No dollar pricings, though big BWAY deal hits the road, EnPro slates; new Kraton, First Quantum busy

By Paul Deckelman and Paul A. Harris

New York, March 20 – The high-yield primary market quieted down on Monday to begin the new week, with no pricings of U.S. dollar-denominated and fully junk-rated issues heard by syndicate sources to have taken place during the session, in contrast to the $1.45 billion of such paper that got done on Friday in four single-tranche deals from domestic or industrialized-country borrowers.

However, the syndicate sources said that metal and plastic container company BWAY Holding Co. began marketing its $2.63 billion two-part junk offering of seven- and eight-year notes to investors via a roadshow process.

They also said that EnPro Industries, Inc., a manufacturer of industrial products such as diesel engines, pump and compressor components, bearing systems and tractor-trailer truck steering, suspension and braking components, began shopping around a $150 million add-on to its existing 2022 notes.

The European unit of U.S.-based packaging company Owens-Illinois Group Inc. priced a quickly shopped and upsized add-on to its existing euro-denominated 2024 notes.

Back in the dollar market, traders saw some activity among the deals that had priced last week, including Friday’s offering of eight-year notes from chemical manufacturer Kraton Corp. and Thursday’s issues from industrial and precious metals mining concern First Quantum Minerals Ltd. and from AK Steel Holding Corp. All three were seen lower, in line with a generally easier overall market.

Statistical market performance measures turned lower on Monday after having been mixed on Friday and higher on Thursday after two consecutive mixed sessions before that. It was the third such lower session for the market gauges in the last six trading days.

BWAY starts roadshow

In the primary market BWAY Holding started a roadshow on Monday for a $2.63 billion two-part offering of high-yield notes.

The deal includes $1.38 billion of seven-year senior secured notes (B2/B-) via left bookrunner BofA Merill Lynch and $1.25 billion of eight-year senior unsecured notes (Caa2/CCC) via left bookrunner Goldman Sachs.

Proceeds, along with proceeds from the new $1.5 billion term loan, will be used to help fund the acquisition by BWAY’s parent company, Stone Canyon Industries LLC, of Mauser Group NV for $2.3 billion from Clayton, Dubilier & Rice, and repay debt.

EnPro to tap 5 7/8% notes

EnPro Industries, Inc. announced in a Monday press release that it plans to privately offer a $150 million tack-on to its 5 7/8% senior notes due Sept. 15, 2022.

The Charlotte, N.C.-based manufacturer of engineered products plans to use the proceeds to repay debt under its senior secured revolving credit facility.

Owens-Illinois upsizes

In the European market Owens-Illinois Group priced an upsized €225 million add-on to the OI European Group BV 3 1/8% senior notes due Nov. 15, 2024 (Ba3/BB) at par to yield 3 1/8%.

The deal size was increased from €200 million.

The reoffer price came at the rich end of the 99.5 to par price talk.

Credit Agricole was the global coordinator for the debt refinancing deal.

Grifols plans €1 billion

There were numerous European deal announcements on Monday.

Grifols Worldwide Operations Ltd. announced in a Monday press release that it plans to offer €1 billion of senior notes.

The Sant Cugat del Valles, Barcelona-based health care company plans to use the proceeds to fund the redemption of $1 billion of its 5¼% of its senior notes due 2022 at 103.938 on April 19.

Anglo American Capital benchmark

Anglo American Capital plc announced Monday that it will hold investor calls with a view to selling dollar- and/or euro-denominated notes in a benchmark-sized issue in international capital markets.

The announcement came in conjunction with the launch of tender offers for six of its issues of outstanding notes with maturities ranging from 2018 to 2020.

Aramark euro deal

Aramark announced in a Monday press release that it plans to offer €325 million of senior notes.

The Philadelphia-based professional services company plans to use the proceeds to refinance term loans under its senior secured credit facilities.

Arrow Global secured notes

Arrow Global Finance plc plans to sell an offering of new senior secured notes.

Proceeds will be used to redeem the company’s €335 million of floating-rate senior secured notes due 2021.

NH Hotel to tap 3¾% notes

NH Hotel Group, SA will offer an add-on to its €285 million of 3¾% senior secured note due 2023.

Deutsche Bank AG, London Branch will manage the sale although other banks may also be appointed.

Quiet domestic market

In the secondary arena, traders said that things were dull and fairly quiet.

Although there was no televised college basketball to serve as a distraction, as had been the case last week – the playoffs don’t resume until Thursday – a trader said that “a lot of people were watching Comey” – a reference to FBI director James Comey’s much-anticipated appearance at televised congressional hearings.

Kraton active, easier

Among specific issues, Friday’s new deal from Houston-based chemical manufacturer Kraton Corp. was the most active name seen among the purely junk credits on Monday, with about $18 million having changed hands.

A trader saw those Kraton Polymers LLC/Kraton Polymers Capital Corp. 7% notes due 2025 at 100¾ bid, down a little from the 101-ish range at which those notes had traded in initial aftermarket dealings on Friday, after the $400 million regularly scheduled forward calendar deal had priced at par.

A second trader pegged those bonds on Monday at 100 5/8 bid, seeing them down by 5/16 point on the day.

Other Friday issues less seen

The traders did not see much activity in other names which had priced on Friday.

One said that the new Rain Carbon Inc. 7¼% senior secured second-lien notes due 2025 traded in a 99½ to 99¾ bid context, but only on volume of around $2 million or so.

The Stamford, Conn.-based chemicals manufacturer had priced $550 million of those notes – downsized from an originally announced $1.05 billion – at 99.254 on Friday in a scheduled forward calendar transaction yielding 7 3/8%.

High Ridge Brands Co.’s 8 7/8% notes due 2025 were a point better on the day on Monday, a market source said, locating the new notes at 102¾ bid, on volume of about $5 million.

The personal-care products company – also based in Stamford – had priced a scheduled $250 million of the notes Friday at par. They had moved up to around a 101¾ to 102¼ bid context when they were freed to trade.

First Quantum issues ease

Going back a little further, a trader quoted First Quantum Minerals’ 7¼% notes due 2023 at 99 3/16 bid, on volume of around $14 million.

A second trader also saw the bonds at that level, on around the same kind of volume, calling them down some 13/16 point on the day.

The Toronto-based copper, nickel, gold and zinc-mining company had priced $1.1 billion of those notes at par on Thursday to yield 7.249%, along with $1.1 billion of 7½% notes due 2025, which also priced at par in a regularly scheduled deal.

The latter bonds were down ½ point on Monday to 99 3/8 bid, on $10 million of volume.

AK Steel off

Thursday’s quickly shopped AK Steel 7% notes due 2027 lost 3/16 point Monday to end at 99 3/8 bid, on volume of over $9 million.

The West Chester, Ohio-based steel maker’s $400 million deal had priced at par.

Indicators turn lower

Statistical market performance measures turned lower on Monday after having been mixed on Friday and higher on Thursday after two consecutive mixed sessions before that. It was the third such lower session for the market gauges in the last six trading days.

The KDP High Yield Daily index fell by 2 basis points on Monday to end at 71.70, its first loss after two straight gains, which in turn had followed nine consecutive setbacks. On Friday, it had risen by 8 bps, after having jumped by 26 bps on Thursday to snap the long losing streak.

It yield was unchanged on Monday at 5.36% after having unusually risen by 7 bps on Friday despite the better index level that session; the yield normally moves inversely to the index, with one rising as the other falls, or vice versa. More typically, the yield had come in by 8 bps on Thursday.

The Markit CDX Series 27 High Yield index saw its first loss on Monday after three straight advances, dropping by more than 5/32 point to end at 107 5/32 bid, 107 7/32 offered, its eighth loss in the last 11 sessions. The index had firmed by almost 3/32 point.

The Merrill Lynch High Yield index retreated by 0.077% on Monday, its second loss in a row; it had declined by 0.015% on Friday, after having risen for two straight sessions before that, including Thursday’s 0.47% improvement.

Monday’s downturn dropped its year-to-date return to 1.889% from Friday’s 1.968% close. Those levels remain well down from the index’s 2017 peak of 3.19%, which was established on March 1.

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