Morning Commentary: Mercer International, American Greetings on tap; Tempur Sealy bonds dive

By Paul A. Harris

Portland, Ore., Jan. 30 – High-yield bonds were trading flat at mid-morning, according to a New York-based bond trader.

Against a backdrop of lower equities, high-yield ETFs were lower.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was down 0.24%, or 21 cents, at $87.41 per share.

The SPDR Barclays High Yield Bond ETF (JNK), at $36.90 per share, was down a dime, or 0.27%.

The bonds of Tempur Sealy International, Inc. were down 5 points on a company announcement that agreements between two subsidiaries of Tempur Sealy and a subsidiary of Mattress Firm Holdings Corp., Tempur Sealy's largest customer, have been terminated for all product lines.

In an 8-K document filed with the Securities and Exchange Commission, Tempur Sealy stated that it is evaluating the anticipated impact, and no assurances can be made that the termination will not have a material adverse impact on net sales, profitability or financial position.

The Tempur Sealy 5½% senior notes due 2026 were 96½ bid, 97 offered, down 5 points at mid-morning, the trader said.

Among some recent issues it was a brighter picture on Monday morning.

The new Trinidad Drilling Ltd. 6 5/8% senior notes due Feb. 15, 2025 (Caa1/BB-) were 102½ bid on Monday.

The $350 million issue priced at par on Friday in a deal that was said to be substantially oversubscribed.

And the new Jacobs Entertainment, Inc. 7 7/8% second-lien senior secured notes due Feb. 1, 2024 (B2/B) were doing well at 102½ bid, 103¼ offered on Monday.

The $350 million priced at par on Friday.

Primary market

In the primary market two new deal announcements surfaced on Monday morning.

Mercer International Inc. plans to price a $225 million offering of seven-year senior notes on Tuesday.

The deal was scheduled to kick off on a mid-morning investor conference call on Monday.

Credit Suisse, Barclays and RBC are the joint bookrunners for the debt refinancing deal.

And in another debt refinancing, American Greetings Corp. started a roadshow on Monday for a $375 million offering of eight-year senior notes.

That deal is expected to price on Thursday.

BofA Merrill Lynch is the lead.

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