Primary prices $5.37 billion in seven drive-by deals; Altice Luxembourg weakens; Plastipak drops

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 7 – Despite the volatility rocking capital markets on Tuesday, the high-yield primary market saw its biggest daily total in over two years.

Seven issuers, each bringing a single dollar-denominated tranche of junk, raised $5.37 billion – all in drive-by deals.

Iqvia Inc. priced a $1.1 billion drive-by issue of eight-year senior notes (Ba3/BB) at par to yield 5%.

Pharmaceutical Product Development, LLC (PPD) priced a $900 million issue of PIK toggle notes (existing ratings Caa1/CCC+) at 99.00 to yield 8.132%.

Springleaf Finance Corp., an indirect, wholly owned subsidiary of OneMain Holdings Inc., priced an upsized $800 million issue of senior bullet notes due Jan. 15, 2028 (Ba3/BB-) at par to yield 6 5/8%.

Icahn Enterprises LP and Icahn Enterprises Finance Corp. priced an upsized $750 million issue of seven-year senior notes (existing ratings Ba3/BB+) at par to yield 6¼%.

Service Corp. International priced a $750 million issue of 10-year senior notes (Ba3/BB) at par to yield 5 1/8%.

NRG Energy, Inc. priced a $733 million issue of 10-year senior notes (expected ratings Ba3/BB) at par to yield 5¼%.

And United Continental Holdings, Inc. priced a $350 million issue of non-callable 4 7/8% 5.7-year senior notes (Ba3/BB) at 99.374 to yield 5%.

Wednesday also promises to be a busy session.

MGM China Holdings Ltd. is set to price its $1.25 billion two-part offering of senior notes (Ba3/BB-).

Talen Energy Supply LLC is expected to price a $500 million offering of eight-year senior secured notes (expected ratings B3/B) on Wednesday.

As the primary market opened the floodgates on Tuesday, the secondary space was soft as trade war jitters continued to rattle the markets.

Despite the weakness in the overall market, the onslaught of new paper to hit the secondary space was performing well.

New issues from NRG Energy and Icahn were trading at a premium to their issue price.

Altice Luxembourg SA’s recently priced 10½% senior notes due 2027 were weakening in high-volume activity on Tuesday with the notes down more than 1 point from their highs after hitting the aftermarket.

Plastipak Holdings Inc.’s 6¼% senior notes due 2025 dropped more than 2 points in active trading after the company was labeled a loser at the annual Sohn Investment Conference.

Despite another disappointing earnings report, Dean Foods Co.’s 6½% senior notes due 2023 skyrocketed on Tuesday on confirmation the company was actively considering a sale.

Tuesday’s session

As market volatility, driven by the winds of trade wars, continued to erode share prices on Tuesday, the junk bond market put up its biggest daily total in over two years.

Seven issuers, each bringing a single dollar-denominated tranche of junk – all in drive-by deals – raised $5.37 billion.

It was the biggest daily total since March 9, 2017, which saw $6.64 billion in eight tranches.

And it was the first time the new-issue market cleared the $5 billion mark since June 5, 2017 when $5.08 billion priced in eight tranches.

Two of Tuesday's seven deals upsized.

And executions tended to be sharp, with three of the seven coming at the tight ends of yield talk, three coming in the middle of talk, and one pricing at the wide end.

Iqvia prices $1.1 billion

Iqvia priced a $1.1 billion drive-by issue of eight-year senior notes (Ba3/BB) at par to yield 5%.

The yield printed in the middle of yield talk in the 5% area.

Lead left bookrunner Barclays will bill and deliver for the debt refinancing deal.

PPD/Eagle Holding PIK toggle dividend

Pharmaceutical Product Development (PPD) priced a $900 million issue of PIK toggle notes (existing ratings Caa1/CCC+) at 99.00 to yield 8.132%.

The notes come with a 7¾% cash coupon which steps up to 8½% for in-kind payments.

The yield printed at the tight end of yield talk in the 8¼% area and cheap to discount talk of 75 basis points.

The PPD transaction, which featured a holding company issuing a PIK toggle notes to fund a dividend to shareholders, is an indicator that says the market is hot, sources say.

That didn't seem to bother high-yield investors on Tuesday, according to a trader who said that the PPD deal was playing to $1.3 billion of orders around lunchtime in New York.

JP Morgan, Barclays, UBS, Credit Suisse, Citigroup, Deutsche Bank, Goldman Sachs and Morgan Stanley were the joint bookrunners.

OneMain Springleaf upsized and tight

Springleaf Finance, an indirect, wholly owned subsidiary of OneMain Holdings Inc., priced an upsized $800 million issue of senior bullet notes due Jan. 15, 2028 (Ba3/BB-) at par to yield 6 5/8%.

The issue size increased from $500 million.

The yield printed at the tight end of yield talk in the 6¾% area. Initial guidance was in the high 6% area.

Morgan Stanley, RBC, Barclays, Citigroup, Citizens, Credit Suisse, Deutsche Bank, Goldman Sachs, NatWest and SG were the joint bookrunners for the debt refinancing deal.

Icahn upsizes

Icahn Enterprises and Icahn Enterprises Finance priced an upsized $750 million issue of seven-year senior notes (existing ratings Ba3/BB+) at par to yield 6¼%.

The issue size increased from $500 million.

The yield printed on top of yield talk.

Jefferies ran the books.

The New York-based diversified holding company plans to use the proceeds to provide increased liquidity for general partnership purposes, including the possible repayment of existing senior notes or to fund potential acquisitions.

Service Corp. oversubscribed

Service Corp. priced a $750 million issue of 10-year senior notes (Ba3/BB) at par to yield 5 1/8%.

The yield printed in the middle of yield talk in the 5 1/8% area and tight to initial guidance in the 5¼% area.

Around noon ET Tuesday, the deal was playing to $1 billion of orders, a market source said.

Wells Fargo was the left bookrunner.

The Houston-based provider of funeral goods and services plans to use the proceeds for general corporate purposes.

NRG prices tight

NRG Energy priced a $733 million issue of 10-year senior notes (expected ratings Ba3/BB) at par to yield 5¼%.

The yield printed at the tight end of the 5¼% to 5 3/8% yield talk and tight to early guidance in the 5¼% to 5½% area.

The debt refinancing deal was heard to be playing to $1.7 billion of orders early Tuesday afternoon, a trader said.

JP Morgan, Citigroup, Credit Suisse, Barclays, Credit Agricole, Deutsche Bank, Goldman Sachs, MUFG, RBC, SMBC Nikko and Natixis were the joint bookrunners.

United Continental at a discount

United Continental Holdings priced a $350 million issue of non-callable 4 7/8% 5.7-year senior notes (Ba3/BB) at 99.374 to yield 5%.

The yield printed at the wide end of the 4 7/8% to 5% yield talk but on top of initial guidance in the 5% area.

Left lead bookrunner Barclays will bill and deliver.

MGM China talk

The stage is set for more new-issue action on Wednesday.

MGM China Holdings set price talk in its $1.25 billion two-part offering of senior notes (Ba3/BB-).

The short maturity tranche features five-year notes with two years of call protection, talked at 5½% to 5¾%, slightly wide of initial guidance in the 5½% area.

The long maturity tranche features seven-year notes with three years of call protection, talked at 6% to 6 ¼%, at the wide end of initial guidance in the 6% area.

The deal is heard to be playing to $2 billion of orders across both tranches.

Books close at 9 a.m. ET Wednesday and the deal is set to price thereafter.

Talen Energy for Wednesday

Elsewhere, Talen Energy is expected to price a $500 million offering of eight-year senior secured notes (expected ratings B3/B) on Wednesday.

As the market awaits official talk, initial guidance has the notes coming with a yield in the low-to-mid 7% area, a bond trader said.

Credit Suisse is the left lead bookrunner for the debt refinancing deal.

Circa starts roadshow

In the European primary market, Cirsa Finance International started a roadshow on Tuesday in London for a €390 million offering of six-year senior secured notes (B2/B+).

Left lead global coordinator Deutsche Bank will bill and deliver.

The Spain-based gaming company plans to use the proceeds to finance the acquisition of Giga Game System Operation SLU and certain of its subsidiaries, as well as for general corporate purposes

Co-operative selling £250 million

In the sterling-denominated market, UK-based Co-operative Group announced a £250 million offering of five-year senior “sustainability” bullet notes (S&P: expected BB).

Bookrunner Barclays will bill and deliver.

The Manchester-based consumer co-operative plans to use the proceeds to finance and refinance eligible sustainability projects as defined in its sustainability framework.

New paper

The new paper to free for trade on Tuesday was in focus and performing well in the secondary space.

NRG Energy’s 5¼% senior notes due 2029 dominated activity in the secondary space.

The notes were changing hands between par 5/8 and par ¾ in the late afternoon.

More than $140 million of the bonds were on the tape after breaking for trade.

Icahn’s 6¼% senior notes due 2026 were also trading at a slight premium to their issue price in high-volume activity.

The notes traded as high as 101 after breaking for trade. However, they quickly dropped down to trade between par and par ¼ in the late afternoon.

More than $40 million of the bonds were on the tape by the late afternoon.

Altice Luxembourg weakens

Altice Luxembourg’s 10½% senior notes due 2027 were weakening in high-volume activity on Tuesday with the notes down more than 1 point from their highs after breaking for trade on May 3.

The 10½% notes dropped more than 1 1/8 points to close Tuesday at 101.

They remained active in the secondary space with $53 million of the bonds on the tape by the late afternoon, according to a market source.

The 10½% notes had traded as high as 102¼ after hitting the market.

Altice Luxembourg priced a $1.6 billion tranche of the 10½% senior notes at par on May 3.

In addition, Altice Luxembourg priced €1.4 billion of euro-denominated notes launched at par to yield 8%.

Plastipak drops

Plastipak Holdings’ 6¼% senior notes due 2025 dropped more than 2 points in active trading on Tuesday.

The notes traded down to 91 by the late afternoon, a market source said.

The typically illiquid issue saw more than $20 million in reported volume during Tuesday’s session.

The activity comes after the company was named as one of the primary losers in waning demand for plastic packaging at the Sohn Investment Conference on Monday.

Scott Goodwin of Diameter Capital Partners announced at the conference he would be shorting the company’s unsecured bonds, with its spreads expected to widen, Bloomberg report.

Dean Foods

While the overall market was soft on Tuesday, Dean Foods’ 6½% senior notes due 2023 skyrocketed on news the company was exploring a sale.

The 6½% notes rose 3¼ points to 56½ by the late afternoon, a market source said. More than $47 million of the bonds were on the tape during Tuesday’s session.

Dean Foods reported a large earnings miss in its first quarter with revenue of $1.795 billion versus analyst expectations for revenue of $1.9 billion, according to a market source.

The milk producer also missed on EBITDA by a wide margin with a reported negative EBITDA of $2.9 million versus analyst expectations for EBITDA of $21.3 million.

However, the notes skyrocketed as the company gave credence to speculation circulating in the market that it was considering a sale.

Monday inflows

In the teeth of capital markets volatility on Monday, the daily cash flows of the dedicated high-yield bond funds were positive, a trader said.

High-yield ETFs saw a modest $28 million of inflows on the day.

Actively managed high-yield funds saw $140 million of inflows on Monday, the trader said.

Indexes down

Indexes were losing ground on Tuesday.

The KDP High Yield Daily index slid 2 bps to close Tuesday at 70.32 with the yield now 5.81%.

The index was down 6 bps on Monday. The index was largely flat last week posting a cumulative loss of 1 bp.

The ICE BofAML US High Yield index dropped 11 bps with the year-to-date return now 8.653%. The index was down 13 bps on Monday after a cumulative gain of 15.4 bps on the week last week.

The CDX High Yield 30 index plummeted 42 bps to close Tuesday at 107.02.

The index also dropped 24 bps on Monday after remaining largely flat with just a cumulative loss of 2 bps on the week last week.

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