Uniti Group drives by; Garda deal hits the road; calendar builds; overall market follows stocks higher

By Paul Deckelman and Paul A. Harris

New York, April 24 – The high-yield primary market opened the last trading week in April on Monday with one deal coming to market – a quickly shopped $200 million issue of 2024 notes from Uniti Group Inc., a communications infrastructure-oriented real estate investment trust. Those notes were quoted higher going home.

Besides that solitary pricing, the day saw an active roster of news developments in both the dollar- and the euro-denominated segments of the primary.

Syndicate sources said that Canadian business services provider Garda World Security Corp. began a roadshow for its $630 million eight-year note offering, while oil and natural gas exploration and production operator Covey Park Energy LLC likewise hit the road to market a $450 million eight-year bond deal.

Also out of the energy patch, Bill Barrett Corp. was heard to be shopping around $275 million of eight-year paper, with pricing on that transaction expected Tuesday.

Entertainment company Netflix, Inc. was meantime among several prospective issuers looking to do euro-denominated bond deals this week.

In the secondary arena, traders said that recently priced issues such as Friday’s new deals from Laureate Education, Inc., Clearwater Seafoods Inc. and Trilogy International Partners Inc. and Thursday’s deal from E.W. Scripps Co. all continued to firm on Monday.

However, they said that volume in those credits was very light; only Thursday’s Tempo Acquisition LLC offering saw any kind of appreciable turnover.

Overall, the market had a firm tone, following the lead of equities, which shot up in the wake of the first round of voting in the French presidential election.

Statistical market performance measures improved across the board on Monday, after having been mixed over the three previous sessions and lower all around the session before that. It was the first time that the indicators had all been up since April 3.

Uniti prices $200 million

During an active Monday session in the high-yield primary market Uniti Group Inc. priced a $200 million issue of 7 1/8% senior notes due Dec. 15, 2024 (Caa1/B-) at 100.5.

The reoffer price came at the rich end of the 100.25 to 100.5 price talk.

The sale renders a 7.013% yield to worst and a 7.037% yield to maturity.

Uniti Fiber Holdings Inc. and CSL Capital, LLC are the co-issuers.

The notes issued on Monday come under a separate Cusip number and will be mandatorily exchanged for add-on notes to the existing 7 1/8% senior notes due Dec. 15, 2024 upon Uniti Group's completion of its Southern Light acquisition.

The Citigroup-led deal came to market on Monday in order to provide financing for that acquisition.

Garda roadshow starts

Meanwhile the stage began being set for the final week of April to be a big one in the new issue market.

Garda World Security Corp. started a roadshow for a $630 million offering of eight-year senior notes (Caa2/CCC+/B-).

Global coordinator Citigroup is the left bookrunner. Global coordinator Barclays is a joint bookrunner.

The Montreal-based cash logistics and security solutions provider plans to use the proceeds from the sale of the new eight-year notes to refinance debt and for general corporate purposes including a dividend to fund a stock repurchase.

Covey Park Energy

Covey Park Energy LLC and Covey Park Energy Finance Corp. started a roadshow on Monday in New York for a $450 million offering of eight-year senior notes.

Goldman Sachs is the left bookrunner for the debt refinancing deal. Wells Fargo, Capital One, Deutsche Bank, BMO, Citigroup and BofA Merrill Lynch are joint bookrunners.

Bill Barrett whispers 8½% area

Bill Barrett Corp. plans to price a $275 million offering of eight-year senior notes (Caa3/CCC) on Tuesday.

The debt refinancing deal, being led by BofA Merrill Lynch, is being whispered in the 8½% area.

Netflix €1 billion 10-year bullet

Meanwhile in Europe there is a substantial deal pipeline stretching through the month of May, a London-based debt capital markets banker said on Monday.

With the results from Sunday's round one election in France indicating that a pro-European Union presidential candidate, centrist Emmanuel Macron, likely to come out on top in the round two election on May 7, the track ahead appears to be lined with green lights, the banker said.

Netflix, Inc. plans to price €1 billion of non-callable 10-year senior notes in the middle part of the present week.

Morgan Stanley, JP Morgan, Goldman Sachs and Deutsche Bank are managing the deal.

The Los Gatos, Calif.-based entertainment company plans to use the proceeds for general corporate purposes, which may include content acquisitions, capital expenditures, investments, working capital and potential acquisitions and strategic transactions.

Travelex five-year secured

Travelex Holdings Ltd. expects to price a €360 million offering of five-year senior secured notes on Thursday.

JP Morgan has the books for the debt refinancing deal.

Atalian offer €600 million

La Financiere Atalian SA announced in a Monday press release that it plans to make a Rule 144A and Regulation S offer of €600 million senior notes due 2024.

The Paris-based provider of outsourced building services plans to use the proceeds to take out its 7¼% senior notes due 2020, pay off existing bilateral agreements and for general corporate purposes including acquisitions.

Mixed Friday flows

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

High yield ETFs saw $47 million of inflows on the day.

However actively managed funds sustained a hefty $455 million of outflows on the day.

Meanwhile the flows of the dedicated bank loan funds remained robust at positive $470 million on Friday, the trader said.

Uniti issue seen firmer

In the aftermarket, a trader said that the new Uniti Group 7 1/8% notes due in December of 2024 were finishing the day in a 100 7/8 to 101 bid context.

That was up from the 100.5 level at which that paper had been priced by Uniti – the Little Rock, Ark.-based communications infrastructure-focused REIT formerly known as Communications Sales & Leasing, Inc. since its 2015 spinoff from high yield telecommunications company Windstream Holdings, Inc.

Friday deals lightly traded

A trader said that there was “not much activity” in recently priced new junk bond issues, although what action there was added to those credits’ initial aftermarket gains.

Friday’s new deal from Laureate Education, for instance, gained ¾ point on the day, a market source said, with hose 8¼% notes due 2025 ending at 102 bid.

But volume on the Baltimore-based global for-profit college operator’s $800 million forward calendar issue dwindled to around $7 million on Monday, just a fraction of the more than $35 million which traded on Friday after those bonds had priced at par.

The market source saw only around $4 million of Clearwater Seafoods’ 6 7/8% notes due 2025 having changed hands on Monday, with the paper ending up 7/8 point at 103 bid.

The Bedford, Nova Scotia-based seafood harvester, processor and distributor had priced its regularly scheduled $250 million offering at par, and they had jumped to above the 102 bid level in initial aftermarket dealings of more than $32 million.

The new Trilogy International Partners’ 8 7/8% senior secured notes due 2022 – which priced too late in the session on Friday for any real aftermarket activity at that time – began trading on Monday, seen at 101¾ bid on the break and firming to 102 bid near the end of the day, on volume of around $7 million.

The Bellevue, Wash.-based wireless communications company priced its $350 million forward calendar offering at 99.506 on Friday.

Going back a little further, there likewise was not much activity in the paper priced during Thursday’s $2.1 billion primary session.

Cincinnati-based broadcaster E.W. Scripps Co.’s 5 1/8% notes due 2025 were seen finishing up 7/8 point on Monday at 102 3/8 bid, though on only $9 million of turnover, versus the more than $74 million traded on Friday, when the bonds gained 3/8 point on the day.

The $400 million regularly scheduled issue had priced at par on Thursday, gaining more than a point in initial trading.

The most active issue among the recently priced deals was Tempo Acquisition LLC’s 6¾% notes due 2025; they gained 1 full point on Monday to finish at 102½ bid, on relatively busy volume of over $13 million.

The company – a financing vehicle for Blackstone Group’s acquisition of technology assets from insurer Aon plc – priced a $500 million forward calendar offering at par on Thursday, after the deal was downsized from $730 million originally. The bonds had moved up beyond the 101 bid level in Friday’s dealings.

Indicators turn higher

Statistical market performance measures improved across the board on Monday, after having been mixed over the three previous sessions and lower all around the session before that. It was the first time that the indicators had all been up since April 3.

The KDP High Yield Daily index rose by 9 basis points on Monday to end at 71.96, its second consecutive gain after seven losses in a row before that. On Friday, it had moved up by 3 bps.

Its yield came in by 4 bps on Monday to 5.22% on top of Friday’s 1 bp tightening, which had been its first narrowing after having been unchanged on Thursday and having widened over the two sessions before that.

The Markit CDX Series 28 index firmed by more than ½ point on Monday to close at 107 5/16 bid, 107 3/8 offered, in contrast to Friday, when it had finished marginally lower from Thursday’s closing level.

And the Merrill Lynch North American High Yield index advanced by 0.255% on Monday, its fourth gain in a row. On Friday, it had improved by 0.065%.

Monday’s upturn lifted the index’s year-to-date return to 3.438% from 3.175% on Friday.

That set a new high point for the year to date, surpassing the previous 2017 zenith of 3.19%, set on March 1.

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