Eight issuers sell $5.92 billion; Eldorado/Caesars megadeal on deck; recent issues up

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 17 – The domestic high-yield primary market saw a massive session on Wednesday with eight issuers pricing and the forward calendar ballooning.

Iron Mountain Inc., Virgin Media Secured Finance plc, Energizer Holdings, Inc., DCP Midstream Operating, LP, Scientific Games Corp., Viasat, Inc. and DPL Inc. all brought deals on Wednesday.

PG&E Corp.’s megadeal is expected to price on Thursday in addition to offerings from Abercrombie & Fitch Management Co. and Radio Systems Corp.

And details surfaced on the $6 billion in junk bonds that will help finance the Eldorado Resorts, Inc. acquisition of Caesars Entertainment Corp., which is expected to price on Friday.

Meanwhile, new issues dominated activity in the secondary space with most putting in strong performances.

Ford Motor Credit Co. LLC’s 5 1/8% senior notes due 2025 (Ba2/BB+) ‘ripped’ early in Wednesday’s session, although they faded into the close.

EQM Midstream Partners LP’s (Ba3/BB-) two tranches were trading with healthy premiums with the longer duration notes outperforming.

Despite their tight pricing, Warner Music Group Corp.’s 3 7/8% senior notes due 2030 were also trading up in the aftermarket.

Dana Inc.’s 5 5/8% senior notes due 2028 (B2/BB-/BB+) continued to gain on Wednesday after a strong break.

While the notes were trading off their highs, Standard Industries Inc.’s 4 3/8% senior notes due 2030 (Ba2/BBB-) maintained a nominal premium heading into the close.

A massive Wednesday

The drive-by window was wide open on Wednesday with eight issuers pricing a cumulative $5.915 billion.

Iron Mountain priced an upsized $2.4 billion amount of senior notes (Ba3/BB) in three tranches.

The deal included a $500 million tranche of eight-year notes which priced at par to yield 5%, a $1.3 billion tranche of 10-year notes which priced at par to yield 5¼%, and a $600 million tranche of 12-year notes which priced at par to yield 5 5/8%.

The deal was initially launched as a two-tranche $1.8 billion offering with the 12-year tranche added on.

Virgin Media priced 10-year senior secured notes (Ba3/BB-/BB+) in two tranches.

The deal included an upsized $650 million tranche that priced at par to yield 4½%.

The issue size increased from $550 million.

The yield printed at the tight end of yield talk in the 4 5/8% area.

The deal also included a £450 million amount priced at par to yield 4 1/8%.

DCP Midstream priced an upsized $500 million issue of seven-year senior notes (Ba2/BB+/BB+) at par to yield 5 5/8%.

The issue size increased from $400 million.

The yield printed at the tight end of yield talk in the 5¾% area. Initial talk was in the 6% area.

Energizer Holdings priced a $600 million issue of eight-year senior notes (B2/B+) at par to yield 4¾%.

Scientific Games priced an upsized $550 million issue of five-year senior notes (Caa2/B-) at par to yield 8 5/8%.

The issue size increased from $350 million.

The yield printed at the tight end of the 8 5/8% to 8¾% yield talk. Initial talk was 8¾% to 9%.

DPL priced a $415 million issue of five-year senior bullet notes (Ba1/BB) at par to yield 4 1/8%.

The yield printed at the tight end of yield talk in the 4¼% area.

Viasat priced $400 million eight-year senior unsecured notes at par to yield 6½% (Caa1/B/BB-).

Pricing came on top of talk for a yield in the mid-6% area.

The forward calendar

PG&E Corp. accelerated timing on its $3.75 billion three-part senior secured notes offer (B1/BB-/BB), now expected to price Thursday. Earlier in the week it was announced as Friday business.

Abercrombie & Fitch Management plans to price a $300 million offering of five-year senior secured notes (Ba2/BB-) on Thursday.

Initial talk is in the 9% area.

And Radio Systems expects to price its $625 million offering of CD&R Smokey Buyer, Inc. five-year senior secured notes.

Talk in the 7% area surfaced on Wednesday.

Eldorado-Caesars megadeal

Details emerged about the $6 billion in junk bonds that will help finance Eldorado’s acquisition of Caesars on Wednesday.

The deal includes a $1.05 billion offering from Caesars of five-year senior secured notes, non-callable for two years, with initial talk in the high 5% area to 6%.

Meanwhile, Eldorado is offering $3.08 billion of five-year senior secured notes, non-callable for two years, with initial talk in the low-to-mid 6% area and $1.875 billion of seven-year senior unsecured notes, non-callable for three years, with initial talk in the mid-to-high 8% area.

Ford Motor in focus

Ford Motor Credit’s 5 1/8% senior notes due 2025 “ripped” in the aftermarket on Wednesday, although they lost steam heading into the market close.

The notes traded as high as 101 5/8 in intraday trading. However, they were marked at par ¾ bid, 101 offered heading into the close, a source said.

“It was probably just a beta fade,” the source said.

The notes were also strong after breaking for trade but faded to close Tuesday at par 1/8.

Ford Motor Credit priced a $1.75 billion issue of the 5 1/8% notes at par on Tuesday.

Pricing came on top of final yield talk. Initial guidance was for a yield of 5 5/8 to 5¾%.

Standard Industries above par

Standard Industries’ 4 3/8% senior notes due 2030 maintained a solid premium in the aftermarket on Wednesday although the notes were trading off their highs.

The 4 3/8% notes popped up to 101 for a “hot second,” a market source said. However, they were marked at par ½ bid, par ¾ offered heading into the market close.

Standard Industries priced an upsized $1.1 billion issue of the 4 3/8% notes at par on Tuesday.

The issue more than doubled in size from the initially launched $500 million.

The yield printed in the middle of yield talk in the 4 3/8% area. Initial guidance had the notes coming to yield in the mid-to-high 4% area.

EQM trades up

EQM Midstream’s two tranches of senior notes were putting in a strong performance in the secondary space with the longer duration notes outperforming.

EQM’s 6% senior notes due 2025 were marked at par ½ bid, 101 offered late Wednesday.

The 6½% senior notes due 2027 were marked at 101¾ bid, 102 offered with lots of prints around 102, a source said.

EQM priced a $700 million tranche of the 6% notes and a $900 million tranche of the 6½% notes at par on Tuesday.

The combined tranches were upsized from $800 million.

Warner Music at a premium

Warner Music Group’s 3 7/8% senior notes due 2030 were trading at a premium in the aftermarket, despite their tight pricing.

The 3 7/8% notes were marked at par ½ bid, par ¾ offered on Wednesday.

However, the trading level had some scratching their heads.

The spread on the notes at their current level was 303, which did not seem like a good deal given their long duration, a source said.

However, “someone’s buying them,” a source said.

Warner Music priced an upsized $535 million issue of the 3 7/8% notes at par on Tuesday.

Pricing came tighter than the 4% to 4¼% yield talk.

The initial size of the deal was $525 million.

Dana gains

Dana’s 5 5/8% senior notes due 2028 continued to gain in the aftermarket after a strong break.

The 5 5/8% notes were marked at par 7/8 bid, 101¼ offered heading into the market close on Wednesday, a source said.

They were trading at par ½ bid, 101 offered after breaking for trade on Tuesday.

Dana priced a $400 million issue of the 5 5/8% notes at par on Tuesday.

The yield printed inside of the 5¾% to 5 7/8% price talk.

Indexes

Indexes were again mixed on Wednesday, as they have been for most of the week.

The KDP High Yield Daily index rose 3 basis points on Wednesday to 66.41 with the yield now 6.15%.

The index gained 56 bps on Tuesday after dropping 7 bps on Monday.

The ICE BofAML US High Yield index shaved off 2.2 bps with the year-to-date return now negative 2.83%. The index jumped 133.6 bps on Tuesday after dropping 10.1 bps on Monday.

The CDX High Yield 30 index dropped 30 bps to close Wednesday at 101.33. The index shaved off 9 bps on Tuesday after a 115 bps gain on Monday.

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