High yield rebounds with oil prices, Acelity to price $190 million tap

By Paul A. Harris

Portland, Ore., June 17 – Cash bonds were up ¼ to ½ point Friday morning on the back of improving oil prices, sources said.

With the barrel price of West Texas Intermediate crude oil for July 2016 delivery up $1.23, or 2.66%, at $47.44, at late morning, energy debt was outperforming the market. This included names such as California Resources Corp., Oasis Petroleum Inc. and Whiting Petroleum Corp., all of which were up at least 1 to 2 points, a trader said.

Whiting Petroleum’s 5¾% notes due March 15, 2021, which the trader cited as a liquid issue, were at 86 bid, 87 offered on Friday morning, up from 82 bid, 83 offered on Thursday.

Meanwhile, among recent issues, the new 20-year paper from L Brands, Inc. was wrapped around par, unchanged from Thursday.

The $700 million 6¾% senior bullet due 2036 (Ba1/BB+) came at par on Monday.

ETFs seek offers

Badly beaten up high-yield ETFs were showing a modicum of stability at late morning, a trader said.

Whereas the market had been inundated with bids-wanted-in-competition (BWIC) lists, earlier in the week, some offers-wanted-in-competition (OWIC) lists turned up on Friday morning, the source added.

On the exchanges, the ETFs were flat to slightly better, at late morning. The iShares iBoxx $ High Yield Corporate Bd (HYG) was up 7 cents, or 0.08%, at $83.14 per share. The SPDR Barclays High Yield Bond ETF (JNK), at $34.96 per share, was up a nickel, or 0.14%.

The ETFs saw big daily cash outflows on Thursday of $683 million, sources said.

High-yield asset managers saw $40 million of outflows on the day.

In the primary market, Acelity LP Inc. plans to price a $190 million add-on Friday to the 7 7/8% first-lien senior secured notes due Feb. 15, 2021 issued by Kinetic Concepts, Inc. and KCI USA, Inc.

Initial price talk is 104.75 to 105.

BofA Merrill Lynch, SunTrust, Credit Suisse, Nomura, RBC and UBS are managing the offer.

In Europe, Salini Impregilo SpA’s new 3¾% senior notes due June 24, 2021 (BB+/BB) were trading well at 101 bid on Friday morning, a London-based sellside source said.

The €300 million issue priced at par on Thursday.

Factors including the pending Brexit vote in the United Kingdom and the French Open tennis competition were muting new issue activity on Friday.

Slow conditions in the primary market are expected to continue until the Brexit vote on June 23, sources say.

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