Ferrellgas, Nordstrom price; NCR skyrockets; Wynn Resorts, Ardagh trade up

By Paul A. Harris and Abigail W. Adams

Portland, Me. April 8 – The domestic high-yield primary market continued to churn out new deals with two new issues pricing during Wednesday’s session.

Ferrellgas, LP priced $575 million of five-year senior secured notes (B3/CCC), and Nordstrom Inc. priced an upsized $600 million issue of five-year senior secured notes (Baa2/BBB-).

While rated investment grade, Nordstrom priced off the high-yield desk. Both deals were playing to massive demand, sources said.

Meanwhile, it was another strong day for the secondary space with investors returning to risk assets.

New paper continued to dominate activity with the deals to price during Tuesday’s session putting in a strong secondary market performance.

NCR Corp.’s newly priced 8 1/8% senior notes due 2025 (B3/BB-) skyrocketed in high-volume activity.

Wynn Resorts’ 7¾% senior notes due 2025 (B1/BB-) started the day flat but finished strong as the market roared into the close.

Ardagh Packaging’s 5¼% senior notes due 2025 (B1/BB/BB+) were active following the pricing of an add-on.

Deals play to massive demand

Amid the strictures of coronavirus lock-down, the new issue market continued to operate on Wednesday, as massive demand continued to enable issuers to price deals through price talk, and far below early pricing indications.

Ferrellgas priced $575 million of five-year senior secured notes (B3/CCC) at par to yield 10%.

The yield printed at the tight end of the 10% to 10¼% yield talk. Early guidance was 10½% to 11%.

The deal was heard to be 10 times oversubscribed, according to a bond trader who spotted the new Ferrellgas 10% notes due 2025 at 104, late Wednesday afternoon.

High yield execution for Nordstrom

Seattle high-end department store company became the second investment-grade-rated company in a week to raise capital by means of pricing an issue of notes on the high-yield syndicate desk.

Nordstrom priced an upsized $600 million issue of five-year senior secured notes (Baa2/BBB-) at par to yield 8¾% in a drive-by.

The issue size increased from $500 million.

The yield came 25 basis points through the 9% to 9¼% yield talk.

The deal came with initial talk in the 10% area, according to a bond trader who said that it was heard to be playing to orders that were already six-times deal size, on Wednesday morning.

Nordstrom secured the notes with real estate valued at $1 billion to $1.1 billion (see related story in this issue).

Nordstrom joined Carnival Corp., which priced $4 billion of 11½% senior secured notes due April 2023 (Baa2/BBB-) in a high-yield execution on April 1.

NCR skyrockets

NCR’s 8 1/8% senior notes due 2025 skyrocketed in high-volume activity on Wednesday.

The notes traded in a range of 101 to 103¾ during the session with the final prints in the 103¼ to 103 3/8 context, a market source said.

The bonds saw more than $121 million in reported volume during Wednesday’s session.

NCR is from the information technology sector. “It’s a better quality credit with a high coupon,” a market source said.

The notes also have a short duration.

NCR priced a $400 million issue of the 8 1/8% notes at par in a Tuesday drive-by.

Pricing came tighter than talk for a yield in the 8½% area.

Wynn finishes strong

Wynn Resorts’ 7¾% senior notes due 2025 (B1/BB-) started the day flat but finished strong.

The notes were hovering around par early in the session but gained strength as the day progressed.

They were trading in the 101 to 101½ context heading into the market close, a source said.

The bonds saw more than $71 million in reported volume.

While the notes were trading with a premium, they did not achieve the same heights as NCR’s new notes, despite a better credit rating from Moody’s Investors Service.

The notes carried a lower coupon than NCR.

Wynn is also from the gaming and leisure sector, which has been badly battered by the coronavirus pandemic, a source.

Wynn priced an upsized $600 million issue of the 7¾% notes at par in a Tuesday drive-by.

The issue size increased from $350 million.

The yield printed tighter than yield talk in the 8% area.

Ardagh returns

Ardagh’s 5¼% senior notes due 2025 were active on Wednesday following the pricing of an add-on.

The 5¼% notes were trading well above the add-on’s reoffer price. However, they returned to their previous level prior to the add-on pricing.

The 5¼% notes were changing hands at 101 heading into Wednesday’s close with about $24 million in reported volume, according to a market source.

Less than one week after pricing the 5¼% notes, Ardagh returned to the primary market and priced a $200 million add-on.

The add-on priced at par in a Tuesday drive-by. The issue price came on top of price talk.

Ardagh priced a $500 million issue of the 5¼% notes at par on April 3.

$577 million Tuesday inflows

The dedicated high-yield bond funds saw $577 million of net inflows on Monday, according to a market source.

High-yield ETFs saw $602 million of inflows on the day.

However actively managed high-yield funds sustained $25 million of outflows on Tuesday, the source said.

With only Wednesday's fund flow numbers remaining to go into the tally the combined funds are tracking $1.47 billion of net inflows in the week to Wednesday's close, according to the market source.

Indexes gain again

Indexes continued their upward trajectory on Wednesday.

The KDP High Yield Daily index gained 28 bps to close Wednesday at 61.12 with the yield now 8.18%. The index was up 59 bps on Tuesday and 17 bps on Monday.

The ICE BofAML US High Yield index gained 28.2 bps with year-to-date returns now 13.5%. The index was up 112.4 bps on Tuesday and 32.9 bps on Monday.

The CDX High Yield 30 index gained 252 bps to close Wednesday at 95. The index was up 53 bps on Tuesday after jumping 283 bps on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.