CIT Group, Frontdoor, Denbury, Qorvo, Cogent price; Starwood on tap; Curo lags; Masonite stuck at par

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 14 – The domestic primary market saw another day of vigorous new issue activity on Tuesday with $1.5 billion pricing over five deals and one more on deck for Wednesday.

In drive-by action, CIT Group Inc. priced a $500 million issue of long five-year senior notes (existing ratings Ba2/BB), and Denbury Resources Inc. priced an upsized $450 million issue of 5.5-year senior secured second-lien notes (B3/B+).

Qorvo, Inc. priced an upsized $130 million add-on to its 5½% senior notes due July 15, 2026 (Ba1/BB+), and Cogent Communications Group, Inc. priced a $70 million add-on to its 5 3/8% senior secured bullet notes due March 1, 2022 (Ba3/B+).

At the conclusion of what may be August’s final roadshow, Frontdoor, Inc. priced a $350 million issue of eight-year senior notes (B2/B-).

The new deal activity will continue into Wednesday with Starwood Property Trust, Inc. planning to price a $300 million offering of five-year senior bullet notes.

Meanwhile, the new paper from Frontdoor dominated secondary market activity with the notes trading up 2 points. However, the new paper to hit the space on Monday did not fare so well.

CURO Group Holdings Corp.’s newly priced 8¼% senior notes due 2025 lagged their issue price by up to 1½ points during Tuesday’s session but rebounded to close the day at par.

Masonite International Corp.’s newly priced 5¾% senior notes due 2026 were stuck at their issue price in active trading on Tuesday.

After weakening on Monday, BMC Software’s 9¾% senior notes due 2026 (Caa2/CCC+) were up about 5/8 point to trade to their highest level since pricing.

While some of the new paper to price has been slow to take off, the secondary market “has been on fire,” with a strong underlying tone and cash inflows continuing, a market source said.

There continues to be a risk-on environment with investors looking to put money to work in high-yields, the source said.

CIT $500 million drive-by

CIT Group priced a $500 million issue of long five-year senior notes (existing ratings Ba2/BB) at par to yield 4¾%.

The yield printed on top of yield talk.

Barclays ran the books for the drive-by deal that was announced at benchmark size.

The New York-based bank holding company plans to use the proceeds from the long five-year notes to repay debt and for general corporate purposes.

Denbury’s $450 million drive-by

Denbury Resources priced an upsized $450 million issue of 5.5-year senior secured second-lien notes (B3/B+) at par to yield 7½% in a quick-to-market Tuesday trade, according to market sources.

The issue size was increased from $400 million.

The yield printed in the middle of yield talk in the 7½% area.

J.P. Morgan Securities LLC, BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Capital One Securities Inc., RBC Capital Markets LLC, Wells Fargo Securities LLC, ABN Amro, CIBC World Markets and Comerica Securities were the joint bookrunners for the Rule 144A for life offering.

Frontdoor inside of talk

At the conclusion of what could be the final pre-Labor Day roadshow Frontdoor priced a $350 million issue of eight-year senior notes (B2/B-) at par to yield 6¾%.

The yield printed 12.5 basis points below the tight end of yield talk in the 7% area. Earlier guidance was in the low 7% area.

JP Morgan, Capital One, FTN, Regions, Credit Suisse, Goldman Sachs and RBC were the joint bookrunners.

Frontdoor, a wholly owned subsidiary of ServiceMaster Global Holdings, Inc., plans to use the proceeds to refinance debt in connection with the spinoff of ServiceMaster’s American Home Shield business, which is expected to be completed during the third quarter.

Qorvo upsizes

Qorvo priced an upsized $130 million add-on to its 5½% senior notes due July 15, 2026 (Ba1/BB+) at 101.00.

The tap has a 5.299% yield to worst and a 5.342% yield to maturity.

BofA Merrill Lynch was the left bookrunner.

The Greensboro, N.C.-based technology company plans to use the proceeds to fund the tender for its 7% senior notes due 2025.

Cogent’s add-on

Cogent Communications Group priced a $70 million add-on to its 5 3/8% senior secured bullet notes due March 1, 2022 (Ba3/B+) at 101.75 to yield 4.794%.

The reoffer price came on top of price talk.

Morgan Stanley was the sole bookrunner.

The Washington, D.C.-based wireless telecommunications company plans to use the proceeds for general corporate purposes and/or common stock repurchases, or for special or recurring dividends to stockholders.

Starwood on tap

Starwood Property Trust plans to price a $300 million offering of five-year senior bullet notes on Wednesday.

The deal was shopped on a late Tuesday morning conference call with investors.

Credit Suisse is the left bookrunner. Citigroup is the joint bookrunner.

The Greenwich, Conn.-based commercial mortgage real estate investment trust (REIT) plans to use the proceeds to repay secured debt and to support its purchase of the GE Energy Project Finance debt business from General Electric.

The forward calendar

The summer primary market has a short way to run before it goes quiet ahead of the extended Labor Day holiday weekend, which gets underway following the Friday, Aug. 31 close, sources said.

A couple of drive-by deals could materialize on Wednesday, said a syndicate banker.

There will almost certainly be no roadshow starts before Labor Day, the banker said, adding that there is a sizable merger and acquisition deal pipeline taking shape for the post-Labor Day period.

The final week ahead of Labor Day should be a quiet one in the new issue market, the banker said.

Frontdoor dominates

Frontdoor’s 6¾% senior notes due 2026 dominated secondary market activity after breaking for trade with the notes strong out of the gate.

The 6¾% notes traded “right up” to 102, a market source said. Another source pegged the notes at 102½.

More than $62 million of the bonds were on the tape by the late afternoon. “They’re the leader of the pack,” a market source said.

Curo lags

While Frontdoor was off to a strong start on Tuesday, Curo Group Holdings’ newly priced 8¼% senior notes due 2025 were struggling.

The notes traded in the 98½ to 99½ range early in the session but gained steam into the afternoon and stood poised to close the day at par, sources said.

The notes were active with $28 million on the tape by late afternoon.

CURO priced an upsized $690 million issue of the notes at par on Monday. 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.

Masonite stuck at par

Masonite’s newly priced 5¾% senior notes due 2026 were stuck at par in secondary trading.

“They haven’t really gone anywhere,” a market source said. While active with about $19 million on the tape by late in the afternoon, the notes were holding at par.

The lack of movement in the notes was surprising with the deal appearing attractive, the source said.

However, the small size of the deal may have affected its secondary market performance with the deal playing to a smaller audience.

The deal from the manufacturer of doors and door components is also one of several that are expected from the building products sector, the source said.

With several other deals in the pipeline, it may have diminished demand for the notes.

Masonite priced a $300 million issue of the notes at par on Monday. The yield came tight to initial talk in the high 5% to 6% area.

BMC improves

BMC Software’s 9¾% senior notes due 2026 gained steam on Tuesday after weakening in active trading on Monday.

The 9¾% notes traded up to their highest level since pricing on Aug. 9. They were seen changing hands at par ¾ on Tuesday after closing Monday at 99 7/8.

The notes remained active in the secondary space with more than $16 million bonds changing hands 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.

The notes have largely traded at par since hitting the secondary space but dipped below on Monday.

Indexes mixed

Benchmarks for the high-yield secondary market were mixed on Tuesday after opening the week flat to down.

The KDP High Yield Daily index was down 5 basis points to close Tuesday at 70.39 with the yield 5.86%. The index was flat on Monday closing the day at 70.44 after a 10 bps drop on Friday.

The CDX High Yield 30 index was up 11 bps to close Tuesday at 106.84. The index was down 10 bps on Monday after a 27 bps drop on Friday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.