Solenis, Papa John’s on HY tap; Laredo active; TransDigm gains; Wesco Aircraft down again

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 7 – While no deals priced during Tuesday’s session, the domestic high-yield primary market returned to action with two deals joining the forward calendar.

Papa John's Pizza began a roadshow for its debut deal – a $400 million offering of eight-year senior notes.

Solenis, formerly Ashland Water Technologies, rolled out a $2.4 billion equivalent four-part offering with pricing expected during the Sept. 20 week.

Meanwhile, it was a quiet return in the secondary space from the Labor Day weekend with many accounts still out in celebration of the Jewish New Year.

While the market was soft on Tuesday with Covid concerns weighing on risk assets, volume in the space remained light.

Laredo Petroleum, Inc.’s 7¾% senior notes due July 2029 (B3/B) were active with the notes continuing their upward momentum after bottoming out in mid-August.

TransDigm Inc.’s senior notes were on the rise after the aerospace company dropped its takeover bid for Meggitt plc.

Wolverine Escrow’s junk bonds (Wesco Aircraft Holdings Inc.) were again down in active trading.

The primary

While the high-grade market went on a 23-deal Tuesday tear, just two issuers announced high-yield deals.

There were no drive-bys.

Pizza-maker Papa John's Pizza began a roadshow for its debut deal, $400 million of eight-year senior notes with initial guidance in the low 4% area, expected to price Thursday.

Meanwhile, Solenis, formerly Ashland Water Technologies, rolled out a $2.4 billion equivalent four-part offer expected to go into roadshow mode and price during the Sept. 20 week. An investor call is set to for Thursday (see related stories in this issue).

Although a week has already gone by, with $0.00 issuance to the Sept. 7 close, some market sources continued to forecast as much as $60 billion of September issuance, on Tuesday.

Pointing out that the market would have to crank out around $20 billion per week during the run-up to October, traders say that the $60 billion mark does not seem very likely, but add that $50 billion between Sept. 8 and Sept. 30 – 17 remaining market sessions including Yom Kippur on Sept. 16 – would be impressive.

That would involve an average daily issuance of nearly $3 billion.

Laredo active

Laredo Petroleum’s 7¾% senior notes due July 2029 were active during Tuesday’s session with the notes continuing their upward momentum after bottoming out in mid-August.

The 7¾% notes continued to trade in the 99 to 99½ context throughout Tuesday’s session, according to a market source.

There was about $16 million in reported volume.

The 7¾% notes climbed 4 points in thin trading the previous week to reach their current level.

The notes, which priced at par in July, traded down to an 88-handle in mid-August with crude oil futures under pressure.

However, the notes have rallied alongside the commodity.

While Laredo notes held on to their gains on Tuesday, crude oil futures were under pressure.

WTI crude oil settled at $68.35, a decrease of 94 cents or 1.36%, on Tuesday.

TransDigm gains

TransDigm’s junk bonds were on the rise in active trading on Tuesday after the aerospace manufacturer dropped a takeover bid for aerospace supplier Meggitt.

The 5½% senior notes due 2027 climbed about ½ point. They were changing hands in the 103 to 103½ context heading into the market close, according to a market source.

There was about $14 million in reported volume.

The aerospace manufacturer’s 4 5/8% senior notes due 2029 broke par for the first time since early August.

The notes were up about 1 3/8 points.

They were changing hands in the par to par ¼ context heading into the market close.

There was more than $12 million in reported volume.

In terms of the takeover bid, the company “could not conclude than an offer of 900 pence per Meggitt share would meet our longstanding goals for value creation and investor returns,” the company said in a press release.

TransDigm had been in a bidding war with Parker-Hannifin for Meggitt and offered Meggitt 100 pence more than Parker-Hannifin’s initial offer when the takeover bid was first announced in early August.

Wesco Aircraft down again

Wolverine Escrow’s junk bonds (Wesco Aircraft Holdings) were again trading off on Tuesday.

The 8½% senior notes due 2024 dropped 2¼ points to close the day at 88½.

There was about $10 million in reported volume.

While less active, the company’s 9% senior notes due 2026 dropped 1½ points to close the day at 88.

The notes sank about 5 points the previous week after the company, which now does business as Incora, announced disappointing earnings and the resignation of its chief financial officer.

Friday fund flows

Actively managed high-yield funds saw $105 million of daily inflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs, however, sustained $61 million of outflows on the day.

The combined funds are coming off $1.05 billion of net inflows for the week to the Sept. 1 close, their largest weekly inflow since early June, the market source said.

Indexes

The KDP High Yield Daily index gained 1 basis point to close Tuesday at 70.38. However, the yield was unchanged at 3.54%.

The index posted a cumulative gain of 32 bps on the week last week.

The CDX High Yield 30 index shaved off 16 bps to close Tuesday at 109.68.

The index was largely flat the previous week and posted a cumulative gain of 1 bp on the week.

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