MGM China, Talen Energy, DCP Midstream, Virgin Media price; new paper in focus, trades up

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 8 – Following the busiest session in two-years, the dollar-denominated high-yield primary market was again active on Wednesday with $3.68 million pricing over four deals.

MGM China Holdings Ltd. priced an upsized $1.5 billion of senior notes (Ba3/BB-) in two even tranches.

Virgin Media Ltd. priced $825 million of 10-year senior secured notes (Ba3/BB-/BB+) at par to yield 5½%.

Talen Energy Supply LLC priced an upsized $750 million issue of 7¼% eight-year senior secured notes (S&P: BB).

And DCP Midstream Operating, LP price an upsized $600 million issue of 10-year senior bullet notes (Ba2/BB+/BB+) at par to yield 5 1/8% in a Wednesday drive-by.

The European primary market was also active.

Cirsa Finance International Sarl priced a €390 million issue of six-year senior secured notes (B2/B+).

And UK-based Co-operative Group Ltd. priced an upsized £300 million issue of five-year senior “sustainability” bullet notes (S&P: expected BB).

Meanwhile, the onslaught of new paper that freed for trade over the past two sessions was in focus in the secondary space with most issues putting in a strong performance in the aftermarket.

Springleaf Finance Corp.’s 6 5/8% senior notes due 2028 (Ba3/BB-), Iqvia Inc.’s 5% senior notes due 2027 (Ba3/BB), and Service Corp. International’s 5 1/8% senor notes due 2029 (Ba3/BB) continued to post gains after soaring out of the gate on Tuesday.

Icahn Enterprises LP and Icahn Enterprises Finance Corp.’s 6¼% senior notes due 2026 (existing ratings Ba3/BB+) and NRG Energy, Inc.’s 5¼% senior notes due 2029 (expected ratings Ba3/BB) also continued to climb in the secondary space.

Pharmaceutical Product Development, LLC’s 7¾% PIK toggle notes (existing ratings Caa1/CCC+) and United Continental Holdings, Inc.’s 4 7/8% senior notes due 2025 (Ba3/BB) were also trading at a premium to their issue price during Wednesday’s session.

Upsized MGM China prices

A busy Wednesday session in the primary market saw MGM China Holdings Ltd. price an upsized $1.5 billion amount of senior notes (Ba3/BB-) in two evenly split tranches.

The overall amount of issuance increased from $1.25 billion.

The short maturity tranche featured $750 million of five-year notes, which priced at par to yield 5 3/8%.

The yield printed 12.5 basis points inside of the 5½% to 5¾% yield talk, which had tightened slightly from initial guidance in the 6% area.

The long maturity tranche featured $750 million of seven-year notes, which priced at par to yield 5 7/8%.

Again, the yield printed 12.5 bps inside of yield talk of 6% to 6¼%. However, that talk had widened slightly from initial guidance in the 6% area.

BofA Merrill Lynch and Deutsche Bank Securities Inc. were the global coordinators.

Virgin Media prices secured notes

Virgin Media priced $825 million of 10-year senior secured notes (Ba3/BB-/BB+) at par to yield 5½% on Wednesday, according to a syndicate source.

The yield printed in the middle of yield talk in the 5½% area.

The notes are part of an overall $1.2 billion equivalent two-part deal that also includes a £300 million tranche, terms for which were not available at press time.

Joint bookrunner Credit Suisse Securities (USA) LLC was lead left on the dollar-denominated tranche.

Joint bookrunner Deutsche Bank is lead left on the sterling-denominated tranche.

Talen Energy upsizes

Talen Energy priced an upsized $750 million issue of 7¼% eight-year senior secured notes (S&P: BB).

The deal, which was upsized from $500 million, came with price talk of 7¼% to 7½%.

Credit Suisse was the left lead bookrunner.

The Woodlands, Texas-based power generation and energy company plans to use the proceeds to fund the tender offers for its senior notes due 2021, its senior guaranteed notes due 2022 and its senior guaranteed notes due 2024.

The new notes skyrocketed after freeing for trade.

They were changing hands at 101 5/8 with more than $88 million on the tape by the late afternoon, according to a market source.

DCP upsizes 10-year bullet

DCP Midstream priced an upsized $600 million issue of 10-year senior bullet notes (Ba2/BB+/BB+) at par to yield 5 1/8% in a Wednesday drive-by.

The issue size was increased from $500 million.

The yield printed 12.5 bps inside of the tight end of the 5¼% to 5 3/8% price talk. Initial guidance was in the 5 3/8% area.

Citigroup, MUFG, TD, JP Morgan, Mizuho, RBC and SunTrust were the joint bookrunners for the public offer.

The Denver-based midstream services master limited partnership plans to use the proceeds for general partnership purposes including debt repayment under DCP Operating’s revolving credit facility, and for funding capital expenditures.

The notes were trading at a premium to their issue price in the secondary space. They were seen changing hands around par ½ with more than $25 million on the tape by the late afternoon.

Cirsa prices €390 million

Cirsa Finance priced a €390 million issue of six-year senior secured notes (B2/B+) at par to yield 4¾%.

The yield printed in the middle of yield talk in the 4¾% area.

Global coordinator Deutsche Bank will bill and deliver.

The Terrassa, 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 upsized

UK-based Co-operative Group priced an upsized £300 million issue of five-year senior “sustainability” bullet notes (S&P: expected BB) at par to yield 5 1/8%.

The issue size was increased from £250 million.

The yield came inside of the 5¼% to 5½% initial guidance.

Joint bookrunner Barclays will bill and deliver.

Joint bookrunner ING served as the sustainability adviser.

Lloyds Bank Corporate Markets was also a joint bookrunner.

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

The issuer withdrew a similarly structured £250 million offer from the market last November, citing market conditions, at that time.

Springleaf in focus

Springleaf’s newly priced 6 5/8% senior notes due 2028 were among the most actively traded issues in the secondary space with the notes continuing to climb in the aftermarket.

The 6 5/8% senior notes were up another ¼ point after soaring out of the gate on Tuesday.

The notes were changing hands at 101¾ late Wednesday afternoon with more than $61 million of the bonds on the tape.

Springleaf Finance, an indirect, wholly owned subsidiary of OneMain Holdings Inc., priced an upsized $800 million issue of the 6 5/8% senior notes at par on Tuesday.

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.

Iqvia gains

Iqvia’s 5% senior notes due 2027 were also posting gains in active trading on Wednesday.

The 5% notes rose another ¼ point to par 7/8 in the late afternoon, according to a market source.

More than $58 million of the bonds were on the tape by the late afternoon.

Iqvia priced a $1.1 billion issue of the 5% notes at par in a Tuesday drive-by.

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

Service Corp. rises

Service Corp.’s 5 1/8% senior notes due 2029 were also posting gains on Wednesday after a strong start out of the gate.

The 5 1/8% notes rose another ½ point on Wednesday to trade at 101½ in the late afternoon. More than $50 million of the bonds were on the tape during Wednesday’s session.

Service Corp. priced a $750 million issue of the 5 1/8% notes at par on Wednesday.

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

The deal was heard to be playing to $1 billion in orders prior to pricing.

Icahn hovers

While still trading at a premium to their issue price, Icahn Enterprises’ 6¼% senior notes due 2026 continued to hover just slightly above their issue price on Wednesday.

The notes were slightly improved at par 3/8, according to a market source. The notes were trading in a range of par to par ¼ after freeing for trade on Tuesday.

Icahn priced a $750 million issue of the 6¼% senior notes at par on Tuesday in a deal that was upsized from $500 million.

NRG gains

NRG Energy’s 5¼% senior notes due 2029 continued to shoot higher in the secondary space on Wednesday.

The notes were changing hands at 101 1/8 in the late afternoon with more than $20 million of the bonds in play, according to a market source.

The notes were strong out of the gate on Tuesday, shooting up to par ¾ soon after breaking for trade.

NRG Energy priced a $733 million issue of the 5¼% notes at par on Wednesday.

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 deal was also oversubscribed and was playing to $1.7 billion in orders.

The toggle notes

Pharmaceutical Product Development’s 7¾% toggle notes were also trading at a premium to their issue price.

The 7¾% notes traded as high as par 5/8 during Wednesday’s session but were trading between par ¼ and par 3/8 in the late afternoon, a market source said.

More than $32 million of the bonds were in play by the late afternoon.

Pharmaceutical Product Development priced a $900 million issue of the PIK toggle notes at 99.00 to yield 8.132% on Tuesday.

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 bps.

United Continental at a slight premium

United Continental’s 4 7/8% notes due 2025 were trading at a slight premium to their issue price in the secondary space.

The notes were seen changing hands around 99 5/8 in the late afternoon with more than $47 million of the bonds on the tape, according to a market source.

United Continental priced a $350 million issue of the 4 7/8% notes at 99.374 to yield 5% on Tuesday.

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.

Indexes drop

Indexes were again down on Wednesday.

The KDP High Yield Daily index dropped 5 bps to close Wednesday at 70.26 with the yield now 5.85%. The index slid 2 bps on Tuesday and was down 6 bps on Monday.

The ICE BofAML US High Yield index slid 2 bps with the year-to-date return now 8.633%.

The index dropped 11 bps on Tuesday and was down 13 bps on Monday.

The CDX High Yield 30 index dropped 14 bps to close Wednesday at 106.88. The index plummeted 42 bps on Tuesday and dropped 24 bps on Monday.

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