Graham Packaging prices, soars in aftermarket; Cenovus upsizes; Calpine in focus; Summit gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 28 – The domestic high-yield primary market was active on Tuesday with two deals pricing and the forward calendar growing.

In drive-by action, Cenovus Energy Inc. priced an upsized $1 billion amount of split-rated five-year senior bullet notes (Ba2/BBB-/BB+).

Graham Packaging Co. Inc. also priced a $510 million issue of eight-year senior notes (Caa1/CCC+), which skyrocketed after breaking for trade.

And G-III Apparel Group Ltd. joined the forward calendar with a $350 million offering of five-year senior secured notes (Ba3/BB+).

The European primary market was also active with Faurecia SA pricing €1 billion of senior notes (expected ratings Ba2/BB/BB+) in two upsized tranches.

Meanwhile, the secondary space was largely unchanged on Tuesday despite a soft day for equities.

New paper dominated trading activity with several recent deals putting in strong performances.

Calpine Corp.’s two tranches of senior notes (B) were in focus with both tranches trading at premiums to their issue prices.

Summit Materials, LLC and Summit Materials Finance Corp.’s 5¼% senior notes due 2029 (B2/BB) continued to climb higher in active trading.

Outside of recent issues, American Airlines Inc’s 11¾% senior notes due 2025 hit their lowest level since pricing.

Big upsize for Cenovus

A busy Tuesday session saw Cenovus Energy price an upsized $1 billion amount of split-rated five-year senior bullet notes at par to yield 5 3/8% in a drive-by.

The issue size increased from $750 million.

The yield printed in the middle of the 5¼% to 5½% yield talk. Initial guidance was 5½% to 5¾%.

The deal was heard to be playing to $2.5 billion of orders at 1 p.m. ET on Tuesday, a trader said.

Graham rockets into secondary

Graham Packaging priced a $510 million issue of eight-year senior notes at par to yield 7 1/8% at the conclusion of a roadshow.

The yield printed at the tight end of yield talk in the 7¼% area. Initial guidance was in the 7½% to 7¾% area.

It was a hound and hare story as the deal broke for trading, with a trader spotting the par-pricing notes at 103¾ bid, 104¼ offered, going out on Tuesday, having eased a bit from 104 1/8 bid, 104 5/8 offered.

The deal was heard to have played to $4 billion of orders, the trader said.

Calendar build

There was a slight buildup in the dollar-denominated active calendar.

G-III Apparel Group began a brief roadshow for a $350 million offering of five-year senior secured notes.

Initial guidance has the notes coming to yield 8% to 8¼%.

Faurecia sees big upsize

In Europe, Faurecia SA priced €1 billion of senior notes in two upsized tranches.

An upsized €700 million tranche of new eight-year senior notes priced at par to yield 3¾%. The issue size increased from €500 million. The yield printed tight to yield talk in the 3 7/8% area. Initial guidance was in the 4% area.

An upsized €300 million add-on to the 2 5/8% senior notes due June 15, 2025 priced at 97.5 to yield 3.182%. The tap size increased from €250 million. The issue price came at the rich end of the 97 to 97.5 price talk.

The euro-denominated calendar also saw a slight buildup.

PaymentSense Ltd. plans to shop €320 million of five-year senior secured notes by means of investor conference calls set to take place until Friday.

Early guidance has the deal coming to yield in the 8% area.

Calpine in focus

Calpine’s recently priced tranches of senior notes were in focus in the secondary space on Tuesday with both trading at premiums to their issue prices.

Calpine’s 5% senior notes due 2031 were changing hands at par ¾ heading into the market close, a source said.

The 4 5/8% notes were changing hands around par ½.

Both tranches had more than $120 million in reported volume.

The power company priced an upsized $650 million tranche of the 4 5/8% notes and an upsized $850 million tranche of the 5% notes at par in a Monday drive-by.

The 4 5/8% notes priced tighter than the 4¾% to 5% yield talk. The 5% tranche priced at the tight end of talk for a yield in the 5% to 5¼% area.

The tranche sizes were initially each $500 million.

Summit gains

After a strong break, Summit Materials’ 5¼% senior notes due 2029 continued to gain in active trading on Tuesday.

The 5¼% notes were changing hands at 103½ heading into the market close. The bonds had more than $44 million in reported volume.

The notes rose to a 102-handle soon after freeing for trade.

Summit Materials priced a $700 million issue of the 5¼% notes at par in a Monday drive-by.

Pricing came at the tight end of the 5¼% to 5½% yield talk.

American Airlines new low

American Airlines’ 11¾% senior notes due 2025 hit their lowest level since pricing on Tuesday.

The notes traded off 2 points in high-volume activity to close the day at 86¾, according to a market source.

There was more than $15 million of the bonds on the tape during Tuesday’s session.

The 11¾% notes mildly improved last Thursday after the embattled airline’s second-quarter earnings report beat expectations.

However, the notes have steadily traded lower since then.

Citigroup analysts cut their price target for American Airlines stock late Monday, citing the company’s debt load compared to peers and uncertainty regarding future revenue.

The airline has cut several of its travel routes.

It has also been the subject of several headlines about delayed flights due to passengers who refuse to wear masks while on board.

$34 million Monday outflows

The dedicated high-yield bond funds saw a relatively modest $34 million of net daily outflows on Monday, the most recent session for which data was available at press time, according to a market source.

High Bakery-yield ETFs sustained $94 million of outflows on the day, while actively managed high-yield funds saw $60 million of inflows on Monday, the source said.

Indexes mixed

Indexes were mixed on Tuesday after opening the week with gains.

The KDP High Yield Daily index continued to rise and closed Monday up 6 bps at 66.63 with the yield now 5.85%.

The index was up 2 bps on Monday.

The ICE BofAML US High Yield index gained 1.9 bps with the year-to-date return now negative 0.955%.

The index was up 12.8 bps on Monday.

The CDX High Yield 30 index shaved off 13 bps to close Tuesday at 101.92. The index gained 43 bps on Monday.

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