Weatherford upsizes in HY sector; risk-on in secondary; Iliad gains continue; Altice breaks par

By Paul A. Harris and Abigail W. Adams

Portland, Me., Oct. 14 – A busy Thursday session saw five issuers raise a total of $3.7 billion with single-tranche issues that had been marketed by means of roadshows.

Executions were good, with three of the five tranches coming at the tight ends of talk, one in the middle of talk and one at the wide end.

Weatherford International Ltd. brought the day’s largest sale.

Meanwhile, it was risk-on in the secondary space as positive earnings and a declining 10-year Treasury yield emboldened market bulls.

The cash bond market was up ½ to 5/8 points with several rate-sensitive names that had been under pressure markedly improved as the 10-year Treasury yield slid to 1.52% at the market close, sources said.

Iliad Holdings SAS’ dollar-denominated senior secured notes (B2/B+) were in focus in the secondary space with the notes continuing to gain after a strong break.

Medline Industries, LP’s two tranches of senior notes returned to focus in the secondary space with both improved.

The 3 7/8% senior secured notes due 2029 (B1/B+/BB-) broke par for the first time in nearly two weeks with the notes lifted alongside other rate-sensitive issues.

Altice France SA’s 5½% senior secured notes due 2029 (B2/B) were also on the rise with the notes breaking par for the first time since hitting the secondary space.

Thursday business

Only one issue upsized on Thursday in the primary market, and it happened to be the session's biggest.

Weatherford International Ltd. priced an upsized $1.6 billion issue (from $1.5 billion) of 8.5-year senior notes (B3/CCC+) at par, at the tight end of talk.

Demand was heard to be around $2 billion at the opening of Thursday's session, a bond trader said.

After pricing late Thursday the bonds broke to 101 bid, 101½ offered, implying that there was decent demand for the paper, another trader remarked.

Friday figures to be an active session in the new issue market, with dollar-denominated notes expected from at least three issuers.

Most conspicuous is Sonic Automotive, Inc. with $1 billion of senior notes (B1/BB-/BB) in two $500 million tranches.

Pending official talk, a tranche of eight-year notes has been whispered in the high-4% to 5% area, while a tranche of 10-year notes is expected to come 25 basis points behind the eight-year notes.

Iliad gains

Iliad Holdings' dollar-denominated notes were in focus in the secondary space with the notes continuing to gain after a strong break.

The 6½% senior secured notes due 2026 rose 5/8 point. They were changing hands in the 102 5/8 to 103 3/8 context throughout Thursday’s session.

The 7% senior secured notes due 2028 jumped more than 1 point and were changing hands in the 103¼ to 104¼ context on Thursday.

Both tranches saw more than $40 million in reported volume.

While the deal struggled during bookbuilding, the notes skyrocketed in the aftermarket, hitting a 102-handle shortly after breaking for trade.

Yield-hungry investors were chasing the secured paper for their large coupon, a source said.

Iliad priced a $900 million tranche of the 7% notes and a $1.2 billion tranche of the 6½% notes at par on Wednesday as part of a €3.7 billion equivalent four-tranche offering.

The 6½% notes printed in the middle of yield talk in the 6½% area; the 7% notes printed in the middle of yield talk in the 7% area.

Medline improves

Medline’s two tranches of senior notes returned to focus on Thursday with both improved alongside the broader market.

Medline’s 3 7/8% senior secured notes due 2029 (B1/B+/BB-) rose ½ point to break par for the first time in nearly two weeks.

The 3 7/8% notes traded in a range of 99 5/8 to par 1/8 during Thursday’s session with the notes changing hands in the par to par 1/8 context heading into the close, a source said.

There was $38 million in reported volume.

Medline’s 5¼% senior notes due 2029 (Caa1/B-/B-) continued to outperform their rate-sensitive, low-coupon counterpart.

The 5¼% notes were up 5/8 point to 102.

There was $33 million in reported volume.

In the largest LBO financing deal since the global financial crisis, Medline priced a $4.5 billion tranche of the 3 7/8% notes and a $2.5 billion tranche of the 5¼% notes at par on Sept. 30.

While the 5¼% notes have largely traded on a 101-handle, the 3 7/8% notes have traded below par since Oct. 4, a source said.

Altice breaks par

Altice France’s 5½% senior secured notes due 2029 were lifted alongside the broader market with the notes breaking par for the first time since shortly after pricing.

The 5½% notes were trading in the par to par ½ context throughout Thursday’s session, a source said.

It is the first time the notes have traded above par since Sept. 27.

Altice France priced a $2 billion tranche of the 5½% notes at par on Sept. 24

Indexes

The KDP High Yield Daily index fell 4 points to close Thursday at 69.4. The index shaved off 1 point on Wednesday and 23 points on Tuesday.

The CDX High Yield 30 index gained 50 bps to close Thursday at 109.17. The index was up 16 bps on Wednesday after dropping 34 bps on Tuesday.

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