Mattel, Carriage Services price, dominate trading; TMX on tap; JW Aluminum quiet; energy sector down

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 23 – The domestic primary market saw two deals price on Wednesday with three more deals set to price before the week draws to a close.

Mattel, Inc. priced a $500 million add-on to its 6¾% senior notes due Dec. 31, 2025 (B1/BB-/BB) at 96.25 to yield 7.403%.

Carriage Services, Inc. priced a $325 million issue of eight-year senior notes (B2/B) at par to yield 6 5/8%.

The new paper dominated trading activity in the secondary space with both notes seen above their issue price.

TMX Finance LLC, formerly known as TitleMax, talked its $450 million offering of five-year senior secured notes with pricing expected Thursday.

Tervita Corp.’s $250 million add-on to its 7 5/8% senior secured notes due Dec. 1, 2021 and Graham Holdings Co.’s offering of $400 million of eight-year notes are slated to price before the end of the week.

JW Aluminum Continuous Cast Co.’s new 10¼% senior notes due 2026 (B3/B-) were quiet in the secondary space with few accounts involved in the deal, market sources said.

Meanwhile, Freeport-McMoran Inc.’s 5.45% senior notes due 2043 (Ba2/BB-) were actively traded and made slight gains on Wednesday while other notes in the structure saw losses.

Junk bonds in the energy sector were off on Wednesday as the barrel price of West Texas intermediate crude oil for June delivery dropped about 70 cents in intra-day trading, a market source said.

California Resources Corp.’s 8% senior notes due 2022 were seen down 1¾ point early in the session but closed the day down about ½ point.

Mattel completes tap

Mattel priced a $500 million add-on to its 6¾% senior notes due Dec. 31, 2025 (B1/BB-/BB) at 96.25 to yield 7.403% on Wednesday.

The reoffer price came cheap to price talk in the 96.5 area and in the middle of early guidance in the 96.25 area.

BofA Merrill Lynch was the left bookrunner for the debt refinancing deal.

Carriage Services within talk

Carriage Services priced a $325 million issue of eight-year senior notes (B2/B) at par to yield 6 5/8%.

The yield printed in the middle of the 6½% to 6¾% yield talk and at the wide end of early guidance in the mid-6% area.

Goldman Sachs was the left bookrunner.

The Houston-based provider of death care services and products plans to use the proceeds to pay off its existing credit facility and for general corporate purposes, including acquisitions.

TitleMax talk 11% area

TMX Finance LLC, formerly known as TitleMax, talked its $450 million offering of five-year senior secured notes (S&P: B-) to yield in the 11% area.

Books close 11 a.m. ET Thursday and the refinancing deal, via sole bookrunner Jefferies, is set to price thereafter.

Also slated to price before the week comes to a close are Tervita Corp., with a $250 million add-on to its 7 5/8% senior secured notes due Dec. 1, 2021 (B2) whispered at par, and Graham Holdings with $400 million of eight-year notes (expected ratings B1/BB+) initially guided in the high 5% to 6% area.

Source Energy C$40 million tap

Source Energy Services Canada LP plans to price a C$40 million add-on to its 10½% senior secured first lien notes due Dec. 15, 2021 (S&P: B+/DBRS: B(high)) before the end of the May 21 week.

Price talk is expected on Thursday and the deal will possibly price on Thursday.

BMO and Scotia are the joint bookrunners.

The Calgary, Alta.-based company plans to use the proceeds to repay drawn amounts under its ABL facility which may be redrawn for general corporate purposes, as well as to fund working capital and capital expenditures.

Nordic deals

Two Nordic deals were announced Wednesday.

Oslo-based investment company Bulk Industrier AS announced in a Wednesday press release that it mandated Arctic Securities to arrange a series of meetings in the Nordic region with fixed income investors starting Friday.

A possible NOK-denominated four-year senior secured bond offer may follow, pending market conditions.

Bergen, Norway-based Marine Harvest mandated DNB Markets and Nordea as coordinators, along with Danske Bank, Rabobank and SEB to arrange a series of fixed income investor meetings starting Monday.

A euro-denominated five-year senior unsecured bond may follow, subject to market conditions.

Wednesday’s focus

Mattel’s 6¾% senior notes due 2025 and Carriage Services’ 6 5/8% senior notes due 2026 were in focus on Wednesday, dominating trading activity in the secondary space.

Mattel’s 6¾% notes due 2025 traded up to ¾ point above the $500 million add-on’s 96.25 issue price. The notes were seen trading between 96½ to 97 with about $43 million of the bonds traded during Wednesday’s session, sources said.

The 6¾% notes were under pressure in the run up to the pricing of the add-on, with the notes losing 2½ points over Monday and Tuesday to trade down to 96¾.

Carriage Services’ 6 5/8% notes were also trading ½ point to ¾ point above their issue price after breaking for trade.

The 6 5/8% notes were trading between par ½ to par ¾ with more than $37 million of the bonds traded by late afternoon, a market source said.

JW Aluminum quiet

While Wednesday’s deals were the focus of the secondary market, JW Aluminum’s recently priced 10¼% senior notes due 2026 saw little secondary trading activity, sources said.

The notes were quoted at par ¼ bid, 101¼ offered and were seen trading at par ½ early in the session, market sources said.

“There’s been no real trading,” a market source said.

Only about 500 of the bonds had traded during Wednesday’s session.

After a two-day delay, JW Aluminum priced a $285 million issue of eight-year senior secured notes (B3/B-) at par on Tuesday. The deal had been expected to price on May 18.

Pricing came at the wide end of the 10% to 10¼% yield talk, which had widened from early guidance in the mid-to-high 9% area.

The deal also underwent covenant changes prior to pricing.

JW Aluminum had previously tried to price a $300 million offering in February but pulled the deal.

Very few accounts were involved in the deal, sources said.

The name is not well liked and the deal was small, a market source said.

The buyers that became involved “are going to look at the situation and try to extract as much value as possible,” the source said.

Freeport-McMoran active

Freeport-McMoran’s 5.45% senior notes due 2043 were active on Wednesday after the Phoenix, Ariz.-based international mining company’s partner in the Grasberg copper mine in Indonesia announced plans to sell to its stake.

The 5.45% notes were up about ¼ point to trade at 90¼ with about $20 million of the bonds traded by late afternoon.

Freeport-McMoran’s junk bonds were mixed, however, with other notes in the structure posting losses. Freeport’s 4.55% senior notes due 2025 traded down ¼ point to 97¼.

Rio Tinto, Freeport’s partner in the Grasberg mine, announced that it is in discussions to sell its stake in the mine, which is valued at $3.5 billion, The Jakarta Post reported.

Rio Tinto is discussing the sale with the Indonesian state-owned mining holding company.

The sale would bring the Grasberg mine closer to compliance with a law that requires foreign mining companies to divest 51% of their ownership to Indonesian entities.

Freeport’s junk bonds took a hit in late April with the junk bond structure down 1.5 to 2.5 points after the company released disappointing first quarter earnings reports and announced issues with its mining operation in Indonesia.

Freeport announced late April that its current environmental management program is incompatible with new environmental requirements recently introduced in Indonesia.

Energy down

The energy sector in Junkbondland was off about ½ point on Wednesday as crude oil prices slid about 70 cents in intra-day trading, a market source said.

California Resources 8% senior notes due 2022 were seen at 90 bid, 91 offered early in the session, about a 1¾ point drop from Tuesday, according to a market source.

The 8% notes were seen at 91¾ bid, 92¾ offered on Tuesday.

The 8% notes closed Wednesday down about ½ point at 90½.

The price of crude dropped as much as 70 cents in intra-day trading but closed the day at $71.84, a 36 cents decrease.

Crude oil dropped on Wednesday on news that U.S. crude oil stockpiles were much higher than anticipated with inventories up 5.8 million barrels in mid-May when many had expected a decline, CNBC reported.

Indexes mixed

Three benchmarks for the high-yield secondary market were mixed on Wednesday after all posted gains on Tuesday.

The KDP High Yield index was down 4 basis points on Wednesday to 70.50. However, the yield remained flat at 5.87%.

The index lost most of its gains on Tuesday when it was up 5 bps to 70.54.

The Merrill Lynch High Yield index was down on Wednesday, erasing its gains from Monday and Tuesday. The index was down 9.4 bps on Wednesday with the negative year-to-date return now 0.278.

The index was up 4.7 bps on Tuesday and 2.1 bps on Monday.

The index has been in negative territory since May 15.

The CDX High Yield 30 index was the only index to see gains on Wednesday. However, the gains were minimal.

The index was up 0.5 bps to close Wednesday at 106.95.

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