Springleaf/OneMain, Dana price; Silgan, MSCI trade tight; Chesapeake down; McDermott losses mount

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 5 – A couple of on-the-run issuers came with drive-by deals, as the news flow in the new issue market remained strong and steady on Tuesday.

Both issuers came away with 5 3/8% prints.

Springleaf Finance Corp., a subsidiary of OneMain Financial Holdings, Inc., priced an upsized $750 million 10-year senior bullet (Ba3/BB-/BB+).

And Dana Inc. priced a $300 million issue of eight-year senior notes (B2/BB-/BB+).

Wednesday also promises to be a busy session with Dublin-based packaging firm Ardagh’s $2.22 billion equivalent offering on deck.

Meanwhile, the secondary space was largely flat with the market awaiting further news on a potential U.S.-China trade deal.

Silgan Holdings, Inc.’s recently priced 4 1/8% senior notes due 2028 (Ba3/BB-) and MSCI Inc.’s 4% senior notes due 2029 (expected ratings Ba2/BB+) were major volume movers in the secondary space with the new paper trading in a tight range.

While crude oil futures continued to tick up, Chesapeake Energy Corp.’s junk bonds traded off following an earnings miss, which erased the optimism that spurred the notes higher in the previous session.

McDermott International, Inc.’s 10 5/8% senior notes due 2024 continued to sink after the company missed the Nov. 1 coupon payment on the notes.

Uber Technologies, Inc.’s junk bonds were mixed following its earnings report with the 8% senior notes due 2026 down slightly and the 7½% senior notes due 2027 paring its losses from the previous session.

However, both tranches remained below par.

Drive-bys

Springleaf Finance Corp. priced an upsized $750 million 10-year senior bullet (Ba3/BB-/BB+) at par to yield 5 3/8%.

The issue size increased from $500 million.

The yield printed in the middle of yield talk in the 5 3/8% area. Initial guidance was in the mid-to-high 5% area.

And Dana Inc. priced a $300 million issue of eight-year senior notes (B2/BB-/BB+) at par to yield 5 3/8%.

The yield printed at the tight end of yield talk in the 5½% area, and tight to initial guidance in the mid-to-high 5% area.

Dana’s new 5 3/8% notes were trading at a premium to their issue price after breaking for trade. The notes were seen at par ¼ bid, par ¾ offered in the late afternoon, according to a market source.

European names

Another on-the-run issuer, Dublin-based packaging firm Ardagh is on deck to price $2,215,000,000 equivalent of ARD Finance SA senior secured toggle notes due June 30, 2027 (expected ratings Caa2/B-) in two tranches on Wednesday.

On Tuesday dealers set talk for a $1 billion minimum tranche in the 6¾% area.

Official talk comes inside of initial guidance in the 7% area.

Tranche size and talk on a euro-denominated tranche of the notes are due early Wednesday morning.

Elsewhere Quatrim, a wholly owned subsidiary of French supermarket operator Casino, Guichard-Perrachon, circulated initial talk on a €750 million offering of 4.25-year secured notes in the mid 6% area.

Zurich-based Peach Property Group is in the market with a €250 million offering of non-callable 3.25-year senior notes.

And Owens-Illinois Group, Inc. is heard to be shopping €300 million of OI European Group BV senior notes due 2025.

New paper

New paper was in focus on Tuesday with the deals to price during the previous session changing hands in a tight range.

While above par, the new paper had little room for improvement given the tight pricing of the notes, sources said.

Double B credits coming to market with coupons in the low 4% area were “ridiculous,” a market source said.

However, with the Federal Reserve slashing interest rates and junk bond returns in the double digits, the tight pricing was a growing trend, another source said.

MSCI’s 4% senior notes due 2029 were changing hands in the par ¼, par ¾ context and stood poised to close the day at par 5/8, sources said.

The bonds saw more than $77 million in reported volume.

MSCI priced $500 million of the 4% notes at par in a Monday drive-by.

Pricing came at the tight end of talk for a yield of 4% to 4 1/8%, which was revised from earlier talk in the 4¼% area.

Initial guidance was 4½% to 4¾%.

The deal was multiple-times oversubscribed, a source said.

Silgan’s 4 1/8% senior notes due 2028 were likewise trading in the par ¼ to par ¾ context and stood poised to close the day at par 5/8, according to a market source.

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

Silgan priced an upsized $400 million issue of the 4 1/8% notes at par in a Monday drive-by.

The yield printed at the tight end of yield talk in the 4¼% area. The issue size increased from $300 million.

Chesapeake Energy drops

Chesapeake Energy’s junk bonds traded off in high volume activity on Tuesday following an earnings miss.

The 8% senior notes due 2025 dropped almost 6 points to close the day at 64.

The notes gave back their gains from Monday’s session when they rose 3 points on a strong day for the oil patch.

The 8% senior notes due 2027 traded off almost 7 points to close the day at 60¼. The notes saw more than $37 million in reported volume by the late afternoon.

The notes also rose about 3 points during Monday’s session.

While the energy sector has produced better than expected third-quarter earnings from the likes of California Resources Corp. and Antero Resources Corp., Chesapeake Energy fell short of expectations.

The company reported EBITDA of $570 million versus expectations for EBITDA of $588 million, according to a market source.

McDermott down again

McDermott’s 10 5/8% senior notes due 2026 continued to tumble in high-volume activity on Tuesday.

The notes traded off another 1 to 2 points and stood poised to close the day at 11¾, sources said.

The notes have been on a downward spiral since mid-September when they plunged into the 20s from their previous level of 70.

The 10 5/8% notes returned to focus the past few sessions after the company missed the Nov. 1 coupon payment on the notes, according to a market source.

In addition, McDermott reported dismal third-quarter earnings.

The multinational engineering, procurement, construction and installation company reported a third-quarter loss of $1.9 billion and the resignation of its chief financial officer after the market close on Monday.

Uber below par

Uber’s two tranches of senior notes were mixed following its third-quarter earnings report.

The 8% senior notes due 2026 were down slightly to close Tuesday’s session at 99 7/8 with more than $32 million in reported volume, according to a market source.

The 7½% senior notes due 2027 pared their losses from the previous session.

They gained about ½ point to close the day at 98 with more than $26 million in reported volume.

The 7½% notes dropped a little more than 1 point during Monday’s session.

While mixed on Tuesday, both issues closed the day below par after ending October above par. The notes have steadily traded down in the run up to the ridesharing company’s earnings report.

While Uber’s third quarter earnings beat estimates, the company reported a quarterly loss of $1 billion with profit not expected until 2021, CNBC reported.

Monday inflows

The daily cash flows of the dedicated high-yield bond funds were positive on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $47 million of inflows on the day.

Actively managed high-yield funds saw $100 million of inflows on Monday, the source said.

Indexes

Indexes were flat to down slightly on Tuesday after starting the week on strong footing.

The KDP High Yield Daily index dropped 1 basis point to 71.3 with the yield 5.37%. The index was up 14 bps on Monday.

The ICE BofAML US High Yield index slipped 6.4 bps to 12.117%. The index was up 5.8 bps on Monday.

The CDX High Yield 30 index was down 1 bp to close Tuesday at 107.7. The index gained 37 bps on Monday.

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