Morning Commentary: High yield firm but quiet; Visant bonds jump on acquisition news

By Paul A. Harris

Portland, Ore., Oct. 14 – The high-yield market was firm but quiet heading into mid-morning on Wednesday, according to a portfolio manager on the East Coast of the United States.

The high-yield ETFs were unchanged.

The cash flows of the dedicated high-yield funds were slightly positive but essentially flat on Tuesday, the portfolio manager said.

High-yield ETFs saw $5 million of inflows.

Actively managed funds saw $60 million of inflows on Tuesday.

Dedicated bank loan funds sustained $15 million of outflows.

High coupon bonds sold in late September continue to turn in stellar secondary market performances, according to a trader in New York.

Olin Corp.'s senior notes (Ba1/BB+), which came on Sept. 25 in a in a $1.22 billion two-part deal – the 9¾% eight-year notes and the 10% 10-year notes – were both trading in a context of 106½ bid, 107 offered on Wednesday morning.

The Olin bonds priced at par in a downsized deal that was in the market during the height of recent turbulence, and came “juiced” with eye-popping concessions to the turbulence.

Visant jumps on acquisition

News that Jarden Corp. has entered into a definitive purchase agreement to acquire Visant Holding Corp., the parent company of Jostens, Inc., saw Visant bonds make a big positive price move on Wednesday, the trader said.

Visant's 10% senior notes due Oct. 1, 2017 were 102 bid on Wednesday morning, up from 83 bid, 84 offered, prior to the announcement.

Jarden, a Boca Raton, Fla.-based consumer products company, plans to acquire Visant for about $1.5 billion from investment funds managed by KKR, aPriori Capital Partners and other stockholders, in a deal expected to close in the fourth quarter of this year.

Barclays and Morgan Stanley acted as financial advisers to Jarden.

Jefferies acted as financial adviser to Visant, a Minneapolis-based marketing and publishing services enterprise servicing the school affinity, direct marketing, fragrance, cosmetic and personal care sampling and packaging and educational and trade publishing segments.

Quiet primary

The near-dormant new issue market remained quiet Wednesday morning.

There are two deals on the road.

Greatbatch Ltd. was scheduled to start a roadshow Wednesday for a $360 million offering of eight-year senior notes (Caa1/B-), an acquisition financing via Credit Suisse and KeyBanc.

Early guidance has the notes coming in a yield range of 8% to 8½%, a trader said.

The only other deal on the high-yield road is Lowell Group's £795 million two-part offering of notes.

The roadshow started on Monday.

The deal features £555 million of seven-year senior secured notes (B+) and £240 million eight-year senior unsecured notes (B-).

Thus far no guidance or whispers have been heard, according to a sellside source, who added that the deal has to get done, and Lowell will be a price-taker.

Price talk is expected on Thursday, and the bonds are likely to price before the end of the week.

Sara Rosenberg contributed to this story

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