Getty prices; Ascend Learning trades up; Teva drops; McDermott tanks; Diebold Nixdorf soars

By Paul A.Harris and Abigail W.Adams

Portland, Me., Feb.13 – The high-yield primary market cleared the forward calendar on Wednesday with the sole deal remaining in the market pricing.

Getty Images Inc.priced a downsized $300 million issue of eight-year senior notes (Caa2/CCC+) at par to yield 9¾%.

While the forward calendar is now empty, new deal activity is expected to resume as earnings season begins to peter out.

Meanwhile, the secondary space was largely flat on Wednesday after a strong day on Tuesday. Earnings and company-related news pushed outstanding issues into the spotlight.

While Ascend Learning, LLC’s 6 7/8% senior notes due 2025 (Caa2/CCC) were trading well above their issue price in the secondary space, trading of the new paper was relatively light.

Teva Pharmaceutical Industries’ junk bonds were among the most actively traded issues in the secondary space with the notes losing ground following the company’s earnings report.

Diebold Inc.’s 8½% senior notes due 2024, in contrast, soared following the company’s earnings report with the notes gaining double digits.

However, McDermott International Inc.’s 10 5/8% senior notes due 2024 tanked on Wednesday after the company announced overruns on one of its construction projects resulting in an adverse charge.

Getty Images prices inside talk

Primary market volume remained muted on Wednesday as Getty Images priced a downsized $300 million issue of eight-year senior notes (Caa2/CCC+) at par to yield 9¾%.

The issue size was decreased from $400 million, with the shifting of $100 million of proceeds to the euro-denominated tranche of its concurrent secured loan.

The yield printed 12.5 basis points inside of yield talk in the 10% area.

At its earlier $400 million size the bond deal was heard to have been oversubscribed by as much as four-times at the initial price talk of 10½%, a trader said.

Getty Images plans to use the proceeds to refinance its balance sheet in connection with its acquisition by the Getty family from the Carlyle Group.

The new deal market is poised to become more active as potential issuers clear capital markets blackout periods related to earnings reports for the last quarter of 2018, sources say.

Ascend trades up

Ascend Learning’s newly priced 6 7/8% senior notes due 2025 were trading well above their issue price in the secondary space although activity surrounding the new paper was relatively light, according to a market source.

The 6 7/8% senior notes were quoted at 96¼ bid, 97 offered in the mid-morning, according to a market source.

They were seen trading around 96 later in the afternoon, another source said. About $20 million of the bonds were on the tape during Wednesday’s session.

Ascend Learning priced an upsized $350 million issue of 6 7/8% notes at 95 to yield 7.878% on Tuesday.

The issue price came at the rich end of price talk in the 94.5 area and rich to initial talk of 93 to 94. The initial size of the deal was $300 million.

Teva trades down

Teva’s junk bonds were among the most actively traded issues in the secondary space with the notes losing steam after the company reported fourth-quarter earnings.

Teva’s 3.15% senior notes due 2026 dropped 1 3/8 point to 81¾, according to a market source.

With more than $78 million on the tape by the late afternoon, the 3.15% notes were the most actively traded issue of Wednesday’s session.

Teva’s 6¾% senior notes due 2028 also shaved of 1 3/8 point to trade down to 102¼.

More than $31 million of the bonds were on the tape by the late afternoon.

Teva’s 2.8% senior notes due 2023 dropped 1½ points to 89 5/8 with more than $28 million of the bonds on the tape.

Teva’s 6% senior notes due 2024 dropped 1½ point to par ¼ with about $22 million of the bonds on the tape.

While Teva missed on the bottom line, it beat on the top in its fourth-quarter report.

Teva reported earnings per share of 53 cents, which missed analyst expectations of 56 cents.

Teva’s revenue of $4.56 billion topped analyst expectations of revenue of $4.54 billion.

However, Teva reported weak guidance for 2019 with expectations for revenue of $17 billion to $17.4 billion and earnings per share of $2.20 to $2.50.

Analysts had been expecting revenue of $17.88 billion and earnings per share of $2.79 for 2019.

Diebold soars

Diebold’s 8½% senior notes due 2024 soared on Wednesday following its fourth-quarter earnings report.

The notes rose more than 11¾ point to 76¾ on Wednesday.

Diebold soared despite a bottom-line earnings miss. Diebold reported a loss per share of 8 cents versus analyst expectations for break-even earnings of 0.

However, sales of $1.29 billion beat analyst expectations of sales of $1.23 billion.

Diebold reported upbeat guidance for 2019 with the company expected to break even in terms of free cash flow.

Diebold also increased its cost cutting target.

The 8½% notes have been under pressure since the company reported its second-quarter earnings report in August.

Prior to the second-quarter earnings report, the notes traded in the 92 range.

McDermott tanks

McDermott 10 5/8% senior notes due 2024 tanked in high-volume activity on Wednesday after the company reported cost overruns on one of its projects.

The 10 5/8% notes dropped 8 1/8 points to 84 3/8, according to a market source.

More than $59 million of the bonds changed hands during Wednesday’s session.

McDermott announced on Wednesday it was taking a $168 million charge for its Cameron LNG project in Louisiana.

The charge will impact McDermott’s operating statements for the fourth-quarter, the company said in a press release.

The adverse charge was announced following the quarterly results of Chiyoda Corporation, McDermott’s partner in the joint venture.

McDermott will report its quarterly results on Feb.25.

ETFs see big Tuesday inflows

High-yield ETFs saw a whopping $697 million of inflows on Tuesday, according to a trader.

Actively managed high-yield funds saw $30 million of inflows on the day, the source added.

Indexes mixed

Indexes were mixed on Wednesday after posting gains on Tuesday.

The KDP High Yield Daily index rose 4 basis points to close Wednesday at 69.59 with the yield now 6.21%.

The index was up 13 bps on Tuesday after a 6 bps drop on Monday.

The index saw a cumulative gain of 8 bps on the week last week.

The ICE BofAML US High Yield index was up 5 bps with the year-to-date return now 5.343%.

The index gained 33 bps Tuesday and 7.7 bps on Monday after a cumulative gain of 16.7 bps on the week last week.

The index again shot past 5% returns on Tuesday after sinking below the 5% threshold last Thursday.

The index initially crossed the 5% threshold on Feb.5 after surpassing 4% year-to-date returns on Jan.30.

The CDX High Yield 30 index dropped 10 bps to close Wednesday at 106.05.

The index gained 52 bps on Tuesday after dropping 2 bps on Monday.

The index shaved off a cumulative 25 bps on the week last week.

© 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.