Weatherford, Pilgrim’s Pride, GFL drive by; new Sears, First Quantum busy; Rite Aid, Albertsons fall

By Paul Deckelman and Paul A. Harris

New York, Feb. 21 – For a second consecutive session, the recently sleepy high-yield primary market was sparkling brightly on Wednesday, with three issuers bringing four tranches of new dollar-denominated and fully junk-rated paper totaling $1.5 billion to market – on top of the $3.35 billion that came clattering down the chute on Tuesday, the biggest-volume day the new issue market has seen so far this year.

Switzerland-based oilfield services company Weatherford International plc priced a quickly shopped $600 million of seven-year notes.

Poultry processor Pilgrim’s Pride Corp. flew in with an upsized $500 million two-part offering of add-on notes to two existing series of bonds, evenly split, while Canadian waste management and environmental services provider GFL Environmental Inc. did a $400 million five-year issue.

Like Weatherford’s deal, the Pilgrims Pride and GFL deals were quick-to-market transactions.

Traders said there was not much in the way of aftermarket activity immediately apparent in Wednesday’s new deals, with the Weatherford and GFL paper quoted around or slightly above their respective issue prices.

The traders meantime saw heavy volume in the three tranches that had priced on Tuesday, from wireless provider Sprint Corp. and Canadian mining concern First Quantum Minerals Ltd., with most of the day’s trades in all three straddling their respective par issue prices.

Away from the new deals, the traders reported very active dealings for a second day in a row in pharmacy operator Rite Aid Corp.’s bonds and those of supermarket giant Albertsons LLC, which had announced on Tuesday that it will acquire Rite Aid.

However, in contrast to Tuesday’s action, which saw Rite Aid shoot up and Albertsons at least hold its own, Wednesday saw both companies’ bonds hammered down.

Statistical market performance measures turned lower on Wednesday, after having been mixed on Tuesday, and having been higher across the board on Thursday and again on Friday. There was no official trading on Monday, with the junk market closed due to the Presidents Day holiday, although some of the various indicators were in in fact published.

Weatherford at a discount

A regenerated primary market continued to crank on Wednesday, featuring the third, fourth and fifth drive-by transactions to clear the market in the two sessions that have followed the extended Presidents Day holiday weekend.

Weatherford International plc priced a $600 million issue of seven-year bullet notes (Caa1/B-) at 99.34 to yield 10% in a quick-to-market deal.

The yield printed in the middle of yield talk in the 10% area. Initial guidance was in the 10¼% area.

Deutsche Bank, Citigroup and Morgan Stanley were the global coordinators for the debt refinancing deal. JP Morgan and Wells Fargo were the joint bookrunners.

Pilgrim's Pride upsizes

Pilgrim’s Pride Corp. priced an upsized $500 million of senior notes in two add-on tranches.

The drive-by deal features a $250 million add-on to the 5¾% senior notes due March 15, 2025 which priced at 99.25 to yield 5.881%. The price came at the rich end of the 98.75 to 99.25 price talk (initial talk was 98.5 to 99.25). The yield printed at the tight end of the 5.88% to 5.97% yield talk.

The debt refinancing deal also included a $250 million add-on to the 5 7/8% senior notes due Sept. 30, 2027, which priced at 97.25 to yield 6.26%. The price came at cheap end of the 97.25 to 97.75 price talk. The yield printed at the wide end of the 6.19% to 6.26% yield talk.

The overall amount of the two-part drive-by deal was increased from $400 million.

Barclays was the left bookrunner. RBC and BMO were the joint bookrunners.

GFL in line with talk

GFL Environmental Inc. priced a $400 million issue of five-year senior notes (B3/B-) at par to yield 5 3/8%.

The yield printed in the middle of the 5¼% to 5½% yield talk. Initial guidance had the deal coming with a yield in the 5½% context.

The GFL deal played to a receptive audience on the buyside, market sources said.

Investors are familiar with the credit and like it, according to one trader.

And GFL could only benefit from the fact that a comp, the Waste Pro USA Inc. 5½% senior notes due Feb. 15, 2026 (B3/B+), are presently trading with a 5¼% yield, another trader said. That deal came at par in a $500 million issue on Jan. 25.

For Wednesday's GFL deal Barclays was the left bookrunner. BMO, Credit Suisse, Macquarie and RBC were the joint bookrunners.

The Vaughan, Ont.-based diversified environmental services company plans to use the proceeds to repay borrowings under its senior secured revolving credit facility, and for general corporate purposes including financing future acquisitions and organic growth initiatives.

Thin calendar

In a market that has been replete with drive-by deals since reopening on Tuesday, after an extended period on the sidelines due to capital markets volatility, the active forward calendar remained thin at Wednesday's close.

As to dollar-denominated transactions, Bristow Group Inc. is expected to price $300 million of five-year senior secured notes Friday afternoon.

The Credit Suisse deal is in the market with early guidance of 9% to 9½%, a trader said.

Elsewhere Faurecia SA will hold a fixed-income investor call on Thursday for a seven-year benchmark-sized senior note offering (Ba1/BB+/BB+).

Societe Generale will bill and deliver and is a joint global coordinator and joint bookrunner with BNP Paribas and Natixis.

CM-CIC, Commerzbank and Santander will also be joint bookrunners for the Regulation S offering.

Mixed Tuesday flows

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

High-yield ETFs saw $281 million of inflows on the day.

However the actively managed funds sustained $130 million of outflows on Tuesday, the trader said.

Wednesday deals quoted higher

In the secondary arena, a trader said that around $10 million of the new GFL Environmental 5 3/8% notes due 2023 traded, after the issue had priced at par.

He saw the notes in a par-to-100½ bid context, with the last prints of the day going off around 100¼ bid.

At another desk, a market source pegged the notes at 100 ½ bid.

One of the traders meantime said that Weatherford International’s 9 7/8% notes due 2025 were quoted at par, up from an issue price of 99.34, yielding 10%.

But he said that there were only a couple of sizable trades in the Switzerland-based oilfield services company’s new issue, not even amounting to $2 million, he said.

Pilgrim’s Pride unseen

A trader said that he had seen no initial aftermarket activity in Greeley, Colo.-based poultry processor Pilgrim’s Pride two new issues.

The company priced a $250 million add-on to its existing $500 million of 5¾% senior notes due March 15, 2025, which had originally priced at par in March of 2015.

And it did a $250 million tap of 5 7/8% senior notes due Sept. 30, 2027, with the company having priced its original $600 million of those notes at par last September.

Sprint volume runs up

Sprint Corp.’s new 7 5/8% notes due 2026 was easily the day’s most actively traded issue, a market source said, seeing more than $200 million of those notes having changed hands on the session.

He said that the notes closed at 100 1/8 bid, which he called down marginally on the session from the levels around a 100 1/8-to-100¼ bid context on Tuesday, after the Overland Park, Kans.-based wireless service provider had priced its upside $1.5 billion of those notes.

At another desk, a trader saw the new Sprint paper moving around between 100 1/8 and 100 3/8 bid.

And a third saw the notes straddling their par issue price, in a 99 7/8-to-100 1/8 bid range.

“The last prints were going off at 99¾, 99 13/16, 99 7/8, and par,” he said.

Sprint priced its quickly shopped issue at par Tuesday after upsizing that deal from an originally announced $1 billion.

It had initially moved up to around 100 3/16 bid, with more than $50 million of turnover in initial aftermarket dealings.

Existing Sprint notes again ease

For a second straight session, Sprint’s existing notes were seen lower – although one of the traders noted that the overall market was easier, and so it was not unexpected that large, normally well-traded issues like Sprint’s might be lower in this case.

Sprint’s 7 5/8% notes due 2025 and its 7 7/8% notes due 2023 were both seen down about ½ point on the day, ending at 101 bid and 104½ bid, respectively, with about $12 million of each having traded.

On Tuesday, the 2025 bonds had retreated by 1½ points, with the 2023s down 1 point.

Its 9% notes slated to mature this coming Nov. 15 were unchanged at 104 bid, also with around $12 million traded.

First Quantum trades actively

A trader said there was also considerable volume in the new First Quantum notes which were priced on Tuesday.

He saw more than $112 million of the Vancouver, B.C.-based copper mining company’s new 6 7/8% notes due 2026 traded, seeing the bonds moving around between 99 5/16 and 100 1/8 bid.

“Most were trading with a 99 bid handle and were offered at par,” down slightly from the par level at which that $1 billion tranche of bonds had priced.

He saw more than $96 million of the 6½% notes due 2024 traded between 99½-to-100 1/8 bid.

He saw the final prints happening between 99¼ and 99½ bid, down from the par level at which that $850 million tranche had priced.

The quickly shopped two-part issue was upsized on Tuesday to $1.85 billion from an originally announced $1.5 billion.

Rite Aid in retreat

Away from the new deals, a market source said “Rite Aid got clocked” on Wednesday – a day after the Camp Hill, Pa.-based No. 3 U.S. drugstore chain operator’s bonds had firmed smartly on the news that it will be acquired by Boise, Idaho-based supermarket company Albertsons.

Its 6 1/8% notes due 2023 lost nearly 1½ points on the session, closing at 100½ bid, with more than $69 million having changed hands.

That still left the issue well up from where it had been before Tuesday’s Albertsons announcement, when those bond had jumped more than 7 points, with more than $260 million traded.

Albertsons’ notes – which had been unchanged to up slightly on Tuesday in the wake of the acquisition announcement – did even worse than the Rite Aid notes did on Wednesday.

Its 6 5/8% notes due 2024 plummeted by nearly 3 points, to just over 92 bid, with over $21 million having traded.

Its 5¾% notes due 2025 swooned by more than 3½ points, closing at 87 bid, on volume of more than $12 million.

Indicators turn lower

Statistical market performance measures turned mostly lower on Wednesday, after having been mixed on Tuesday and having been higher across the board on Thursday and again on Friday. There was no official trading on Monday, with the junk market closed due to the Presidents Day holiday, although some of the various indicators were in in fact published.

The KDP High Yield Daily Index was unchanged on Wednesday at 70.78, after having notched four consecutive gains before that, including Tuesday’s 12 bps rise.

Its yield meanwhile was also steady at 5.62%, after having narrowed for three successive sessions, including Tuesday, when it had come in by 5 bps.

The Markit CDX Series 29 High Yield Index suffered its third loss in a row on Wednesday, retreating by 11/32 point to close at 106¾ bid, 106 25/32 offered. It had also lost more than 3/8 point on Tuesday. On Monday, the index was published despite the market’s holiday close, and finished marginally lower versus its Friday closing level.

And even the Merrill Lynch High Yield Index – which had improved for four consecutive sessions – turned lower on Wednesday, dipping by 0.029%, in contrast to Tuesday’s 0.039% gain.

Wednesday’s setback widened the index’s year-to-date deficit to 0.357% from 0.328% on Tuesday, although those loss levels were in from the 1.248% cumulative loss posted on Feb. 9, its second straight new widest deficit level for the year.

Its peak cumulative gain for the year so far was 0.936%, established on Jan. 26.

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