bps on the week last week.

The ICE BofAML US High Yield index rose 10.4 bps with the year-to-date return now 5.35%.

The index jumped 41 bps on Tuesday and 11.7 bps on Monday after a cumulative gain of 81.4 bps on the week last week.

The index shot past 5% returns on Tuesday after surpassing 4% year-to-date returns on Jan. 30.

The CDX High Yield 30 index dropped 27 bps to close Wednesday at 106.04.

The index rose 19 bps on Tuesday and 22 bps on Monday after a cumulative gain of 76 bps on the week last week.

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