Arconic, Banijay, Innophos, Griffon price; Charter trades up; Open Text loses steam; Teva gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 4 – The domestic high-yield primary market saw another active session on Tuesday with four deals clearing the market.

Arconic Inc. priced an upsized $600 million issue of eight-year second-lien secured notes (Ba3/B+/BB+).

Banijay Group priced a $403 million tranche of secured notes as part of a dual-currency three-tranche offering.

Innophos Holdings Inc. priced a downsized $275 million issue of eight-year senior notes (Caa1/B-).

And Griffon Corp. priced an upsized $850 million issue of eight-year senior notes (B2/B+/B+) in a deal with accelerated timing.

Meanwhile, the secondary space was firm on Tuesday as equity markets continued to recover from the coronavirus.

New paper was again in focus with the two issues to price during Monday’s session topping the volume chart.

Charter Communications Inc.’s 4½% senior notes due 2030 (B1/BB/BB+) were trading at a decent premium in high-volume activity.

While Open Text’s two tranches (Ba2/BB) were initially putting in a strong performance, they weakened as the session progressed.

While the overall secondary space was firm on Tuesday, losses in the energy sector intensified with WTI crude oil futures dropping below $50 a barrel.

EQT Corp.’s recently priced split-rated notes continued to sell-off on Tuesday with the notes now more than 10 points below their issue price.

In the pharmaceutical space, Teva Pharmaceutical Industries’ junk bonds were on the rise following positive results from a clinical trial.

Oversubscribed Arconic through talk

High-yield primary market news flow remained heavy on Tuesday.

Arconic priced an upsized $600 million issue of eight-year second-lien secured notes (Ba3/B+/BB+) at par to yield 6 1/8%.

The yield printed 12.5 basis points inside of the 6¼% to 6½% yield talk. Earlier guidance was in the 6½% area.

The deal size increased from $400 million, as the company shifted $200 million to the bonds from its concurrent term loan.

The deal was heard to have been playing to $5 billion of demand late Tuesday morning, a trader said.

Banijay Group priced a $403 million tranche of secured notes at par to yield 5 3/8%. The yield came through talk in the 5¾% area. The tranche was upsized from $325 million.

The 5 3/8% notes saw a strong break. They were changing hands as high as 102 5/8 Tuesday afternoon, a source said.

The deal also included €575 million of five-year senior secured notes (B1/B/B+) priced at par to yield 3½%, and €400 million of six-year unsecured notes (Caa2/CCC+/CCC+), which priced at par to yield 6½%.

Innophos Holdings priced a downsized $275 million issue of eight-year senior notes (Caa1/B-) at par to yield 9 3/8%.

The issue size decreased from $300 million with the shift of $25 million of proceeds to the concurrent bank loan.

The yield printed in the middle of the 9¼% to 9½% yield talk, and toward the tight end of the earlier 9%-handle guidance.

Innophos was heard to be a “clubby” deal, a trader said, meaning participants tended to be accounts that already had exposure to the credit.

Book size was heard to be around $700 million, on Tuesday morning, the trader added.

And early Tuesday evening, Griffon priced an upsized $850 million issue of eight-year senior notes (B2/B+/B+) at par to yield 5¾%.

The issue size increased from $800 million.

The yield printed in the middle of yield talk in the 5¾% area and inside of initial talk in the 6% area.

Deal timing was accelerated. The original timeline that had Griffon's offer in the market through Wednesday.

The calendar

Asbury Automotive Group, Inc. winds up its roadshow for a $1,125,000,000 two-part offering of senior notes – eight-year non-call-three and 10-year non-call-five – on Wednesday.

Pending official talk, the eight-year notes are whispered in the high 4% area to 5%, with the 10-year paper coming 25 bps behind the eight-year.

Husky III Holding Ltd. is scheduled to shop a $450 million offering of five-year senior PIK toggle notes through Thursday.

Early guidance is in the 12% area.

Allen Media, LLC is also expected to price its $300 million offering of eight-year senior notes (S&P: B-) before the end of the week. Initial guidance is in the low-to-mid 10% area.

Charter trades tight

Charter Communication’s 4½% senior notes due 2030 were trading in a tight range in high-volume activity in the secondary space.

The notes were marked at par 5/8 bid, par 7/8 offered Tuesday afternoon, according to a market source.

“It’s a pretty tight market,” the source said.

The notes were among the most actively traded during the session.

Charter priced a $1.65 billion issue of the 4½% notes at par in a Monday drive-by.

The notes priced at the tight end of the 4½% to 4 5/8% yield talk.

Open Text weakens

Open Text’s two tranches of senior notes were initially putting in a strong performance in the secondary space.

However, they lost steam as the session progressed.

The 3 7/8% senior notes due 2028 traded as high as par 5/8 with a large amount of dealer buying at par ½ in the mid-afternoon, a source said.

However, the notes were down to par ¼ bid by the late afternoon.

The Canadian-based software company’s 4 1/8% senior notes due 2030 saw a lot of buying activity at 101 early in the session, a source said.

However, the notes also lost steam as the session progressed.

The 4 1/8% notes were wavering between par 5/8 to par ¾ bid heading into the market close, a source said.

Open Text priced a $900 million tranche of the 3 7/8% notes and a $900 million tranche of the 4 1/8% notes at par in a Monday drive-by.

The 3 7/8% notes priced at the tight end of yield talk in the 4% area. The 4 1/8% notes priced at the tight end of yield talk in the 4¼% area.

EQT down again

EQT’s recently priced split-rated senior notes continued their downward spiral on Tuesday with both issues now more than 10 points below issue price.

EQT’s 6 1/8% senior notes due 2025 traded off about 1 point to close the day at 89, according to a market source.

The 7% senior notes due 2030 were down to 87¼.

Both tranches priced at par on Jan. 15.

The Pittsburgh-based natural gas producer’s notes have been under pressure since pricing.

However, the notes continued their decline on Tuesday following a ratings downgrade, a source said.

Teva gains

Teva’s junk bonds were on the rise on Tuesday after the generic drug-maker announced positive results from a clinical trial.

While volume was light, the 7 1/8% senior notes due 2025 hit their highest level since pricing.

The notes gained 1½ point to 107 on Tuesday.

Teva priced a $1 billion tranche of the 7 1/8% notes at par on Nov. 19 as part of a two-tranche dual-currency deal.

Teva’s 6% senior notes due 2024 were up about ½ point to 102 7/8.

The 6¾% senior notes due 2028 rose about 1 point to 106.

Teva’s capital structure was posting gains after the company announced positive clinical results from a Phase 2 and Phase 3 trial for AJOVY in Japan.

AJOVY is currently approved in the U.S. and EU.

It is under development in Japan by Otsuka Pharmaceutical as part of a license agreement for its development and sale in Japan, according to a company news release.

$25 million Monday outflows

The dedicated high-yield bond funds saw $25 million of daily net outflows on Monday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds sustained $175 million of outflows on the day, which were offset by the $150 million of inflows seen by the high-yield ETFs.

The combined funds are tracking $793 million of net outflow for the week that will conclude with Wednesday's close, the market source said.

Indexes mixed

Indexes were again mixed on Tuesday after a mixed start to the week.

The KDP High Yield Daily index was up 6 bps to 71.41 with the yield now 5.05%. The index opened the week flat after a 28 bps drop last week.

The ICE BofAML US High Yield index shaved off 1 bp with the year-to-date return now 0.078%. The index gained 7.6 bps on Monday after a cumulative loss of 37.4 bps last week.

The CDX High Yield 30 index gained 57 bps to close Tuesday at 108.90.

The index was down 6 bps on Monday after a cumulative loss of 45 bps last week.

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