Schweitzer-Mauduit, Enova, Carvana on tap; Tesla pares losses; BlueLine Rental up on acquisition

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 10 – While no new deals priced on Monday, the primary market is preparing for an active end to the week with three deals joining the forward calendar.

Schweitzer-Mauduit International, Inc. launched a roadshow on Monday for a $350 million offering of senior notes due 2026, which is expected to price on Friday.

On Tuesday, Carvana Co. plans to start a roadshow for a $300 million offering of five-year senior notes, and Enova International, Inc. plans to start a roadshow for a $375 million offering of seven-year senior notes (S&P: B-). Both deals are expected to price later in the week.

The European primary market also saw its forward calendar grow with Italy's Gamenet Group SpA announcing plans to offer €225 million of senior secured non-convertible notes due 2023.

Meanwhile, trading volume was light in the secondary space.

While some of the deals to price last week drifted from focus, Cheniere Energy Partners, LP’s 5 5/8% senior notes due 2026 (Ba2/BB) and Intelsat Jackson Holdings SA’s newly priced 8½% senior notes due 2024 (Caa1/CCC+) remained active in the secondary space.

Cheniere’s 5 5/8% notes improved in active trading while Intelsat’s 8½% notes weakened.

Tesla Inc.’s 5.3% senior notes due 2025 improved in active trading on Monday although the notes remain well below their levels prior to a large drop on Friday.

BlueLine Rental LLC’s 9¼% senior notes due 2024 were making gains in active trading on Monday after news broke the company would be acquired by United Rentals Inc.

While BlueLine was active, United Rentals junk bonds saw little movement as a result of the news.

Schweitzer-Mauduit roadshow

In Monday's primary market, Schweitzer-Mauduit International started a roadshow for a $350 million offering of senior notes due 2026.

The deal is expected to price on Friday.

JP Morgan is leading the debt refinancing deal.

Enova starts Tuesday

Enova International plans to start a roadshow on Tuesday for a $375 million offering of seven-year senior notes (S&P: B-).

The deal is set to price late in the Sept. 10 week.

Credit Suisse is the left bookrunner. Jefferies is the joint bookrunner.

The Chicago-based online financial services provider plans to use the proceeds to refinance debt and for general corporate purposes.

Carvana starts Tuesday

Carvana plans to start a roadshow on Tuesday for a $300 million offering of five-year senior notes.

The offer is also expected to price on Friday.

Wells Fargo is the left bookrunner for the general corporate purposes deal.

Gamenet deal backs acquisition

In the European primary market, Italy's Gamenet Group announced that it plans to offer €225 million of senior secured non-convertible notes due 2023.

The notes proceeds represent a portion of the financing for Gamenet's acquisition of GoldBet Srl, backed by a bridge commitment from UniCredit Bank and Nomura.

Related to the acquisition, Gamenet's revolving credit facility is increased to €50 million from €30 million. The lenders include Intesa Sanpaolo, UniCredit and Banca IMI, among others.

Cheniere improves

Cheniere Energy’s 5 5/8% senior notes due 2026 improved on Monday after hovering just above par since hitting the secondary market.

The 5 5/8% notes were up about ¼ point to close Monday at par 5/8, according to a market source.

The notes remained major volume movers in the secondary space with more than $18 million of the bonds changing hands during Monday’s session.

The notes have largely traded between par and par 3/8 since breaking for trade.

Cheniere Energy priced a $1.1 billion issue of the notes at par on Sept. 6.

Intelsat weakens

Intelsat’s 8½% senior notes due 2024 weakened on Monday. The notes were down about ¼ point on bid, according to a market source.

The 8½% notes were seen at 99½ bid, 99 7/8 offered on Monday. They were at 99¾ bid, par offered on Friday.

Intelsat’s 8½% notes have largely traded below par since pricing, which sources attributed to the large size of the deal.

Intelsat priced an upsized $2.25 billion issue of the notes at par on Sept. 5. The offering was increased from $2 billion.

Proceeds from the new offering will be used to refinance Intelsat Jackson’s 7¼% senior notes due 2020 through a concurrent tender offer and/or redemption.

Intelsat launched a tender offer for the $1.75 billion outstanding of the 7¼% notes on Monday with the company offering $1,036.25 per $1,000 of the principal amount. (see related story)

The 7¼% notes remained unchanged and closed Monday at par 3/8, according to Trace data.

Tesla pars losses

Tesla’s 5.3% senior notes due 2025 remained a volume leader in the secondary space on Monday with the notes paring some of Friday’s losses.

The 5.3% notes were up about 7/8 point to trade at 84, according to a market source. More than $22.5 million of the notes had traded by the late afternoon.

The 5.3% notes hit their lowest level since pricing on Friday with investors shaken after the latest round of headlines concerning the electric car manufacturer.

The notes dropped 3½ points to 82 bid, 83 offered in high-volume trading on Friday.

After a wild ride throughout August, investor confidence in Tesla was shaken on Friday after news broke that Tesla’s chief accounting officer and head of human resources resigned and CEO Elon Musk smoked marijuana during a podcast interview.

The notes were on the rebound on Monday with Friday’s headlines fading from focus and the new lows presenting a buying opportunity.

BlueLine trades up

BlueLine Rental’s 9¼% senior notes due 2024 were making gains in active trading on Monday after news broke the company would be acquired by United Rentals.

The bonds gained ½ point to ¾ point with most trades between 105¾ and 106, a market source said.

With $25 million of the bonds on the tape by the late afternoon, the 9¼% notes were the most actively traded issue of the day.

United Rentals announced Monday it would acquire BlueLine from investment firm Platinum Equity for $2.1 billion in cash.

The deal is expected to close in the fourth quarter, according to a company news release.

While BlueLine was active and making gains, United Rentals’ junk bonds were largely unmoved as a result of the news.

It is unclear what will happen to BlueLine’s bonds in the acquisition with the companies “going through the motions,” before the deal closes, a market source said.

However, BlueLine is a triple C and single B credit and United Rentals is a double B credit.

With BlueLine’s large coupon and yield above 7%, the bonds have renewed appeal in light of the acquisition, the source said.

ETFs stabilize

The daily cash flows of the high-yield bond funds were positive on Friday, the most recent session for which data was available at press time, a trader said.

High-yield ETFs saw $188 million of inflows on Friday.

A decent infusion of cash, it reversed the massive $959 million of outflows which the ETFs saw in the two previous sessions, the trader noted.

Actively managed high-yield funds saw $20 million of inflows on Friday, the source added.

Indexes mixed

Three benchmarks for the high-yield secondary market opened the week mixed after all closed last week with losses.

The KDP High Yield Daily index was down 3 basis points to close Monday at 70.27 with the yield now 5.87%. The index was down 7 bps on Friday and dropped 16 bps on the week.

The Merrill Lynch High Yield index was on the rise on Monday after three consecutive trading days of losses.

The index was up 10.3 bps with the year-to-date return now 1.894%. The index was down 6.1 bps on Friday and was down 13.6 bps on the week.

The CDX High Yield 30 index was up 17 bps to close Friday at 107.01. The index was down 3 bps on Friday after a mixed week that saw the index close with a 2 bps loss.

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