Anixter prices; KLX Energy slow to trade; First Quantum improves; Envision active

By Paul A. Harris and Abigail W. Adams

Portland, Me., Oct. 29 – The domestic primary market saw one new deal price in a Monday drive-by while the deals that joined the forward calendar last week remained in limbo.

Anixter, Inc. priced a $250 million issue of seven-year senior bullet notes (Ba3/BB/BBB-) at par to yield 6% in a quick-to-market trade.

However, there was radio silence on the deals from GEP Haynesville LLC and INTL FCStone Inc. that carried over from last week.

HC2 Holdings, Inc. and Vector Group Ltd. were scheduled to wrap up roadshows on Monday with price talk for HC2 still under discussion.

The European primary market saw one new deal from Victoria plc joining the forward calendar.

Meanwhile, trading volume was light in the secondary space on another down day for the market that saw oil futures slide and volatility continuing to roil equities.

While the market was down, KLX Energy Services Holdings, Inc.’s newly priced 11½% senior secured notes due 2025 (B3/B) were seen more than 1 point above their issue price.

However, the notes were slow to trade with buyers of the notes holding on to them, a market source said.

Intelsat Jackson Holdings SA’s 8½% senior notes due 2024 (Caa2/CCC+) were again down in high-volume activity after the company announced it was seeking to amend its senior secured credit agreement.

First Quantum Minerals Ltd.’s junk bonds were also active and making slight gains in the run up to the mining company’s third-quarter earnings report.

Envision Healthcare Corp.’s 8¾% senior notes due 2026 (Caa1/B-) were major volume movers in the secondary space on Monday, although the notes were unchanged in the high-volume activity.

Anixter drives by

In Monday’s new issue market, Anixter priced $250 million of seven-year senior bullet notes (Ba3/BB/BBB-) at par to yield 6% in a quick-to-market trade.

The yield printed in the middle of yield talk that was set in the 6% area.

Wells Fargo was the left bookrunner for the debt refinancing deal.

The new paper was seen changing hands between par ¼ to par ½ after breaking for trade, a market source said.

Victoria starts roadshow

Kidderminster, England-based flooring company Victoria plc started a roadshow on Monday for a €450 million offering of five-year senior secured notes (expected ratings BB-/BB).

The roadshow wraps up on Thursday.

Joint global coordinator HSBC will bill and deliver for the deal which will be used to take out a bridge loan obtained to fund the acquisition of Spain-based tile manufacturer Ceramica Saloni.

Radio silence

There was “radio silence” Monday on a backlog of deals scheduled to price late last week but moved into the October-November crossover week owing to volatility in the capital markets, sources said.

Word in the market is that GEP Haynesville continues to endeavor to get a deal done but perhaps a downsized one, a trader said.

The Woodlands, Texas-based oil and gas producer roadshowed a $600 million offering of five-year senior notes (B3/B) that was scheduled to price on Friday.

Feelers are out for a deal with a 9% coupon at a discount, according to the trader who added that document changes are also expected.

If that won’t get it across the finish line, GEP Hayneseville is expected to shelve the effort, the source added.

Initial talk had the offering coming to yield 8½% to 8¾%.

There was no word Monday on INTL FCStone which was scheduled to price its $350 million sale of five-year senior secured notes (Ba3/BB-) last Friday, sources said.

The deal was talked to yield 8½% to 8¾%, including an original issue discount.

There are also a couple of deals in the market that were set to wrap up full roadshows on Monday.

HC2 Holdings was scheduled to conclude the marketing for its $535 million offering of five-year senior secured notes (Caa1/B-).

Initial guidance had it coming with a yield in the low-to-mid 9% area, sources said.

The deal structure and price talk remain under discussion, a trader said.

And Vector Group was also scheduled to conclude its roadshow on Monday for a $325 million offering of eight-year senior notes (B2/B-).

Jefferies is sole bookrunner for both HC2 and Vector Group.

KLX Energy held tightly

KLX Energy’s newly priced 11½% senior notes due 2025 jumped more than 1 point above their issue price in the secondary market.

However, the notes were slow to trade with few flippers involved in the deal, a market source said.

The 11½% notes were seen trading between 101¼ and 101¾.

However, only $2 million of the bonds had changed hands during Monday’s session, a market source said.

The notes carry a high coupon for secured paper from a single B credit, the source said.

“People are not going to buy it to flip it,” the source said. “People are with it for good.”

KLX Energy priced a $250 million issue of the 11½% notes at par on Friday.

The high-yield market was soft throughout last week as oil futures slid and equities experienced a steep sell off.

The market conditions took their toll on the new paper to price last week.

The yield on KLX Energy’s new notes printed 75 basis points beyond the wide end of the 10½% to 10¾% official price talk.

Initial guidance had been in the mid to high 9% area, a market source said.

Intelsat down again

Intelsat Jackson’s 8½% senior notes due 2024 were again down in high-volume activity on Monday.

The notes dropped 1 point to close Monday at 98¼, a market source said.

More than $32 million of the bonds were on the tape by the late afternoon.

The high-volume activity came after Intelsat Jackson Holdings announced it was attempting to amend its senior secured credit agreement, a market source said.

The amendments include the removal or loosening of the covenant related to the interest expense coverage ratio.

The proposed amendments were announced just one day before Intelsat releases its closely watched third-quarter earnings report.

Intelsat will report earnings prior to the market open on Tuesday.

The 8½% notes were above par last Thursday but traded lower in high-volume activity on Friday.

Intelsat Jackson priced a $700 million add-on to the 8½% notes at 100.75 in early October.

The company initially priced a $2.25 billion issue of the 8½% notes at par in September.

First Quantum improves

First Quantum Minerals’ junk bonds were seeing slight gains on Monday in the run up to the mining company’s third-quarter earnings, which were announced after the market close.

First Quantum’s 7% senior notes due 2021 were up about ½ point on Monday to 96 7/8, a market source said.

More than $15 million of the bonds were on the tape by the late afternoon.

First Quantum’s 6 7/8% senior notes due 2026 were up about ¼ point to 85½ with more than $17 million of the bonds changing hands during Monday’s session, sources said.

First Quantum’s junk bonds have been under pressure with copper prices sliding over the summer. Copper firmed on Monday on concerns over a shortage.

Envision active

Envision Healthcare’s recently priced 8¾% senior notes due 2026 were active although unchanged in the secondary space on Monday.

The notes continue to trade at a deep discount to their issue price.

They were quoted at 96 bid, 96½ offered and continued to trade around 96¼, sources said.

More than $25 million of the bonds were on the tape by the late afternoon.

Envision priced a downsized $1.225 billion offering of the 8¾% notes at par on Sept. 28 in an LBO financing deal that helped fund the buyout of the company by KKR for about $9.9 billion.

The notes have struggled since hitting the market with the junk bonds loosely placed and the covenants on the deal poor, sources said.

Mixed Friday flows

The daily cash flows for dedicated high-yield bonds funds were mixed on Friday, the most recent session for which data was available, a trader said.

High-yield ETFs saw $267 million of inflows on the day.

However, actively managed high yield funds sustained $65 million of outflows on Friday, the source said.

The dedicated bank loan funds also sustained conspicuous outflows on Friday, the trader remarked.

The loan funds saw $235 million of outflows on the day, with $187 million of that amount coming out of the bank loan ETFs.

Indexes mixed

Indexes were mixed on Monday after closing out Friday with steep losses.

The KDP High Yield Daily index dropped 14 basis points to 69.10 with the yield now 6.34%. The index dropped 60 bps on the week last week.

The CDX High Yield 30 index gained 5 bps to close Monday at 104.84. The index was down 92 bps on the week.

The ICE BofAML US High Yield index rebounded a little to a year-to-date return of 0.806%. The measure dropped below the 1% threshold on Friday, losing 25.6 bps to close the week at 0.762%. That followed a loss of 20.3 bps on Thursday but a 6.2 bps climb on Wednesday. The index was down 33.8 bps on Tuesday and 1 bp on Monday.

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