Morning Commentary: WMG bonds trade higher; UCP starts roadshow; big book building for Sprint

By Paul A. Harris

Portland, Ore., Oct. 14 – The high-yield market had decent footing at the Friday mid-morning, sources said.

ETFs were higher, albeit off of highs seen earlier in the session.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was up 0.18%, or 16 cents, at $86.82 per share. The SPDR Barclays High Yield Bond ETF (JNK), at $36.58 per share, was up 0.12%, or a nickel.

Both tranches of the new Warner Music Group Corp. senior notes due Nov. 1, 2024 (Ba3/B) were trading above new issue prices.

The euro-denominated 4 1/8% notes (issue size €345 million) were 101½ bid, 102¼ offered on Friday, according to a London-based debt capital markets banker.

The dollar-denominated 4 7/8% notes ($250 million) were par ¾ offered, according to a portfolio manager.

Both tranches priced at par on Thursday.

UCP starts roadhow

In a generally quiet primary market UCP, Inc. began a roadshow on Friday for a $200 million offering of five-year senior notes (expected ratings B3/B).

The debt refinancing/general corporate purposes deal, being helmed by left bookrunner Citigroup Global Markets Inc., is in the market with initial yield guidance of 8¼% to 8½%, the portfolio manager said.

Big book for Sprint

Sprint Corp.'s big $3.5 billion three-part securitization deal, set to run a full roadshow, is already playing to $15 billion of orders, according to the portfolio manager, who expects that, given the demand, the roadshow could be foreshortened.

Although the secured, amortizing notes are expected to be rated Baa2 by Moody's and BBB by Fitch, the deal is being jointly run on the high yield-, investment grade- and structured products syndicate desks, source say.

The class A-1 five-year notes are being whispered in the high 4% to 5% context, the manager said. The class A-2 seven-year notes are whispered in the 5% area. And the class A-3 10-year notes are whispered in the mid-to-high 5% area.

Those levels will tighten, the portfolio manager forecasted.

Goldman Sachs is the global coordinator and lead left bookrunner for the deal.

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