Over $1 billion prices in three deals; Advanced Drainage up; Charter, Marriott better

By Paul A. Harris and James McCandless

Portland, Ore., Sept. 19 – Two drive-by deals and another issue off the high-yield bond calendar priced on Thursday.

Total issuance from NextEra Energy Operating Partners, LP, Mercer International Inc. and InfraBuild Australia Pty. Ltd. totaled $1,025,000,000.

Friday could be a big day for the junk market as several roadshows conclude.

The high-yield secondary was generally higher, especially in newer issues.

Advanced Drainage Systems, Inc.’s new notes moved up during their first trading session.

Charter Communications, Inc.’s and Marriott Vacations Worldwide Corp.’s newer issues closed the day better.

NextEra, Mercer drive by

Three issuers raised $1,025,000,000 on Thursday.

Two deals came as drive-bys, and priced within talk.

The third cleared the market 200 basis points wide of talk, following revisions and concessions.

NextEra Energy Operating Partners, LP priced a $500 million issue of seven-year senior bullet notes (Ba1/BB/BB+) at par to yield 3 7/8% in a quick-to-market trade via left bookrunner Wells Fargo Securities LLC.

The yield printed in the middle of yield talk in the 3 7/8% area, and tight to early guidance in the 4% area.

Mercer International Inc. priced a $200 million add-on to its 7 3/8% senior notes due Jan. 15, 2025 (Ba3/BB-) at 102.75 to yield 6.435%.

Credit Suisse Securities (USA) LLC led that drive-by effort.

The issue price came in the middle of the 102.5 to 103 price talk, which was also the early guidance, a trader said.

Away from quick-to-market action InfraBuild Australia Pty. Ltd. priced a downsized $325 million restructured issue of five-year senior secured notes (Ba3) at par to yield 12%.

The yield printed 200 basis points beyond the midpoint of yield talk in the 10% area.

The bonds ultimately came with a senior secured structure, after the notes were marketed on a roadshow with an unsecured structure earlier in the month (see related story in this issue).

Big Friday expected

A reasonably large active forward calendar features half a dozen deals that have been in roadshow mode and are expected to clear the market ahead of the coming weekend.

Official price talk and timing surfaced on just one of those deals during the Thursday session.

Peabody Energy Corp. downsized its offering of seven-year senior notes (Ba3/BB) to $800 million from $900 million, and talked the notes to yield 8½% to 9%.

Along with price talk came covenant changes (see related story in this issue).

The notes are set to price Friday, in the New York morning.

Among the remaining possible Friday business, for which official talk and timing were pending at press time on Thursday:

• Inmarsat plc $1,125,000,000 seven-year senior secured notes (B+), early guidance low-to-mid 6% area;

• Shutterfly Inc./Photo Holdings Merger Sub, Inc. $500 million seven-year senior secured notes (B1/B), early guidance low-to-mid 7% area;

• Stelco Holdings Inc. $300 million five-year senior secured notes due 2024 (B3/B-), early guidance 9% area;

• Granite Holdings US Acquisition Co. (Howden) $300 million eight-year senior notes (Caa1), early talk 10% area; and

• BidFair MergeRight Inc./Sotheby's $550 million eight-year senior secured notes (B1/B+), early talk high 6% area.

Advanced Drainage lifted

In the secondary market, a new deal from Advanced Drainage was lifted on Thursday, traders said.

The Hilliard, Ohio-based manufacturer of drainage products’ new 5% senior notes due 2027 were pushed up to close at 101¾ bid.

The deal priced at $350 million on Wednesday.

The yield printed at the tight end of the 5% to 5¼% yield talk, Prospect News reported.

Charter, Marriott better

In other recent issues, Charter’s and Marriott’s newer issues closed better, market sources said.

Stamford, Conn.-based telecommunications name Charter’s newer 4¾% senior notes due 2030 moved up ½ point to close at 101 bid.

The notes landed at 100½ bid on Wednesday.

The deal was priced in an upsized $1.35 billion trade.

Orlando-based property management company Marriott Vacations’ 4¾% senior paper due 2028 inched up ¼ point to close at 101 bid.

The deal was another one to be upsized before pricing, originally being talked at $300 million before pricing at $350 million.

Dish improves

Elsewhere, Dish Network’s notes improved, traders said.

The 5 7/8% senior notes due 2024 jumped up 4¾ points to close at 98¾ bid.

On Thursday, the Englewood, Colo.-based pay-TV provider’s structure saw positivity after news broke that telecom giant AT&T, Inc. is exploring options to cut ties with competitor DirecTV.

The company’s paper has seen heightened attention lately after agreeing to purchase wireless assets that would facilitate the merger of Sprint and T-Mobile.

$3.29 billion inflows

The dedicated high-yield bond funds saw a whopping $3.292 billion of inflows for the week to Wednesday's close, according to information posted on the internet by Lipper US Fund Flows.

That's the biggest weekly inflow since the week to the Feb. 6, 2019 close, when the combined high-yield funds saw $3.86 billion of net inflows, according to a Prospect News analysis of the data.

Indexes vary

Three high-yield indexes varied in direction, skewing positive.

The KDP High Yield Daily index slid 17 basis points, ending the day at 71.70 with the yield rising to 5.36%.

The index lost 1 bp on Wednesday, fell 9 bps on Tuesday and shot up 17 bps on Monday.

The ICE BofAML US High Yield index gained 6 bps to finish Thursday with the year-to-date return at 11.906%.

The index fell 4 bps on Wednesday, shaved off 0.6 bps on Tuesday and improved by 26.4 bps on Monday.

The CDX High Yield 30 index dropped 32.37 bps on Thursday to 107.3226.

The index lopped off 31.72 bps on Wednesday, declined by 31.63 bps on Tuesday and added 31.48 bps on Monday.

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