Poindexter, Vallourec upsize; Drax, TopBuild trade up; Sprint gains; funds add $989 million

By Abigail W. Adams and Paul A. Harris

Portland, Me., April 12 – Two new dollar-denominated deals totaling $650 million priced on Thursday in addition to an upsized euro-denominated deal.

J.B. Poindexter & Co., Inc. priced an upsized $350 million issue of eight-year senior notes (expected B2/confirmed BB-) at par to yield 7 1/8% late Thursday.

Drax Group Co. priced a $300 million issue of 7.5-year senior secured notes (BB+//BB+) at par to yield 6 5/8%. The new notes were seen up 1.5 points in secondary market activity.

Meanwhile in the European market, France’s Vallourec SA priced an upsized €400 million issue of 5.5-year senior notes (S&P: B) at par to yield 6 3/8%.

An oversubscribed dual-currency offering from CGG Holding (US) Inc. is expected to price well ahead of schedule on Friday as Piaggio & C. SpA and Aurum Holdings Ltd. wrap up their roadshows.

As new paper from Drax traded up in the secondary market, so too did new paper from TopBuild Corp., which priced on Wednesday.

TopBuild’s 5 5/8% senior notes due 2026 (B1/BB-) were seen up about 1.5 points in heavy trading volume.

Hilton Worldwide Holdings, Inc.’s newly priced 5 1/8% senior notes due 2026 (Ba2/BB+) also continued to see gains in the secondary market.

The secondary market in junkbondland remained firm on Thursday with the market up about ¼ to ½ point, a market source said.

Sprint Corp.’s junk bonds were leading the charge in the secondary market’s gains with the issues climbing another point on Thursday.

The notes have seen solid upward momentum since Tuesday when news broke that Sprint was again negotiating with T-Mobile over a potential merger.

Meanwhile high-yield mutual and exchange-traded funds broke three weeks of losses with an inflow of $989 million in the week to Wednesday, according to statistics generated by AMG Data Services Inc.

J.B. Poindexter upsizes

J.B. Poindexter priced an upsized $350 million issue of eight-year senior notes (expected B2/confirmed BB-) at par to yield 7 1/8% late Thursday afternoon.

The amount was increased from $300 million.

The yield printed at the tight end of yield talk that was set in the 7¼% area and in line with initial talk in the low 7% area.

Timing was moved ahead. The deal which kicked off early Thursday and had been expected to remain in the market until Friday, sources said.

JP Morgan and Wells Fargo were the joint bookrunners.

The Houston-based privately-held diversified manufacturing company plans to use the proceeds to redeem its $175 million of 9% senior notes due 2022 at 103 plus accrued interest.

Proceeds will also be used for general corporate purposes including strategic acquisitions and other investments to expand its operations both domestically and internationally.

Vallourec upsized and tight

France-based Vallourec priced an upsized €400 million issue of 5.5-year senior notes (S&P: B) at par to yield 6 3/8%.

The deal was increased from €300 million.

The yield printed at the tight end of the 6 3/8% to 6½% yield talk and in line with initial guidance in the low-to-mid 6% area.

Joint global coordinator BNP Paribas will bill and deliver for the debt refinancing deal. JPMorgan and SG CIB were also joint global coordinators. Natixis was the joint bookrunner.

CGG oversubscribed

CGG Holding moved up timing for its $650 million equivalent two-part offering of five-year senior secured notes (B2/B), in addition to setting tranche sizes and price talk.

The dollar-denominated tranche features $300 million of notes talked in the 9¼% area, inside initial guidance in the high 9% area.

The euro-denominated tranche features €280 million of notes talked in the 8¼% area, also inside initial guidance, in this case in the high 8% area to 9%.

Both tranches are set to price Friday. Previously, the deal was expected to remain in the market into the April 16 week.

The deal is oversubscribed, sources say.

Orders for the dollar-denominated notes came to $1.1 billion Thursday morning, a trader said, adding that the euro-denominated notes were playing to €1.4 billion of orders.

The European high-yield market is maintaining a firm tone into the late part of the current week, a London-based sell-side source said, and added that this positive tone is reflected in recent executions.

The European market could turn out two deals besides the above-mentioned CGG euro tranche on Friday.

Piaggio & C. has been roadshowing €250 million of seven-year senior notes (expected ratings B1/BB-).

As the market awaits price talk, the roadshow is scheduled to wrap up on Friday.

And Aurum Holdings has been marketing a £265 million offering five-year senior secured notes (B2/B-) on a roadshow that is also expected to wrap up on Friday.

Beyond Friday, there is a sizable European high-yield pipeline for the April 16 week, the source said.

Drax in demand

New notes from England-based Drax Group were in demand in the secondary market with the notes trading well above their issue price.

Drax on Thursday priced a $300 million issue of 7.5-year senior secured notes (BB+/BB+) at par to yield 6 5/8%.

The yield printed at the tight end of yield talk that was announced in the 6¾% area.

Global coordinator Barclays will bill and deliver for the debt refinancing deal. BofA Merrill Lynch was also a global coordinator. Deutsche Bank was a joint bookrunner.

The notes were seen at 101½ bid, 102 offer late Thursday and were seen trading in a range of 101 to 101¾.

“They’re doing well,” a market source said. The 6 5/8% notes were active with more than $60 million traded on Thursday.

Sources attributed the new paper’s strong performance in the secondary market to its double B credit rating and the demand for new paper.

The coupon is also decent, a market source said.

TopBuild busy

TopBuild’s 5 5/8% senior notes due 2026 (B1/BB-) were also seen up about 1.5 points in high-volume trading on Thursday.

“They’ve been busy,” a market source, noting that about $54 million bonds were in play.

The notes were seen at 101½ bid, 102 offer. They opened the day at 101¼ bid, a market source said.

Similarly, the success of the notes was attributed to the demand for new paper amid thin supply.

“The market was strong and new issues have been light,” a market source said.

TopBuild priced an upsized $400 million issue of eight-year senior notes (B1/BB-) at par on Wednesday.

The Daytona Beach, Fla.-based installer and distributor of insulation products will use proceeds to help finance its previously announced acquisition of United Subcontractors, Inc.

The all-cash transaction is valued at $475 million, according to a company news release.

Hilton gains

After dominating secondary market activity on Wednesday, trading in Hilton’s 5 1/8% senior notes due 2026 (Ba2/BB+) tempered. However, the notes continued to perform well with nominal gains on Thursday.

The 5 1/8% notes were seen at 100 5/8 bid, 100 7/8 offered at mid-afternoon and closed the day at par ½ bid, 101 offered, sources said.

The notes opened Wednesday at par 1/8 and closed at par 5/8, a market source said.

Hilton priced a massively upsized $1.5 billion issue of the eight-year senior notes on Tuesday.

The offering was increased from $500 million. The yield printed in the middle of yield talk in the 5 1/8% area and tight to early guidance in the 5¼% area.

While some sources felt the pricing was rich, others felt it was fair for a double-B rated credit in a non-cyclical business.

Sprint in focus

Sprint’s junk bonds remained in focus and continued to see gains in active trading on Thursday.

Sprint’s 7 5/8% notes due 2026 (B3/B) were seen at 104¼ bid, 104¾ offered on Thursday.

Sprint’s 7 7/8% notes due 2023 were seen at 107 ½ bid, 108 offered.

Most issues were up about 1 point, a market source said.

Sprint’s issues were six of the top 10 volume movers on Thursday. While active, the trading of the highly liquid issues was “not crazy,” a market source said.

About $20 million of bonds from each issue was in play, the source said.

Sprint’s junk bonds have been active and making gains since Tuesday when news broke that the telecommunications company was once again at the negotiating table with T-Mobile.

The strength of the notes and the trading activity may be the result of buyers who shorted the credit giving up, a market source said.

The merger talks may drag on for a good 12 to 18 months and will still require FCC approval.

“Some people who shorted the credit may be capitulating,” a market source said.

Indexes gain

The KDP High Yield index marked six consecutive trading days of gains on Thursday. The index was again up 10 bps to 70.79 on Thursday shaving the yield down to 5.72%.

The index was up 10 basis points to 70.69 on Wednesday and has been an upward trend since April 4.

The Merrill Lynch High Yield index turned positive on Thursday. The index was up 16 bps on Thursday with the year-to-date return now in the green at 0.036%. The index has made large gains all week.

The CDX high yield 30 index was also up on Thursday, gaining 32 bps after dropping 8 bps on Wednesday.

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