Morning Commentary: Busy pre-Easter calendar continues to build; new Cequel 7½% notes trading well

By Paul A. Harris

Portland, Ore., March 26 – An already busy pre-Easter deal calendar took aboard more passengers early Monday, as three deals were announced.

GCP Applied Technologies Inc. is expected to price a $350 million offering of eight-year senior notes (expected ratings B1/BB-) in a Monday drive-by.

Initial talk has the deal coming to yield 5½% to 5¾%.

BofA Merrill Lynch is the lead.

The Cambridge, Mass.-based provider of construction products technologies came to market to pay off all $525 million of its 9½% senior notes due 2023.

There were also a pair of roadshow deals announced.

Charles River Laboratories International Inc. plans to price $500 million of eight-year senior notes (expected ratings B1/BB+) on Wednesday.

Initial guidance has the deal coming to yield 5½% to 5¾%, a trader said.

J.P. Morgan Securities LLC is the lead.

The Wilmington, Mass-based company plans to use the proceeds to help fund its acquisition of MPI Research.

And W/S Packaging Holdings is heard to be in the market with $250 million of five-year notes (expected ratings B3/B).

The deal, which is coming with early guidance of 8¾% to 9%, is expected to price on Wednesday.

BofA Merrill Lynch is the lead.

New Cequel trading well

In the secondary market, the new Cequel Communications Holdings I, LLC 7½% senior notes due April 2028 (Caa1/B) were turning in a strong secondary market performance at 101¾ bid, 102¼ offered on Monday morning, a trader said.

The new Cequel 10-year paper came at par in a $1.05 billion issue priced amid last week's turbulence in the global capital markets in a deal said to be almost two-times oversubscribed, the trader remarked, adding that investors sought and received a pricing concession to those rugged market conditions.

Elsewhere, bonds of USG Corp. were up half a point on news that its board unanimously rejected a bid from Knauf Entities to acquire USG's stock.

The USG 4 7/8% senior notes due June 2027 were 99 bid on Monday at mid-morning.

The company's biggest shareholder, Berkshire Hathaway Inc., earlier said it proposed to allow Knauf to purchase all of Berkshire's USG shares at a 25% premium to Friday's closing price.

Friday outflows

The daily cash flows of the dedicated high-yield bond funds were negative on Friday, a trader said.

High-yield ETFs sustained $414 million of outflow on the day.

Actively managed funds saw $105 million of outflows on Friday.

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