Upsized Multi-Color, Mattamy deals, Gogo drive-by price; new bonds firm; energy names up

By Paul Deckelman and Paul A. Harris

New York, Sept. 20 – The pace of activity in the high-yield primary arena quickened on Wednesday, as three issuers combined for $1.2 billion in three tranches, roughly double the $625 million of U.S. dollar-denominated and fully junk-rated notes which had come to market in three tranches on Tuesday.

There was a pair of regularly scheduled forward calendar offerings, each of which priced after having been upsized – label-maker Multi-Color Corp.’s $600 million of eight-year notes and Canadian homebuilder Mattamy Group Corp.’s $500 million of eight-year paper. The latter company also did a tranche of Canadian-dollar-denominated eight-years as part of its overall transaction.

After those deals priced, secondary market traders saw both new issues firm smartly, in active aftermarket volume.

Topping off the day’s deals, Gogo Intermediate Holdings LLC, a provider of inflight connectivity and wireless services to the airline industry, did a quickly shopped $100 million add-on to its existing $590 million of 2022 secured notes.

The traders meantime saw considerable activity in Tuesday’s issue of eight-year notes from solid-waste management firm Waste Industries; the bonds remained well above their par issue price, although they appear to have backed off the hefty gains they notched when they moved into the aftermarket after pricing.

They also quoted metalworking and woodworking machinery supplier JPW Industries, Inc.’s seven-year issue of senior secured paper, which priced on Tuesday, as trading well above its par issue price.

Away from the new issues, the traders saw energy names such as California Resources Corp., EP Energy Corp. and MEG Energy Corp. moving higher, in line with solid price gains for crude oil.

For a second consecutive session, Rite Aid Corp.’s bonds were in retreat, as investors reacted to the news that the drugstore operator’s planned sale of nearly half of its more than 4,000 stores nationwide to larger rival Walgreens Boots Alliance will be smaller than previously planned and will thus generate less in the way of proceeds that the company is planning to use for debt reduction.

Statistical market performance measures turned mixed on Wednesday for the fourth time in the last five sessions. They had been higher across the board on Tuesday, strengthening after having been mixed for three consecutive trading days before that.

Upsized Multi-Color inside of talk

In Wednesday's primary market Multi-Color Corp. priced an upsized $600 million issue of eight-year senior notes (B2/B+) at par to yield 4 7/8%.

The issue size was increased from $480 million.

The yield printed 12.5 basis points beneath the tight end of the 5% to 5¼% yield talk.

BofA Merrill Lynch was the left bookrunner. Citigroup Global Markets Inc., BMO Securities, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and KeyBank Capital Markets were the joint bookrunners.

The Cincinnati-based label maker plans to use the proceeds to help fund the acquisition of the labels division of Constantia Flexibles GmbH, to refinance an existing revolver and for general corporate purposes.

Mattamy upsizes

Mattamy Group Corp. priced upsized $500 million and C$225 million amounts of eight-year senior notes (B1/BB) at par to yield 6½%.

The yield printed 12.5 basis points inside of yield talk in the 6¾% area.

The tranche sizes were increased from $450 million and C$200 million.

Credit Suisse Securities (USA) LLC will bill and deliver for the dollar-denominated notes. RBC Capital Markets LLC will bill and deliver for the Canadian dollar-denominated tranche.

Other bookrunners for both tranches were BMO Securities, JP Morgan Securities LLC, BofA Merrill Lynch and Wells Fargo Securities LLC.

The Burlington, Ont.-based homebuilder plans to use the proceeds to refinance its dollar-denominated and Canadian dollar-denominated senior notes due 2020.

Gogo taps 12½% notes

Gogo, Inc. priced a $100 million add-on to the Gogo Intermediate Holdings LLC and Gogo Finance Co. Inc. 12½% senior secured notes due July 1, 2022 (B2/B-) at 113 to yield 7.827%.

The reoffer price came on top of price talk in the 113 area.

Morgan Stanley & Co. and JP Morgan Securities LLC were the joint bookrunners.

The Chicago-based company plans to use the proceeds to accelerate the commercial rollout of its next-generation global satellite solution, 2Ku, as well as for working capital and other general corporate purposes.

Mattamy, Multi-Color move up

When the new deals from Mattamy Group and Multi-Color hit the secondary market, traders said that both issues moved solidly higher, on active volume.

A trader said that the Mattamy U.S. dollar-denominated 6½% notes due 2025 moved up to around the 101½ bid mark from their par issue price, while a second trader saw the notes firm from that level to end around 101¾ bid area.

A second trader saw those notes in a 101 1/8-to-101½ bid context.

More than $67 million of those notes changed hands, topping the day’s Most Actives list.

Multi-Color’s new 4 7/8% notes due 2025 were not exactly sitting on the sidelines – a trader said that those bonds firmed to around a 101½ bid after pricing earlier in the session at par.

More than 51 million of the new notes traded.

Traders meanwhile did not immediately report any initial levels on the smallish Gogo add-on deal to that company’s existing 2022 senior secured notes.

Tuesday issues trade around

Among the deals which came to market on Tuesday, traders said that the new Waste Industries 6% notes due 2025were trading actively, with more than $28 million seen to have moved around during the session.

One trader saw the notes at 101½ bid – well up from the deal’s issue price, though down from the 102 bid levels seen late in the day on Tuesday.

Another trader, though saw them in a 101 5/8-to-101 7/8 bid context, calling the notes up 5/8 point on the day.

The Raleigh, N.C.-based solid-waste management company priced $305 million of those notes at par on Tuesday in a regularly scheduled forward calendar transaction via Wrangler Buyer Corp. – the issuer of record for the Waste Industries offering. The new bonds promptly moved higher out of the gate in active aftermarket dealings.

Traders meantime saw another Tuesday deal – JPW Industries, Inc.’s 9% senior secured notes due 2024 – trading at 102½ bid on Wednesday.

The LaVergne, Tenn.-based supplier of branded metalworking and woodworking equipment and shop tools priced $220 million of those notes at par in a regularly scheduled offering which was not immediately seen in the aftermarket later Tuesday.

Energy shows improvement

Apart from the new deals, a trader said that “the energy names were strong,” with crude oil prices up by around $1 per barrel on world commodity markets on Wednesday.

Among the big gainers were California Resources Corp.’s sector benchmark 8% notes due 2022, seen up a deuce on the day at 61¼ bid, with over $36 million having traded.

EP Energy’s 8% notes due 2025 gained ¾ point on the day to end at 74 bid, with about $18 million of volume, while MEG Energy’s 7% notes due 2024 jumped 1½ points to end at 85¼ bid, on $11 million of turnover.

Rite Aid in retreat

Rite Aid Corp.’s 6 1/8% notes due 2023 were falling for a second straight session on Wednesday, dropping by nearly 1 point to end at 98 5/8 bid with over $51 million having changed hands. On Tuesday, those bonds were seen down more than 1¼ points on the day, with more than $62 million having traded.

Rite Aid’s paper had risen across the board on Monday on the news that larger sector peer Walgreens was nearing an agreement with government antitrust regulators on its planned purchase of around half of Rite Aid’s more than 4,000 drugstores.

But Walgreens finally agreed to buy 1,932 outlets for $4.38 billion.

That was far below the $5.2 billion it had originally planned to pay Camp Hill, Pa. based Rite Aid for 2,186 stores, under a deal reached in June after Walgreens abandoned its plans to buy Rite Aid outright due to antitrust concerns.

Indicators turn mixed

Statistical market performance measures turned mixed on Wednesday for the fourth time in the last five sessions. They had been higher across the board on Tuesday, strengthening after having been mixed for three consecutive trading days before that.

The KDP Daily High Yield Index firmed by 4 basis points on Wednesday to end at 72.33, its second consecutive upturn. On Monday, it had edged up by 1 bp, after having been unchanged on Monday and losing 6 bps on Friday.

For a second straight session, its yield narrowed by 2 bps, to 5.08, its third straight tightening, having also come in by 4 bps on Monday after widening on Friday by 3 bps.

But the Markit CDX Series 28 High Yield Index lost 3/32 point Wednesday to close at 107 5/32 bid, 107 3/16 offered, after having gained that same amount in Tuesday’s dealings.

However, the Merrill Lynch North American High Yield Index posted its eighth straight advance on Wednesday, improving by 0.075%, on top of Tuesday’s 0.054% gain.

The latest upturn raised the index’s year-to-date return to 6.751% from 6.671% on Tuesday, thus establishing an eighth straight new 2017 year-to-date peak.

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