Morning Commentary: Bausch Health driving by with $1.25 billion; USA Compression gains

By Paul A. Harris

Portland, Ore., Feb. 22 – Bausch Health Cos. Inc. plans to price $1.25 billion of high-yield notes in a quick-to-market Friday trade following a mid-morning conference call with investors.

The deal includes a $500 million tranche of new 8.5-year senior secured notes (Ba2/BB-).

In addition, the Bausch Health Americas Inc., formerly known as Valeant Pharmaceuticals International, plans to price a $750 million add-on to the Valeant 8½% senior notes due Jan. 31, 2027 (B3/B-).

Among existing issues, the new USA Compression Partners, LP 6 7/8% senior notes due Sept. 1, 2027 (B3/B+/BB-) were turning in a strong performance in the secondary market on Friday morning at 101¾ bid, 102 offered, a New York-based trader said.

The upsized $750 million issue (from $500 million) priced at par, at the tight end of talk, in a Thursday drive-by.

Meanwhile, the investment-grade bonds of the Kraft Heinz Co. fell a couple of points in Friday trading, and the company’s stock dropped by 30% as the company disclosed a $15 billion write-down of its legacy brands including Oscar Mayer.

In addition, Kraft Heinz reported a $12.6 billion loss, cut its dividend and announced that its accounting practices are under investigation by the Securities and Exchange Commission.

The company’s bonds, which are rated Baa3 by Moody's Investors Service, may eventually come into the realm of speculative grade debt, the New York trader said.

Although the index was little changed on the morning, high-yield ETFs were higher, in line with the stock indexes in the United States, sources said.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was 0.22%, or 19 cents, at $85.61 per share.

Junk was also catching a tailwind from the continuing rally in crude oil prices, the trader said.

The barrel price of West Texas Intermediate crude for April 2019 delivery was up 0.63%, or 36 cents, at $57.32 on Friday morning.

Thursday inflows

The daily cash flows of the dedicated high-yield bond funds were positive on Thursday, a trader said.

High-yield ETFs saw $251 million of inflows on the day.

Actively managed high-yield funds were essentially flat on the day, with $5 million of inflows.

News of the Thursday daily flows follows word that the combined funds saw $284 million of inflows in the week to Wednesday’s close, according to a closely watched weekly report from Lipper US Fund Flows.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.