Shutterfly prices, Alliant on tap; Bausch, U.S. Steel lower, WeWork sees respite; recent issues active

By James McCandless and Paul A. Harris

San Antonio, Oct. 1 – One issuer priced and one joined the forward calendar in the high-yield market on Tuesday, while the secondary saw trading fixed on newsmakers and newer issues.

Shutterfly Inc. priced an upsized $785 million issue of 8½% seven-year senior secured notes (B1/B) at 94.371 to yield 9 5/8%.

Alliant Holdings Intermediate, LLC and Alliant Holdings Co-Issuer, Inc. plan to price a $575 million offering of eight-year senior notes (current ratings Caa2/CCC+) on Thursday.

In secondary trading, Bausch Health Cos. Inc.’s notes moved lower after the company filed a lawsuit against a competitor over alleged patent infringement.

Manufacturer United States Steel Corp.’s issues lost ground after the company announced the acquisition of a major stake in Big River Steel.

Meanwhile, WeWork Cos. Inc.’s paper gained despite a ratings downgrade, providing a brief respite after a week of losses and negative headlines.

Recent notes from Inmarsat plc and Telesat Canada were active but saw different tracks.

Shutterfly prices

On Tuesday Shutterfly Inc. priced an upsized $785 million issue of 8½% seven-year senior secured notes (B1/B) at 94.371 to yield 9 5/8%.

The deal, which was upsized from $500 million, priced on top of final coupon talk, and cheap to price talk that was set at 95 (earlier price talk was 95 to 96). Initially the deal was talked to yield 8¼% to 8½%.

The notes also underwent covenant changes tightening restrictions on payments, investments, debt incurrence and liens.

Proceeds will be used to fund the buyout of Shutterfly and Snapfish LLC by Apollo Global Management LLC.

Other funds for the buyout come from a $1.03 billion seven-year first-lien term loan and a privately placed $300 million issue of 11% senior unsecured notes due 2026.

Elsewhere Alliant Holdings Intermediate, LLC and Alliant Holdings Co-Issuer, Inc. plan to price a $575 million offering of eight-year senior notes (current ratings Caa2/CCC+) on Thursday.

Initial price talk has the deal coming to yield in the high 6% area, according to an investor (see related stories in this issue).

Monday inflows

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

High-yield ETFs saw $485 million of inflows on the day.

Actively managed high-yield funds saw $10 million of inflows on Monday, the source said.

The combined funds are tracking $799 million of inflows for the week that will conclude with Wednesday's close, the market source added.

Bausch lower

Bausch Heath’s notes were seen moving lower, traders said.

The 6 1/8% senior notes due 2025 dipped 1 point to close at 103 bid.

The notes were traded at about $30 million.

The Laval, Quebec-based drug manufacturer announced on Tuesday that it was filing a lawsuit against competitor Novartis AG, claiming that its Sandoz unit had infringed on 14 of its patents on flagship drug Xiflaxan.

The news also triggered a selloff in its common stock.

U.S. Steel lower

U.S. Steel’s issues ended the session on weaker footing, market sources said.

The 6¼% senior notes due 2026 fell 1¼ points to close at 83 bid. The 6 7/8% senior notes due 2025 dropped 1¼ points to close at 89¼ bid.

The two tranches combined to see about $33 million change hands.

On Tuesday morning, the Pittsburgh-based steel manufacturer announcing that it was purchasing a $700 million stake in competitor Big River Steel, giving the name a 49.9% stake.

As part of the agreement, there is a call option to purchase the rest of the company within the next four years.

“This gives them the chance to acquire something that seems like a good fit for less than expected,” a trader said.

Big River Steel produces products with a technologically advanced flat-rolled mill in Arkansas, which the company says will provide the opportunity to provide “the best of both worlds” to its consumer base.

WeWork gains

Meanwhile, WeWork’s paper was gaining for the first time in a week, traders said.

The 7 7/8% senior paper due 2025 picked up 1¾ points to close at 86¾ bid.

Fitch Ratings issued a downgrade for the New York City-based co-working name on Tuesday.

The agency dropped the company’s overall rating to CCC+ and lowered its senior unsecured notes rating.

The changes reflect what Fitch says is an “uncertain liquidity profile” after the company nixed a planned initial public offering.

“Because there isn’t a lot of information available about things like cash flow, it will be interesting to see how many distressed guys jump on it,” a trader said. “That being said, I think the notes go lower.”

The notes snapped a seven-day trading decline after the company shelved an IPO after a dispute over its valuation.

The flub led to a slew of negative headlines and the resignation of its chief executive officer.

Inmarsat, Telesat active

Recent notes from Inmarsat and Telesat ended in different directions, market sources said.

London-based telecom name Inmarsat’s recent 6¾% senior secured notes due 2026 moved up ¼ point to close at 102¼ bid.

The notes saw about $23 million trading.

The $2.075 billion deal priced on Sept. 23.

Ottawa-based sector peer Telesat’s relatively new 6½% senior notes due 2027 lost ½ point to close at 101½ bid.

About $47 million traded by the end of the session.

Indexes negative

Three high yield indexes saw negative turns in Tuesday’s session.

The KDP High Yield Daily index declined by 2 basis points on Tuesday, closing at 71.41 with the yield moving lower to 5.43%.

The index fell 12 bps on Monday, dropped 10 bps on Friday and shaved off 1 bps on Thursday.

The ICE BofAML US High Yield index ended 6.9 bps weaker with the year-to-date return now at 11.428%.

The CDX High Yield 30 index declined by 35.5 bps to 106.4665.

The index added 34.99 bps on Monday, shifted lower by 35.59 bps on Friday and lost 32.78 bps on Thursday.

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