WernerCo prices; Solenis struggles; Icahn losses deepen; junk funds add $1.4 billion

By Abigail W. Adams

Portland, Me., May 25 – The domestic high-yield primary market slowed its pace on Thursday with one deal clearing the calendar.

WernerCo subsidiaries Werner FinCo LP and Werner FinCo, Inc. priced a $400 million issue of five-year senior secured first-lien notes (Caa1/B-) at a discount.

The ‘clubby’ offering was not active after freeing for trade, although there was some scattered activity with the notes trading at a premium to their discounted issue price.

Meanwhile, it was an active day in the secondary space with the tone improved as blowout earnings from tech behemoths outweighed concern about the lack of progress in debt ceiling negotiations.

The cash bond market was either side of unchanged as the CDX index added 3/8 point, sources said.

New paper was in focus although the deluge of deals to price in the previous session were following different trajectories.

GGAM Finance Ltd.’s (Griffin Global Asset Management) newly minted tranches of senior notes were extremely quiet in secondary market activity with the notes wrapped around par, a source said.

Olympus Water US Holding Corp.’s (Solenis) new 9¾% senior secured notes due 2028 continued to struggle after a weak break.

While several recent deals have wallowed in the aftermarket with most trading on either side of par, Seagate HDD Cayman’s newly priced 8¼% senior notes due 2029 and 8½% senior notes due 2031 (Ba3/BB/BB+) were the exception.

The notes continued to add after a strong break with both tranches breaking above a 101-handle.

Outside of recent issues, Icahn Enterprises LP’s senior notes (Ba3/BB) again had heavy selling pressure as Icahn foe Bill Ackman supported Hindenburg Research’s short-seller report on the company.

Meanwhile, high-yield mutual and exchange-traded funds broke their string of outflows and added $1.399 billion in the week through Wednesday’s close.

WernerCo prices

WernerCo priced a $400 million issue of five-year senior secured first-lien notes (Caa1/B-) on Thursday at 99.067 with a coupon of 11½% for a yield of 11¾%, according to a market source.

Early guidance was for a yield in the 11¾% to 12% area.

The deal is a unique transaction for the primary market with the new notes announced alongside an exchange for any and all outstanding 8¾% senior notes due 2025 for new junior-lien senior secured notes due 2028.

The deal played to a close-knit group of investors with allocations to new money expected to be tight, a source said.

The deal was heard to be playing to $500 million of orders with 10 new accounts involved, a source said.

The new paper was relatively quiet after freeing for trade.

However, there was scattered activity with the notes wrapped around 99½.

Griffin flat

Griffin Global’s newly minted tranches of senior notes were extremely quiet in secondary market activity, a source said.

The 7¾% senior notes due 2026 and 8% senior notes due 2028 (BB-/BB) briefly dipped below par in intraday activity.

However, both tranches closed the day wrapped around par.

The lack of trading volume in the name may have been because the deal was “placed to perfection,” a source said.

The lack of price appreciation may also have enticed holders to continue to hold.

Griffin Global priced a $400 million tranche of the 7¾% senior notes and a $600 million tranche of the 8% notes at par on Wednesday.

Solenis struggles

Solenis’ new 9¾% senior secured notes due 2028 continued to struggle on Thursday after a weak break.

The 9¾% notes were marked at 99½ bid, par offered in early trade.

They were changing hands in the 99½ to 99¾ context heading into the market close.

The notes had a weak break and were trading below par soon after hitting the secondary space, a source said.

Solenis priced a $1.7 billion tranche of the 9¾% notes at par on Wednesday as part of a two-tranche $2.375 billion equivalent offering backing Solenis’ acquisition of Diversey Holdings Ltd.

Seagate adds

While several recent deals have struggled in the aftermarket, Seagate’s newly priced tranches were the exception.

The 8¼% senior notes due 2029 and 8½% senior notes due 2031 (Ba3/BB/BB+) continued to add after a strong break with both tranches breaking above a 101-handle.

The 8¼% and 8½% notes were both changing hands in the 101½ to 102 context in early trade.

They continued to climb as the session progressed with the notes closing the day in the 101¾ to 102¼ context, a source said.

Seagate is a well-known and well-liked name and the pricing was cheap with the notes coming well wide of the BB index, sources said.

Seagate priced a $500 million tranche of the 8¼% notes and a $500 million tranche of the 8½% notes at par on Wednesday.

Icahn loses again

Icahn Enterprises’ capital structure was again for sale after Icahn foe Bill Ackman supported Hindenburg Research’s short-seller report on the company.

Icahn’s senior notes fell ½ to 2 points after Ackman tweeted his support of the short-seller report.

Icahn’s short-duration 4¾% senior notes due Sept. 15, 2024 were the most active in the debt pile.

The notes were down 1 point to close the day at 92 with the yield about 11½%.

There was $38 million in reported volume.

The 5¼% senior notes due 2027 were down 1½ points to 79½ with the yield about 11 7/8%.

The 6 3/8% senior notes due 2025 sank 1¾ points to 86¾ with the yield about 12 5/8%.

Icahn Enterprises’ senior notes have tumbled more than 10 points since early May when Hindenburg Research released their report accusing the company of operating a Ponzi-esque scheme.

Icahn’s personal wealth was reportedly cut by $15 billion.

Indexes

The KDP High Yield Daily index fell 6 points to close Thursday at 49.98 with the yield 7.59%.

The index fell 24 points on Wednesday and 7 points on Tuesday after gaining 4 points on Monday.

The ICE BofAML US High Yield index was off 8.1 basis points with the year-to-date return now 3.333%.

The index fell 49.4 bps on Wednesday and 12 bps on Tuesday after gaining 23.9 bps on Monday.

The CDX High Yield 30 index gained 40 bps to close Thursday at 100.58.

The index fell 30 bps on Wednesday and 28 bps on Tuesday after gaining 49 bps on Monday.

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