Domestic primary dormant; Wind Tre active; McClatchy breaks par; funds lose $1.73 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 5 – The domestic primary market was dormant on Thursday with the European market seeing the lone deal pricing of the day.

Autodis SA priced a €175 million add-on to its Euribor plus 437.5 basis points senior secured floating-rate notes due May 2022 (B2/B) at 99.5 on Thursday.

Enterprise Development Authority is believed to still be in the market with a $440 million offering of five-year senior secured notes.

However, there have been no updates on the deal since a roadshow wrapped up in the middle of the June 25 week.

The post-holiday lull in new issue activity did not take anyone by surprise, a syndicate banker said.

A lot of market participants used vacation time surrounding the mid-week July 4 Independence Day holiday in the United States to carve out week-long vacations.

The secondary market was equally quiet with no new paper entering the space to spur trading volume.

Among existing names, Alliance One International Inc.’s 9 7/8% senior notes due 2021 were among the most actively traded issues of the day with the notes making gains.

Wind Tre SpA’s 5% senior secured notes due 2026 continued to see active trading on Thursday after the notes skyrocketed about 13 points on Tuesday.

McClatchy Co.’s recently priced 9% senior secured notes due 2026 (B1/B-) continued to gain strength in the secondary market with the notes trading north of par after pricing at 97.242.

Meanwhile high-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – again saw cash depart as $1.729 billion left during the week ended July 4, according to fund-flow statistics generated by AMG Data Services Inc.

Autodis at the rich end

Autodis priced a €175 million add-on to its Euribor plus 437.5 basis points senior secured floating-rate notes due May 2022 (B2/B) at 99.5 on Thursday.

The issue price came at the rich end of the 99.25 to 99.5 price talk.

Left lead bookrunner BNP Paribas will bill and deliver. Citigroup, Goldman Sachs and JPMorgan are the joint bookrunners.

The Paris-based distributor of aftermarket spare parts for light vehicles plans to use the proceeds to refinance an acquisition-related draw on its revolving credit facility as well as to refinance its outstanding holdco pay-if-you-can notes and for general corporate purposes.

Post-holiday lull

Apart from Autodis, the new issue market remained dormant on Thursday as expected with many on vacation, sources said.

However, the deal calendar might pick up in the week ahead, a syndicate banker said.

There is some anecdotal evidence that the cash positions of the accounts may be somewhat above average and investors do appear to have money to put to work, the source said.

One dollar-denominated deal remains on the active forward calendar.

With no news to the contrary, tribal gaming concern Enterprise Development Authority is believed to still be in the market with a $440 million offering of five-year senior secured notes (S&P: expected B-), a capital expenditures deal via Wells Fargo.

The roadshow wrapped up in the middle part of the June 25 week and it has been radio silence on the deal since that time.

Alliance One in focus

Alliance One’s 9 7/8% senior notes due 2021 were among the most actively traded issues of the day with more than $13 million on the tape by late afternoon.

The notes were making gains in the high-volume activity.

The notes were seen up about 5/8 point to 92 5/8, according to a market source.

Zimbabwe dismissed claims on Thursday that there was rampant use of child labor in tobacco farms in the country.

The claims were made by the Human Rights Watch in their April report “A Bitter Harvest.” Alliance One, a Morrisville, N.C.-based tobacco merchant, purchases tobacco from Zimbabwe, and was queried by Human Rights Watch in its report.

The Morrisville, N.C.-based tobacco merchant’s 9 7/8% notes have steadily traded downward since late April. Prior to April, the 9 7/8% notes, which priced at 98 in 2013, were in the 97 to 98 range.

Wind Tre active

Wind Tre’s 5% senior notes due 2026 remained active in the secondary space on Thursday after a meteoric rise on Tuesday.

The notes were up about ¾ point on Thursday to 91¼, a market source said. While the notes traded as high as 92 at points on Tuesday, they closed the day at 90½.

Wind Tre’s 5% notes jumped about 13 points on Tuesday after CK Hutchinson announced it was buying out Veon’s stake and consolidating ownership of the company.

The notes were previously trading in the 78 area, sources said.

Wind Tre was formed in a joint venture between CK Hutchinson and Veon in 2016. The Italian mobile telecommunications and data service provider’s 5% senior notes have struggled in the secondary market since pricing at par in October 2017.

However, CK Hutchinson is an investment-grade company and its taking over full control of Wind Tre has given investors renewed confidence in the notes, a market source said.

McClatchy’s upward momentum

McClatchy’s recently priced 9% senior notes due 2026 continued to see gains in the secondary market on Thursday although trading of the notes was light, a market source said.

The 9% notes gained ½ point in limited trading activity to close the day at par ¼. The notes were also on the rise on Tuesday and gained about 5/8 point to close that session at 99¾.

McClatchy priced a $310 million issue of the 9% notes at 97.242 to yield 9½% on June 29.

Indexes mixed

Three benchmarks for the high-yield secondary market were mixed on Thursday after a mixed day on Tuesday.

The KDP High Yield index was down 3 basis points to close Thursday at 70.16 with the yield now 5.97%. The index was down 11 basis points on Tuesday and 9 bps on Monday.

The index has now seen eight consecutive trading days of losses.

The Merrill Lynch High Yield index was up 8 bps on Thursday with the year-to-date return now negative 0.016%.

While the index remains in negative territory, it is zeroing in on flipping back to the positive. The index was up 13.1 bps on Tuesday.

The index dropped 28.6 bps on Monday sinking back into negative territory after a brief foray into positive territory on June 29.

The CDX High Yield 30 index was up 21 bps to close Thursday at 106.06 after a 20 bps rise on Tuesday.

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