MSCI, Inspire price; Standard, Uber add-on; fallen angels in focus; Ford, Occidental gain; Kraft Heinz active

By Paul A. Harris and Abigail W. Adams

Portland, Me. May 18 – The domestic high-yield primary market saw an active start to the week with four drive-by deals pricing and the forward calendar growing on Monday.

MSCI Inc. priced an upsized $1 billion issue, and Inspire Brands priced an upsized $750 million.

Standard Industries Inc. priced an upsized $350 million add-on to its 5% senior notes due Feb. 15, 2027 (Ba2/existing BBB-).

And Uber Technologies Inc. priced a $100 million add-on to its 7½% senior notes due May 15, 2025 (B3/CCC+).

The forward calendar also grew with Park Hotels & Resorts Inc. planning to price a $500 million issue and Cushman & Wakefield plc also planning to price a $400 million offering on Tuesday.

Meanwhile, the secondary space was strong on Monday as equities and crude oil futures surged.

Fallen angels dominated trading activity.

Kraft Heinz Co.’s 4 3/8% senior notes were active although largely unchanged following the early results from a tender offer.

Occidental Petroleum Corp.’s senior notes were on the rise in high-volume activity even after the termination of a previously planned asset sale.

Ford Motor Co.’s three tranches of senior notes (Ba2/BB+/BBB-) remained active with the notes continuing to gain.

Monday’s drive-bys

The new issue news flow was steady and strong on Monday with issuers pricing drive-by deals that generally came upsized and tight.

MSCI priced an upsized $1 billion issue of senior notes due Feb. 15, 2031 (Ba2/BB+) at par to yield 3 7/8%.

The issue size increased from $800 million.

The yield printed in the middle of yield talk in the 3 7/8% area, and tight to initial talk in the 4% area.

Inspire Brands priced an upsized $750 million issue of 7% five-year senior secured notes (B3/B) at par with a 6.999% yield to maturity.

The issue size increased from $500 million.

The yield came tight to the 7% to 7¼% yield talk, and deep inside of initial guidance in the high 7% area.

Standard Industries priced an upsized $350 million add-on to its 5% senior notes due Feb. 15, 2027 (Ba2/existing BBB-) at 99.50 to yield 5.087%.

The issue size increased from $250 million.

The issue price came 25 basis points through the rich end of the 98.75 to 99.25 price talk.

And Uber Technologies priced a $100 million add-on to its 7½% senior notes due May 15, 2025 (B3/CCC+) at par to yield 7½%.

The San Francisco-based ride-hailing service plans to use the proceeds for general corporate purposes including working capital.

“It was a good day to bring a deal,” a New York-based trader said, noting that a massive rally in the stock market saw the S&P 500 finish within 13% of its all-time high.

Promising results from Moderna Therapeutics in its early testing of a Covid-19 vaccine, coupled with Federal Reserve Chairman Jerome Powell's optimism that the U.S. economy could stage a significant recovery in the second half of 2020, voiced Sunday night on “60 Minutes,” sparked rallies in stocks and bonds, the trader said.

Tuesday deals

A couple of deals announced Monday will be in the market overnight.

Park Hotels & Resorts plans to price a $500 million offering of five-year senior secured notes (S&P: BB-) on Tuesday.

Initial guidance has the notes coming to yield in the high 6% area to 7%

And Cushman & Wakefield also plans to price a $400 million offering of eight-year senior secured notes (Ba3/BB-) on Tuesday.

Initial talk has the deal coming to yield 6¾% to 7%.

It's essentially the high-yield debut for the Chicago-based commercial real estate company, a trader said, adding that at initial talk it is very attractively priced.

Kraft Heinz active

Kraft Heinz’s 4 3/8% senior notes due 2046 were active although largely unchanged after the company announced the early results of a tender offer for seven series of its notes.

The 4 3/8% notes were continuing to trade on a 91-handle, a market source said.

The bonds saw more than $38 million in reported volume by the late afternoon.

Kraft Heinz announced on Monday that it had accepted $2.14 billion in early tenders for seven series of notes with maturities through 2025.

Occidental gains

Occidental Petroleum’s senior notes were up multiple points in high-volume activity on Monday as crude oil futures surged to a two-month high.

The Houston-based hydrocarbon exploration company’s 2.7% senior notes due 2022 were up more than 2 points to close Monday at 88 1/8, according to a market source.

The notes were active with more than $23 million in reported volume.

Occidental’s 2.7% senior notes due 2023 rose 1½ points to 83½. The 3½% senior notes due 2029 were up almost 2 points to 67, a source said.

Occidental Petroleum’s notes were posting gains even as the sale of its Ghana asset to Total SA fell apart.

The sale was part of its plan to deleverage some of the debt it took on as part of its acquisition of Anadarko Petroleum.

However, the notes were on the rise as crude oil futures rallied on Monday.

Crude oil futures traded up to a two-month high with the soon-to-expire WTI crude oil contract for June trading as high as $33.32 before settling at $31.89, an increase of $2.39 or 8.12%.

Crude oil prices surged as demand grows amid the slow reopening of the economy and production cuts continue.

Ford gains

Ford’s three tranches of senior notes continued to gain on Monday with all tranches closing the day above par and the long duration notes trading up to a 101-handle.

Ford’s 8½% senior notes due 2023 gained 2 points to close the day at par 3/8, according to a market source.

The notes saw more than $34 million in reported volume.

Ford’s 9% senior notes due 2025 gained 2½ points to par ¼ with more than $25 million in reported volume.

Ford’s 9 5/8% senior notes due 2030 rose 9 5/8% notes to close the day at 101¾.

The notes have struggled below par since pricing.

However, last week they briefly popped above before again moving lower on some soft days for the market.

The notes were largely trading alongside the broader market, a source said.

Ford’s 8½% senior notes due 2023 are also meet the criteria for the Federal Reserve’s secondary market corporate credit facility where the Federal Reserve will purchase individual bonds of fallen angels in addition to high-yield ETFs.

The Federal Reserve announced last week that it was going to begin to make purchases of high-yield ETFs.

$213 million Friday inflows

The dedicated high-yield bond funds saw $213 million of daily inflows on Friday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds saw $190 million of inflows on the day.

High-yield ETFs saw $23 million of inflows on Friday, the source said.

Indexes gain

Indexes were on the rise on Monday after all closed last week with cumulative losses.

The KDP High Yield Daily index was up 45 basis points to close Monday at 62.82 with the yield now 7.48%.

The index saw a cumulative loss of 65 bps on the week last week.

The ICE BofAML US High Yield index jumped 103.5 bps with the year-to-date return now negative 8.826%.

The index had a cumulative loss of 66.3 bps on the week last week.

The CDX High Yield 30 index jumped 166 bps to close Monday at 94.26.

The index had a cumulative loss of 191 bps on the week last week.

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