Altice, Transocean price; Range Resources on deck; Tegna, WPX, Nabors, M/I Homes at a premium

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 8 – The high-yield primary market continued at an active pace on Wednesday with two deals pricing and one more joining the forward calendar.

In a deal that accelerated its timing, Altice Financing SA raised €1.7 billion and $1.2 billion in three tranches of secured notes (B2/B).

Transocean Ltd. priced $750 million of seven-year senior priority guaranteed unsecured notes (existing ratings Caa1/B-) in a Wednesday drive-by.

The forward calendar also grew with Range Resources Corp. expected to price a $500 million offering of six-year senior notes (existing ratings B1/BB) on Thursday, according to market sources.

Meanwhile, the new paper was in focus in the secondary space with the issues to price during Tuesday’s session performing well.

Nabors Industries Ltd.’s two tranches of senior notes (Ba2/BB-/BB-), WPX Energy, Inc.’s 4½% senior notes due 2030 (B1/BB-/BB) and M/I Homes Inc.’s 4.95% senior notes due 2028 (B1/BB-) each gained more than 1 point in the aftermarket.

While Tegna Inc.’s 4 5/8% senior notes due 2028 (Ba3/BB) were trading at a premium to their issue price, they did not reach the same level as the other deals to have hit the secondary space on Tuesday.

Altice megadeal

In Wednesday's primary market Netherlands-based multi-national telecom Altice Financing SA raised €1.7 billion and $1.2 billion by means of placing three tranches of secured notes (B2/B).

The deal priced as follows:

• €600 million of five-year notes priced at par to yield 2¼%, at the tight end of the 2¼% to 2½% talk;

• €1.1 billion of eight-year notes priced at par to yield 3%, at the tight end of the 3% to 3¼% talk; and

• $1.2 billion of eight-year notes priced at par to yield 5%, at the tight end of the 5% to 5¼% talk.

Timing on the deal foreshortened; it was announced early Wednesday with the expectation that it would be in the market until Thursday.

The 5% notes saw a strong break and traded as high as 101.

However, they came in towards the market close and were changing hands in the par ½ to par ¾ context, a market source said.

Transocean drives-by

Transocean priced a $750 million issue of seven-year senior priority guaranteed unsecured notes (existing ratings Caa1/B-) at par to yield 8% in a Wednesday drive-by.

Pricing came tight to talk for a yield in the low 8% area.

Range Resources on tap

The forward calendar continued to grow on Wednesday with Range Resources announcing a $500 million offering of six-year senior notes.

The deal is expected to price on Thursday.

Initial talk has the notes coming to yield in the low 9% area, a trader said.

Nabors gains

Nabors Industries’ two tranches of senior notes continued to gain in active trading during Wednesday’s session after a strong break.

The 7¼% senior notes due 2026 and 7½% senior notes due 2028 were changing hands in the 101½ to 101¾ context during Wednesday’s session, a market source said.

The 7¼% senior notes saw more than $97 million in reported volume by the late afternoon; the 7½% notes saw more than $64 million in reported volume.

The notes were trading in the par ½ to 101½ context after breaking for trade on Tuesday.

In a deal that was heavily oversubscribed, Nabors priced a $600 million issue of the 7¼% notes and a $400 million issue of the 7½% notes at par on Tuesday.

The 7¼% notes priced at the tight end of the 7¼% to 7½% yield talk and was heard to be playing to $1 billion in orders.

The 7½% notes priced at the tight end of the 7½% to 7¾% yield talk and was heard to be playing to $750 million in orders, sources said.

The overall size of the deal was upsized to $1 billion from the initial size of $800 million.

WPX Energy up

WPX Energy’s 4½% senior notes due 2030 were also trading well above their issue price in the secondary space.

The 4½% notes were changing hands in the par ¾ to 101 context, although volume in the name was comparatively light, a market source said.

WPX Energy priced a $900 million issue of the 4½% notes at par in a Tuesday drive-by. The yield printed tighter than talk for a yield of 4 5/8% to 4¾%.

Initial talk was in the high 4% area to 5%.

The deal was restructured during bookbuilding with a proposed eight-year tranche withdrawn from the market and proceeds shifted to the 10-year tranche.

M/I Homes strong

M/I Homes 4.95% senior notes due 2028 were also trading at a large premium to their issue price during Wednesday’s session. The notes traded up to 101½ bid, 101¾ offered, a market source said.

The bonds saw more than $20 million in reported volume by the late afternoon.

The deal from the Columbus, Ohio-based home builder was the only deal to price during Tuesday’s session that did not come from the energy sector.

It was heard to be heavily oversubscribed.

M/I Homes priced an upsized $400 million issue of the 4.95% notes at par in a Tuesday drive-by.

The deal printed tighter than talk for a yield in the low 5% area.

The issue size was upsized from $350 million and was heard to be playing to more than $700 million in orders.

Tegna at a premium

Tegna’s new 4 5/8% senior notes due 2028 were trading at a premium to their issue price in the secondary space.

However, the new paper’s performance lagged the other deals to price during Tuesday’s session.

The 4 5/8% notes were changing hands in the par 3/8 to par 5/8 context during Wednesday’s session, according to a market source.

While their performance lagged the other issues to price on Tuesday, the notes were among the most actively traded in the secondary space with more than $74 million in reported volume by the late afternoon.

Tegna priced a $1 billion issue of the 4 5/8% notes at par in a Tuesday drive-by.

The yield printed at the tight end of yield talk in the 4¾% area. Initial guidance was in the high 4% area.

Tegna’s 4 5/8% notes were trading at a similar level to their 5% notes due 2029 which were issued in September 2019.

The lack of movement in the 4 5/8% notes may have been due to the 5% notes with investors unwilling to pay much of a premium for the new paper with an outstanding issue with a similar structure and yield available, a source said.

$52 million Tuesday outflows

The dedicated high-yield bond funds sustained $52 million of net outflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

ETFs sustained $117 million of outflows on the day.

Actively managed high-yield funds saw $65 million of inflows on Tuesday, the source said.

With only Wednesday's fund flows figures remaining to factor into the totals for the present week, the combined funds are tracking $507 million of inflows in the week that concluded at Wednesday's close, the market source said.

Indexes mixed

Indexes were mixed on Wednesday as they have been for much of the week.

The KDP High Yield Daily index dropped 2 points to 71.89 with the yield 4.85%. The index was down 6 points on Tuesday and up 2 bps on Monday.

The ICE BofAML US High Yield index gained 3 bps with year-to-date returns now 0.351%. The index was up 6.5 bps on Tuesday and jumped 81 bps on Monday.

The CDX High Yield 30 index gained 12 bps to close Wednesday at 109.57. The index dropped 15 bps on Tuesday and rose 2 bps on Monday.

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