Blackboard taps junk market; Wesco coming next week; new issues soft; Tupperware loses

By Cristal Cody and James McCandless

Tupelo, Miss., Nov. 1 – The week ended on a relatively quiet note in the high-yield market, as one expected new issue priced and one stayed on the calendar for next week when $4 to $5 billion of new supply is expected.

Blackboard Inc.’s new issue for $250 million brought the week-to-date high-yield volume to $4.75 billion.

Wesco Aircraft Holdings, Inc. is continuing its roadshow into next week for a $1,575,000,000 deal that will come in two parts.

In the secondary sphere, recent notes from TransDigm Inc., Charter Communications, Inc. and Netflix, Inc. were in focus.

Elsewhere, Tupperware Brands Corp.’s paper was seen losing in the wake of its third-quarter earnings release.

Fund inflows were subdued at $300 million for the week.

And, the high-yield indexes ended Friday better after a week with some declines.

Blackboard upsizes

Blackboard Inc. tapped the junk bond market Friday with an upsized $250 million of 10 3/8% five-year second-lien notes (Caa2/CCC) that came in line with talk in a Rule 144A and Regulation S for life deal on Friday, according to market sources.

The notes priced at 97½ to yield 11.035%.

Price talk had the bonds coming with a coupon in the low 10% original issue discount area and an 11%-handle yield.

The deal was upsized from $243 million.

BofA Securities Inc. was the bookrunner.

Wesco holds to next week

Also on Friday, Wesco Aircraft Holdings, Inc. continued a roadshow for new notes expected to print next week, sources report.

The $1,575,000,000 deal includes $1 billion of seven-year senior secured notes (B3/B) and $575 million of eight-year senior unsecured notes (Caa2/CCC+). Early guidance on the seven-year notes is in the high 7% area. Talk on the eight-year senior unsecured notes is in the 350-basis points area behind the secured notes.

November supply

A number of companies remain in earnings blackout reporting periods, but about $4 billion to $5 billion of new junk supply is anticipated in the upcoming week, according to a market source.

“It feels like there could be a good amount of opportunistic issuance from some of the better-liked higher-rated credits,” one source said. “Some of the lower-rated stuff hasn’t been going as well.”

The high-yield primary market saw $20 billion of issuance in October, and a similar pace is expected in November with $17 billion of supply forecast, according to a BofA Merrill Lynch research note on Friday.

Until Blackboard’s offering, the high-yield primary market quieted following the Federal Reserve’s third rate cut of the year on Wednesday.

The junk bond market entered the week little changed but “things have started to unravel following the FOMC decision,” according to the BofA Merrill Lynch note. The iShares iBoxx $ High Yield Corporate Bond ETF “slumped 3/4s of [a] point in the 24 [hours] following the event, retracing two weeks of improving prices. HY spreads bounced 10 bps off their recent tights in the 380s on [Wednesday] and were bound to add even more on [Thursday].”

The Federal Reserve trimmed rates by 25 bps following the monetary policy meeting.

BBA and TransDigm are soft

This week’s deals “were a little soft,” a market source said.

New paper from BBA Aviation plc and TransDigm Inc. both traded under par on Friday.

BBA Aviation sold $650 million of 8.25-year senior notes (Ba2/BB) at par to yield 4% on Tuesday.

TransDigm priced an upsized $2.65 billion issue of eight-year senior subordinated notes (B3/B-) at par to yield 5½% in a Tuesday drive-by.

The new 5½% senior subordinated notes due 2027 rose ¼ point on Friday to close at 100 bid.

The notes saw about $27 million trading by the end of the session.

Charter and Netflix above par

Stamford, Conn.-based broadband communications company Charter’s 4.8% senior secured notes due 2050 gained ½ point to close at 103 bid.

The $1.5 billion deal priced on Oct. 15.

Los Gatos, Calif.-based media services company Netflix’s recent 4 7/8% senior paper due 2030 declined ¼ point to close at 101¼ bid.

Tupperware loses

Elsewhere, Tupperware’s issues were seen losing throughout the day, traders said.

The 4¾% senior notes due 2021 dropped 1½ points to close at 100 bid.

On Wednesday morning, the Orlando, Fla.-based consumer goods producer released its third-quarter results.

The company reported a profit of 43 cents per share, weaker than what analysts had predicted at 62 cents per share.

Sales were lackluster at $418.1 million.

Fund flows

Meanwhile, high-yield funds inflows slowed to $300 million for the week, mostly due to a $650 million outflow on Wednesday, the note said.

The broader high-yield index sold off heavily on Thursday but recovered on Friday, especially in the BB part of the market, a market source said.

Indexes gain

Three high-yield indexes ended the week on better footing.

The KDP High Yield Daily index improved by 21 basis points on Friday, capping the week at 71.17 with the yield rising to 5.5%.

The index dropped 24 bps on Thursday, dived 17 bps on Wednesday and tacked on 2 bps on Tuesday.

In the aggregate, the index lost 15 bps this week.

The ICE BofAML US High Yield index gained 13 bps with the year-to-date return now at 11.912%.

The index dipped 18.9 bps on Thursday, declined by 13.2 bps on Wednesday and shed 1.2 bps on Tuesday.

The CDX High Yield 30 index moved upward by 33 bps to 107.5515.

The index shaved off 33.81 bps on Thursday, fell 33.33 bps on Wednesday and dropped 33.23 bps on Tuesday.

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