T-Mobile $2.5 billion two-part drives by; new Meredith, Crown busy and better; Frontier gains continue

By Paul Deckelman and Paul A. Harris

New York, Jan. 22 – The high-yield primary market saw just one deal get done on Monday – but it was a big one.

Wireless provider T-Mobile USA, Inc. did a quickly shopped $2.5 billion two-part offering of eight- and 10-year notes, with proceeds slated to take out some of the company’s existing near-term debt.

The new deal priced fairly late in the session, and traders did not immediately report any initial aftermarket activity.

They said that several issues of the company’s existing paper were mixed on the day.

Elsewhere, Friday’s new offering from publisher Meredith Corp. continued to trade actively on Monday, topping the Most Actives list for a second consecutive session. The bonds added marginally to the hefty initial aftermarket gains racked up on Friday when the bonds traded around after pricing.

Friday’s other new deal, from plastics packaging manufacturer Berry Global Inc., traded around but was little changed on the day.

Also among the recently priced issues, Thursday’s big deal from packaging maker Crown Holdings, Inc. was actively traded on Monday at somewhat higher levels.

Away from the new deals, it was another strong session for Frontier Communications Corp. paper, which rose smartly last week after the wireline telecommunications company announced its proposed amendment to its existing credit facility, a move seen as enhancing its ability to deal with its short-term maturities.

Statistical market performance measures were mixed for a second straight session on Monday, the indicators’ fourth mixed session in the last six trading days; they had first turned mixed on Friday after having been lower across the board on Wednesday and again on Thursday. Those losses had followed two straight mixed sessions before that.

T-Mobile $2.5 billion, quick and tight

In Monday's new issue market T-Mobile priced $2.5 billion of senior notes (Ba2/BB+) in two tranches, in a quick-to-market trade.

The debt refinancing deal included $1 billion of eight-year notes that priced at par to yield 4½%. The yield printed at the tight end of yield talk in the 4 5/8% area.

In additional the company sold $1.5 billion of 10-year notes at par to yield 4¾%. The yield printed at the tight end of yield talk in the 4 7/8% area.

Deutsche Bank, Barclay, J.P. Morgan and Morgan Stanley were the joint bookrunners.

Waste Pro starts Tuesday

Waste Pro USA Inc. plans to start a roadshow on Tuesday for a $450 million offering of eight-year senior notes (expected ratings B3/B+).

Lead left active bookrunner Wells Fargo will bill and deliver.

The Longwood, Fla.-based solid waste services company plans to use the proceeds to refinance its existing credit facilities.

Titan upsized

In the European market Titan Cement Co. SA priced an upsized €100 million add-on to its 2 3/8% non-callable guaranteed notes due 2024 at par.

The deal was upsized from €50 million and played to an order book that was three-times oversubscribed.

The price came in the middle of price talk in the par area.

HSBC, Societe Generale, National Bank of Greece and Raiffeisen were the managers.

The Athens-based construction materials company plans to use the proceeds for general corporate purposes including debt.

Nordex green bond

Nordex SE plans to start a roadshow on Tuesday for its €275 million offering of five-year senior notes.

The roadshow for the offering, which qualifies as a green bond, wraps up on Friday.

JP Morgan managing the sale.

The Hamburg, Germany-based wind turbine manufacturer plans to use the proceeds to refinance debt maturing in 2019 and 2021.

T-Mobile biggest deal in a while

In the secondary sphere, traders did not immediately report any initial aftermarket activity in the new T-Mobile offering, owning to the relative lateness of the hour at which the megadeal actually got done.

The $2.5 billion two-part deal was the largest offering seen so far this year in Junkbondland, surpassing the $2.2 billion that Dallas-based motor fuels and petroleum products distributor Sunoco LP and its Sunoco Finance Corp. funding subsidiary had priced in three tranches of five-, eight- and 10-year notes as a regularly scheduled forward calendar deal on Jan. 9.

Monday’s new-issuance total matched the $2.5 billion that had gotten done on Jan. 9, which included a separate $300 million offering as well as the Sunoco transaction.

T-Mobile’s deal is biggest issue of purely junk-rated U.S. dollar-denominated paper seen in the high-yield market since Avantor, Inc., a Center Valley, Pa.-based supplier of ultra-high-purity materials for the life sciences and advanced technology industries, priced a total of $3.5 billion of seven-year senior secured and eight-year senior unsecured notes back on Sept. 22, as part of a downsized $4.1 billion equivalent regularly scheduled offering that also included a tranche of euro-denominated secured notes.

Existing T-Mobile paper trades

T-Mobile plans to use the proceeds from its new deal to redeem up to $1.75 billion of its existing 6 5/8% senior notes due 2023 and up to $600 million of its 6.836% senior notes due 2023, with the balance to be used for general corporate purposes, including a partial paydown of the T-Mobile USA revolving credit facilities.

While the new bonds were not immediately seen in Monday’s aftermarket, a market source noted that the 6 5/8% notes were trading around, quoting them finishing at 104 1/8 bid, up slightly from the most recent previous round-lot dealings in those bonds, around the 104 bid mark in the middle of last week.

More than $9 million of those notes changed hands.

There was only slight trading of around $2 million, at marginally lower levels, in the 6.836% notes.

T-Mobile’s 6½% notes due 2026, which are not slated to be redeemed using the new-deal proceeds, were seen off ½ point, at 109 bid, on volume of more than $17 million.

Meredith bonds extend gains

In the recently priced issues, Meredith Corp.’s 6 7/8% notes due 2026 were seen having gained slightly on the session, with a trader seeing the issue having moved up by maybe 1/8 [point] or so,,” to end at 102½ bid.

A second trader saw the notes in a 102 1/8-to-102 5/8 bid context, while a third also saw the bonds going home at 102½ bid, on volume of nearly $40 million.

It was the second straight session that the Des Moines, Iowa-based magazine publisher and broadcaster’s big new issue had topped the Most Actives list; on Friday, an astounding nearly $260 million of the notes had traded when they hit the aftermarket after that $1.4 billion regularly scheduled forward calendar offering had priced at par.

On Friday, the new deal had zoomed by almost 2½ points from its par issue price, quoted finishing in a 102 3/8-to-102½ bid context.

One of the traders – noting that the Meredith bonds had firmed by multiple points after its pricing while some of the other recently priced offerings which have come to market lately have just managed to hang around their par issue prices – opined that “the coupon was 6 7/8% – better than the ones which have just a 4[%] handle” and thus, fail to generate much buying excitement in the aftermarket.

Berry bonds little changed

In contrast to the solid gains that the Meredith issue was racking up, a trader noted that Friday’s other new deal – Evansville, Ind.-based plastic packaging products manufacturer Berry Global’s 4½% senior secured second-lien notes due 2026 – was about unchanged on the session at 100¼ bid, on volume of around $9 million.

On Friday, that quick-to-market $500 million offering had priced at par after upsizing from an originally announced $400 million.

The bonds had edged up from their issue price, on initial aftermarket volume of around $30 million.

Crown notes edge upward

Also among the recently priced deals, Crown Holdings’ 4¾% notes due 2026 were among the day’s more active credits, on turnover of more than $18 million.

A trader saw the notes at 101 3/8 bid, calling them up by 1/8 point.

That $875 million deal – upsized from an originally planned $750 million – had priced at par on Thursday via the company’s Crown Americas LLC and Crown Americas Capital Corp. financing subsidiaries, as part of a three-part offering that had also included five- and eight-year tranches of euro-denominated notes. The new bonds had moved up to around 101 bid by the end of Thursday’s session in active trading and had continued to firm on Friday, when over $50 million were traded.

Arby’s little seen

In contrast, a trader declared that the 6¾% notes due 2026 priced last week by Arby’s Restaurant Group, Inc. “are not really trading – I think that deal was just kind of tucked away.”

The Atlanta-based fast-food restaurateur priced $485 million of those notes at par on Thursday in a regularly scheduled offering via its IRB Holding Corp. financing subsidiary.

They were initially quoted around a 102 bid area,

But they were seen having moved down to around 101½ in active dealings Friday of more than $63 million.

A market source on Monday pegged the notes at 101 1/8-to-101 3/8 bid, on considerably less volume.

Frontier firming continues

Away from the new deals, Frontier Communications Corp. notes continued their gains across the board Monday on news that the company’s recently announced amendments to its credit agreement had been agreed to, paving the way for debt issuances to cover future senior note maturities.

“The amendments are a done deal,” according to a trader.

A second trader said that the Norwalk, Conn.-based wireline telecommunications company’s paper “continues to move up, noting that the changes in the credit terms mean “they’re kind of able push out some short-term debt a little further out – it gives them some breathing room.”

He said that “the bonds were up a couple of points last week, and that’s continuing a little further this week Frontier’s 10 5/8% notes due 2022 – which were trading a week ago around the 77 bid level – were up another 1½ points on Monday to close at 83½ bid, on volume of more than $27 million.

Its 7 1/8% notes due 2023 gained nearly 1¼ points on the day to end at 70 3/16 on around the same volume as the 10½s; those bonds had languished below 68 bid a week ago.

The company’s 11% notes due 2025 gained 1 point on the day, to 78¼ bid, on volume of more than $13 million.

Indicators stay mixed

Statistical market performance measures were mixed for a second straight session on Monday, the indicators’ fourth mixed session in the last six trading days; they had first turned mixed on Friday after having been lower across the board on Wednesday and again on Thursday. Those losses had followed two straight mixed sessions before that.

The KDP High Yield Daily index suffered its fourth consecutive loss on Monday, easing by 3 basis points to end at 71.91. It had also plunged by 8 bps on Friday, by 10 bps on Thursday and had lost 3 bps on Wednesday.

Its yield rose by 1 bp to 5.27%, its fourth widening out in a row; it had also gained 2 bps on Friday, 4 bps on Thursday and 2 bps on Wednesday.

But the Markit CDX Series 29 index posted its second gain in a row on Monday, firming by 1/8 point to close at 108 19/32 bid, 108 21/32 offered; on Friday, it had turned positive, improving by almost 3/32 point, breaking a string of five consecutive losses before that.

The Merrill Lynch High Yield index broke out of its recent rut on Monday, moving up by 0.063% after three straight sessions on the downside, including Friday’s 0.06% easing.

The gain raised the index’s year-to-date return to 0.678% from Friday’s close at 0.614%.

However, it remained down from its Jan. 8 close at 0.862%, its peak cumulative level for the new year so far.

James McCandless contributed to this review

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