Junk euro primary active; Ball holds premium; Northern Oil flat; Tempur Sealy down on acquisition

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 9 – The dollar-denominated primary market was dormant on Tuesday.

However, two deals remain on deck with Calderys Financing, LLC’s $550 million offering of five-year senior secured notes (B2) and Aventiv Technologies LLC’s $400 million offering of four-year first-lien senior secured notes (B3/B) in the market.

While the dollar-denominated market was quiet Tuesday, the euro-denominated market was active with offerings from Crown European Holdings S.A. and Centurion Bidco SpA pricing.

Meanwhile, it was another soft day in the secondary space as market players awaited the latest Consumer Price Index report and anxiously watched the commencement of debt-ceiling negotiations in Washington.

The cash bond market shaved off another 1/8 to ¼ point with spreads continuing to widen.

However, trading volumes remained thin with activity concentrated in new and recent issues.

Ball Corp.’s new 6% senior notes due 2031 (Ba1/BB+) held on to the nominal gains made after breaking for trade despite a soft day for the market.

Northern Oil and Gas, Inc.’s 8¾% senior notes due 2031 (B2/B+) continued to flatline on Tuesday with the notes wrapped around their discounted issue price.

Outside of new paper, topical and earnings-related news continued to jumpstart activity in certain credits.

Tempur Sealy International Inc.’s 3 7/8% senior notes due 2031 (Ba2/BB/BB+) were under pressure in heavy volume after the company announced a $4 billion leveraged buyout of Mattress Firm.

Sinclair Television Group Inc.’s senior notes were the largest losers of Tuesday’s session after reporting earnings the previous week.

Euro deals price

With the dollar-denominated new issue market remaining dormant on Tuesday, a pair of euro issuers completed deals.

In a quick-to-market trade Crown European Holdings priced an upsized €500 million issue (from €400 million) of five-year senior bullet notes (Ba1/BB+) at par to yield 5%, at the tight end of talk.

And upon completion of a roadshow Centurion Bidco SpA, the parent of Italian software and technology supplier Engineering Group, priced a €385 million issue of five-year senior secured notes (B2/B-/B+) at par to yield 11 1/8%,12.5 basis points inside of talk.

Two dollar deals remain on the active calendar as expected business for the May 8 week.

Calderys Financing is marketing a $550 million offering of five-year senior secured notes (B2).

Early guidance was given in the high-10% to 11% area.

A sellside source said that the bridge repayment deal – bridge debt incurred in connection with the acquisitions and combination of the high-temperature solutions business of Imerys SA, now doing business as Calderys, and HarbisonWalker International, by Platinum Equity – is a work in progress.

Also, Aventiv Technologies remains in the market with a $400 million offering of four-year first-lien senior secured notes (B3/B).

Ball holds premium

Ball’s new 6% senior notes due 2031 held on to the nominal premium made after breaking for trade despite a soft day for the broader market.

The 6% notes continued to trade in the par ¼ to par ¾ context, a level reached the previous session.

There was $55 million in reported volume.

The deal priced tight to the BB index.

However, Ball is a strong credit and a potential rising star, a source said.

Ball priced a $1 billion issue of the 6% notes at par in Monday drive-by.

The yield printed in the middle of yield talk in the 6% area.

The deal came with investment-grade-style covenants.

Northern Oil and Gas flat

Northern Oil and Gas’ 8¾% senior notes due 2031 remained wrapped around their discounted issue price in heavy volume on Tuesday.

The 8¾% notes traded in the 98¼ to 98¾ context throughout the session and closed the day at 98½, a source said.

Northern Oil and Gas priced an upsized $500 million, from $450 million, issue of the 8¾% notes at 98.568 to yield 9% in a Monday drive-by.

The yield printed at the tight end of the 9% to 9¼% yield talk.

Tempur Sealy under pressure

Tempur Sealy’s 3 7/8% senior notes due 2031 were under pressure on Tuesday after the company announced a $4 billion leveraged buyout of specialty mattress retailer Mattress Firm.

The 3 7/8% notes fell 1½ points to close the day at 80¼.

The yield rose to 7%.

There was $20 million in reported volume.

The notes were lower after the company announced it would acquire Mattress Firm in a cash and stock transaction valued at $4 billion.

Tempur Sealy is planning new secured and unsecured debt to finance the transaction, Prospect News reported.

S&P Global Ratings placed Tempur Sealy’s credit rating on watch with negative implications due to the company’s increased leverage as a result of the transaction.

Sinclair drops

Sinclair’s senior notes were under pressure on Tuesday with the notes the largest losers in the space.

The television broadcaster’s 4 1/8% senior secured notes due 2030 (Ba2/BB-) sank 3¾ points to close the day at 68¼, a source said.

The yield rose to 10¼%.

There was $11 million in reported volume.

Tuesday’s price drop was the largest single day decline for the notes in their history, a source said.

Sinclair’s 5½% senior notes due 2030 (B2/B-) sank 3 points to close at 63¾% with the yield 13 7/8%.

There was $6.5 million in reported volume.

Sinclair reported earnings the previous week with revenue forecasts missing estimates.

The notes may also have a heavy short with hedge funds leaning in on them on Tuesday, a source said.

Fund flows

High-yield ETFs sustained $111 million of daily cash outflows on Monday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds were positive on the day, posting $46 million of inflows on Monday, the source said.

The combined funds are tracking $326 million of net outflows on the week that will conclude with Wednesday’s close, according to the market source.

Indexes

The KDP High Yield Daily index was down 9 points to close Tuesday at 50.6 with the yield 7.31%.

The index fell 10 points on Monday.

The ICE BofAML US High Yield index was down 13.4 bps with the year-to-date return now 4.054%.

The index was off 7.9 bps on Monday.

The CDX High Yield 30 index was off 23 bps to close Tuesday at 99.98.

The index was down 9 bps on Monday.

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