Trivium, TPC, Tekni-Plex price; Sinclair holds; Hertz, Taylor Morrison, Acrisure gain

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 19 – The domestic high-yield primary market continued its active pace on Friday after seeing the largest amount of new deal volume year to date on Thursday.

Trivium Packaging Finance BV’s megadeal cleared the market on Friday with $1.75 billion and €980 million of high yield notes pricing over four tranches.

The dollar-denominated tranches skyrocketed after breaking for trade.

TPC Group Inc. priced a $930 million issue of 10¼% five-year senior secured notes (B2/B/B-).

And Tekni-Plex, Inc., priced a $345 million issue of 9¼% five-year senior notes (Caa2/CCC+) at 99.02 to yield 9½%.

The week ahead is also expected to be busy with Advisor Group Inc. and Citgo Holding, Inc. planning to start roadshows on Monday.

There are also other deals on the horizon, sources said.

Meanwhile, the new paper was in focus in the secondary space with each deal to price during Thursday’s session trading at a premium to their offer price.

However, some deals saw more activity and put in stronger performances than others.

Sinclair Broadcast Group Inc.’s two tranches of notes remained in focus with the notes continuing to trade well above their issue price.

Hertz Corp.’s 7 1/8% senior notes due 2026 (B3/B-) and Taylor Morrison Communities, Inc.’s 5¾% senior notes due 2028 (Ba3/BB) continued to post gains in active trading.

While volume was light, Acrisure, LLC’s 10 1/8% senior notes due 2026 (Caa2/CCC+) also continued to rise on Friday.

Ithaca Energy Ltd.’s 9 3/8% senior notes due 2024 (B3/B/B+) were trading at a slight premium to their issue price. However, the notes saw little secondary activity.

Enormous demand for Trivium

The Trivium megadeal cleared the market on Friday in a tight-pricing execution driven by enormous demand, market sources said.

Trivium Packaging Finance BV priced $1.75 billion and €980 million of high-yield notes in four tranches.

The deal included €355 million of Euribor plus 375 basis points seven-year senior secured floating-rate notes (B2) which priced at par, at the tight end of the Euribor plus 375 bps to 400 bps spread talk.

The sole euro-denominated fixed-rate tranche came as €625 million of seven-year senior secured fixed-rate notes (B2) which priced at par to yield 3¾%, 12.5 bps tighter than yield talk in the 4% area.

An upsized $1.05 billion tranche of seven-year senior secured fixed-rate notes (B2) priced at par to yield 5½%, 25 bps beneath the tight end of the 5¾% to 6% yield talk. The tranche was increased by $150 million equivalent with proceeds shifted from the euro-denominated issuance.

The sole unsecured tranche was an upsized $700 million amount of eight-year senior notes (Caa2) that priced at par to yield 8½%, 25 bps beneath the tight end of the 8¾% to 9% yield talk. The unsecured tranche was upsized from $600 million.

The demand driving these tight pricings – with two tranches blowing through talk by 25 bps, one by 12.5 bps and one coming at the tight end – had to be enormous, according to an investor who did not have the book size at hand, late Friday.

Joint bookrunner Citigroup Global Markets Inc. will bill and deliver. BMO Capital Markets was also a joint bookrunner.

Elsewhere Friday

Elsewhere in Friday's session, TPC Group Inc. priced a $930 million issue of five-year senior secured notes (B2/B/B-) at par to yield 10½%.

The yield printed at the wide end of the 10¼% to 10½% price talk.

The deal underwent structural tweaks and document changes.

And Tekni-Plex, Inc., priced a $345 million issue of 9¼% five-year senior notes (Caa2/CCC+) at 99.02 to yield 9½%.

The yield came well wide of yield talk in the 9% area.

The week ahead

The new issue market is expected to remain busy in the run-up to the end-of-July meetings of the Federal Reserve Bank's Federal Open Market Committee, sources said on Friday.

The market fully expects those meetings to produce a 25-bps reduction in the Fed Funds rate, a banker said Friday. A 50-bps cut, while not out of the question, is a lot less probable, the source added.

Nevertheless, better to get in ahead of the Fed, against the possibility that the central bank might come up with a surprise to sour the market's buoyant mood, sources say.

The July 22 week is set to get underway with a modest announced calendar.

Advisor Group Inc. plans to start a roadshow on Monday for a $400 million offering of eight-year senior notes (Caa1/B-), an acquisition financing being helmed by Goldman Sachs.

Elsewhere, Citgo Holding, Inc. (Caa1/B-/CCC+) plans to start a roadshow on Monday for its $1.37 billion offering of five-year senior secured notes via Jefferies LLC and Houlihan Lokey.

Aside from those announced deals there are a couple of others visible to the banker who spoke to Prospect News late Friday afternoon.

There is also a buzz in the market that a couple of deals from the industrial sector, via Goldman Sachs, could materialize in the week ahead, according to a bond investor.

Trivium skyrockets

Demand for new paper from Trivium followed it into the secondary space with the dollar-denominated tranches skyrocketing after breaking for trade.

Trivium’s 5½% senior notes due 2026 were up more than 2 points in active trading.

The notes were changing hands around 102¾ with more than $51.5 million of the bonds on the tape by the late afternoon, according to a market source.

The 8½% senior notes due 2027 rose more than 3 points. They were changing hands at 103¾ with $47 million of the bonds on the tape.

Sinclair in focus

Sinclair’s secured and unsecured notes continued to dominate activity in the secondary space on Friday.

While each tranche maintained a large premium to its issue price, the unsecured tranche gave back some of its gains, while the secured tranche continued to rise.

Sinclair’s 5 3/8% senior notes due 2026 (Ba2/BB) were up ½ point from Thursday’s close.

They were changing hands at 102½ with more than $107 million in reported volume late Friday afternoon, according to a market source.

The 6 5/8% senior notes due 2027 were coming in from their highs on Thursday.

The notes were down about 3/8 point to trade at 102½ during Friday’s session. More than $82 million in reported volume was on the tape.

Sinclair priced an upsized $3.05 billion tranche of the 5 3/8% senior secured notes and a downsized $1,825,000,000 tranche of the 6 5/8% senior unsecured notes at par on Thursday.

Approximately $500 million of proceeds was shifted to the secured tranche from the unsecured tranche.

The deal was heavily oversubscribed and was heard to have played to $18.5 billion in orders, a market source said.

Hertz active

Hertz’s recently priced 7 1/8% senior notes due 2026 continued to post gains in active trading.

The notes were up ¾ point from Thursday’s close to settle around 101, a market source said.

The bonds saw more than $94 million in reported volume during Friday’s session.

While the notes saw good volume early in the session, activity in the name trailed off into the afternoon, a source said.

Hertz priced a $500 million issue of the 7 1/8% notes at par in a Thursday drive-by.

The yield printed at the tight end of yield talk in the 7¼% area

Taylor Morrison gains

Taylor Morrison’s 5¾% senior notes due 2028 also continued to gain in active trading in the secondary space.

The 5¾% senior notes were up ¾ point to trade at 101¼, according to a market source. There was more than $54 million in reported volume by the late afternoon.

Taylor Morrison priced an upsized $450 million issue of the 5¾% notes at par in a Thursday drive-by.

The issue size was increased from $425 million. The yield printed at the tight end of yield talk in the 5 7/8% area.

Acrisure up

Acrisure’s 10 1/8% senior notes due 2026 were also posting gains on Friday although volume was light. The notes were trading around 102¼, sources said.

However, the notes saw only $5 million in reported volume during Friday’s session.

The notes were active on Thursday and rose to 101¾ shortly before the market close.

Acrisure priced an upsized $400 million issue of the 10 1/8% notes at par on Thursday.

The issue size was increased from $300 million.

Ithaca at a slight premium

While there were few prints on the tape on Friday, Ithaca Energy’s 9 3/8% senior notes due 2024 were seen at a slight premium to their issue price in the secondary space.

The 9 3/8% notes were changing hands between par 1/8 and par ¾, a market source said. However, there were few prints on the tape.

About $5 to $10 million of the notes changed hands during Friday’s session.

Ithaca priced a downsized $500 million issue of the 9 3/8% notes at par on Thursday.

The issue was downsized from $700 million.

The yield printed in the middle of the 9¼% to 9½% yield talk.

The deal encountered pushback from investors and underwent covenant changes prior to pricing, sources said.

Mixed Thursday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Thursday, according to a market source.

High-yield ETFs sustained $149 million of outflows on the day.

However, asset managers at the actively managed funds saw $155 million of inflows on Thursday, the source said.

News of Thursday's daily flows follows a late Thursday afternoon report that the combined high-yield funds saw $573 million of inflows in the week to Wednesday's close, according to Lipper US Fund Flows.

Indexes mixed

Indexes were again mixed on Friday. However, all closed the week with losses.

The KDP High Yield Daily index saw its first day of gains all week.

The index rose 4 basis points to close Friday at 71.56 with the yield now 5.48%.

The index dropped 18 bps on Thursday, 8 bps on Wednesday, 4 bps on Tuesday and shaved off 1 bp on Monday.

The index was down 27 bps on the week.

The ICE BofAML US High Yield index rose 4 bps with the year-to-date return now 10.143%.

The index dropped 23.4 bps and 7.7 bps on Wednesday after rising 0.8 bps on Tuesday and 8.1 bps on Monday.

The index was down 18.2 bps on the week.

The CDX High Yield 30 index dropped 21 bps to close Friday at 106.95.

The index gained 13 bps on Thursday and was down 22 bps on Wednesday, 20 bps on Tuesday and 8 bps on Monday.

The index was down 58 bps on the week.

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