VICI Properties, Albertsons, Baytex price; Altice, Stena on deck; Holly Energy, SBA Communications gain

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 22 – The domestic high-yield primary market saw another active session with two megadeals pricing on Wednesday.

VICI Properties LP and VICI Note Co. Inc. priced a $2.5 billion three-tranche offering and Albertsons Cos. Inc. priced its $2.35 billion three-part offering.

Baytex Energy Corp. also priced a $500 million offering of seven-year notes (B2/BB/BB-) on Wednesday.

Thursday also promises to be an active session with Altice’s €2.1 billion equivalent three-tranche offering and Stena International SA’s upsized $600 million equivalent dual-currency offering on deck.

Meanwhile, new paper was in focus in the secondary space with the deals to price during Tuesday’s session continuing to gain.

Holly Energy Partners LP and Holly Energy Finance Corp.’s 5% senior notes due 2028 (B1/BB) climbed higher in active trading after a strong break.

Despite the tight pricing, SBA Communications Corp.’s 3 7/8% senior notes due 2027 also gained strength in high-volume activity.

The energy space was, in general, flat on Wednesday despite the downward move in crude oil futures, a source said.

While the space was flat on balance, several recent deals from the energy sector continued to move lower.

Transocean Ltd.’s 8% senior notes due 2027 (Caa1/B-) and Laredo Petroleum, Inc.’s 9½% senior notes due 2025 (B3/B+) continued to trade off in high-volume activity on Wednesday with both now several points below their issue price.

Big Wednesday

A big Wednesday in the new issue market saw VICI Properties price $2.5 billion of senior notes (Ba3/BB/BB) in three tranches.

A $750 million tranche of five-year notes priced at par to yield 3½%. The yield printed on top of final talk, and tight to earlier talk in the 3 5/8% area.

A $750 million tranche of seven-year notes priced at par to yield 3¾%, on top of final talk, and tight to earlier talk in the 3 7/8% area

A $1 billion tranche of 10.5-year notes priced at par to yield 4 1/8%, on top of final talk, and tight to earlier talk in the 4¼% area.

Albertsons Cos. priced $2.35 billion senior notes (B2/BB-), also in three tranches.

A $750 million tranche three-year notes priced at par to yield 3½%, at the tight end of the 3½% to 3¾% yield talk.

A $600 million add-on to the 4 5/8% senior notes due Jan. 15, 2027 priced at 101. The issue price came in the middle of price talk in the 101 area.

A $1 billion tranche of 10-year notes priced at par to yield 4 7/8%, at the tight end of the 4 7/8% to 5 1/8% price talk.

And Baytex Energy priced a $500 million issue of 7.25-year senior notes (B2/BB/BB-) at par to yield 8¾%.

The yield printed at the wide end of the 8½% to 8¾% yield talk.

Timing was moved ahead. The deal had been expected to remain in the market until Thursday.

Dollars and euros

Altice plans to sell €2.1 billion equivalent of high-yield notes in three tranches.

Altice France SA is selling €500 million of five-year senior secured notes (expected ratings B2/B) which become callable after two years at par plus 50% of the coupon. Deutsche Bank is physical bookrunner for the secured tranche.

Ypso Finance BIS SA is selling €500 million minimum and $500 million minimum of eight-year senior unsecured notes (expected ratings Caa1/CCC+) which become callable after three years at par plus 50% of the coupon. BNP Paribas is the physical bookrunner for the euro-denominated unsecured notes. Goldman Sachs International is the physical bookrunner for the dollar-denominated unsecured notes.

Price talk on the dollar-denominated unsecured notes is in the 6¼% area. Books for that tranche close at 9 a.m. ET on Thursday.

Elsewhere Stena International upsized its two-part offering of five-year senior secured notes (expected ratings Ba3/BB-) to $600 million equivalent from $500 million equivalent.

An upsized €315 million tranche of the notes is talked to yield 3 7/8% to 4%, tightened from the 4¼% area; initial talk was in the mid-4% area. The tranche size increased from €250 million.

Talk on an upsized $350 million tranche of the notes remains unchanged at 6¼% to 6½%; initial talk was in the high-6% area. The tranche size increased from $250 million.

Holly Energy gains

While several recent deals from the energy sector were losing momentum as crude oil futures continued to slide, Holly Energy’s 5% senior notes due 2028 were not among them.

After a strong break on Tuesday, the 5% senior notes continued to gain.

The notes were marked at 101½ bid, 101¾ offered on Wednesday. “They’re a little stronger,” a source said.

The notes remained active with $28 million in reported volume heading into the market close.

The notes were strong out of the gate and traded up to 101 bid, 101½ offered soon after breaking for trade.

Holly Energy priced a $500 million issue of the 5% notes at par in a Tuesday drive-by.

Pricing came at the tight end of the 5% to 5 1/8% yield talk.

SBA Communications in focus

SBA Communications’ 3 7/8% senior notes due 2027 were grinding higher in the secondary space despite the tight pricing of the notes.

The 3 7/8% notes were marked at par 5/8 bid, par 7/8 offered Wednesday afternoon. The notes were in focus in the secondary space with more than $40 million in reported volume.

While the notes priced tight, they still gained premium after breaking for trade on Tuesday. The notes were trading in the par 1/8 to par ½ context heading into Tuesday’s close.

SBA priced an upsized $1 billion issue of the 3 7/8% notes at par in a Tuesday drive-by.

The issue size increased from $750 million.

The yield printed at the tight end of yield talk in the 4% area.

The energy patch

While the energy space as a whole fared the downturn in crude oil futures well with the space largely flat from a balanced perspective, several recent deals from the energy sector continued their downward spiral, sources said.

Transocean’s 8% senior notes due 2027 shaved off another 1¾ point and stood poised to close the day at 97, according to a market source.

The bonds saw more than $20 million in reported volume.

The notes were down about 1 point on Tuesday.

Laredo Petroleum’s 9½% senior notes due 2025 dropped another 1 5/8 points to 96 7/8. The bonds saw more than $26 million in estimated volume.

The notes also dropped about 1 point on Tuesday.

Concern of a supply glut continued to drive down crude oil futures on Wednesday.

The barrel price of WTI crude for March delivery fell to settle at $56.74, a decrease of $1.64 or 3.94%. Brent crude oil fell to settle at $63.21, a decrease of $1.38 or 2.1%.

$160 million outflows on Tuesday

The dedicated high-yield bond funds saw $160 million of net outflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $240 million of outflows on the day.

Actively managed high-yield funds saw $80 million of inflows on Tuesday, the source said.

With only Wednesday's fund flow number to factor into the pending week total, the combined funds are tracking $327 million of inflows in the week that concluded with Wednesday's close.

Indexes

Indexes were flat to down on Wednesday after all were soft at the start of the week.

The KDP High Yield Daily index dropped 8 points to close Wednesday at 71.80 with the yield now 4.91%. The index dropped 4 bps on Tuesday.

The ICE BofAML US High Yield index dropped another 3.4 bps with the year-to-date return now 0.699%. The index saw its first decline in 2020 on Tuesday with a 2.6 bps drop.

The CDX High Yield 30 index was flat on Wednesday, closing the day at 109.34. The index was down 28 bps on Tuesday.

© 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.