Presidio, Ladder Capital price; PBF Holding on deck; Novelis active; Teva gains; Chemours drops

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 15 – The domestic high-yield primary market returned to action on Wednesday with two issuers pricing three tranches.

Presidio Holdings Inc. priced its $800 million two-tranche offering and Ladder Capital Corp. priced an upsized $750 million issue.

The primary market will also be active on Thursday with PBF Holding Co. and PBF Finance Corp. expected to price $1 billion of eight-year senior notes (existing ratings B1/BB/BB).

Meanwhile, the secondary space was again largely flat on Wednesday with the market’s response to the completed phase one trade deal with China underwhelming, sources said.

While there was a lot of topical trading activity on Wednesday, Novelis Corp.’s recently priced 4¾% senior notes due 2030 (B2/B+) continued to see high-volume activity although the notes were largely trading sidewise.

While volume was light, Tegna Inc.’s 4 5/8% senior notes due 2028 (Ba3/BB) rose to a 102 handle as a proxy fight begins for new board of director members.

Chemours Co.’s junk bonds were soft on Wednesday following news the chemical company was named as a defendant in a lawsuit filed by the state of Michigan.

Teva Pharmaceutical Industries’ junk bonds were on the rise on the heels of the generic drug maker's presentation at the JPMorgan health care conference in San Francisco.

Tight executions

Two issuers placed $1.55 billion of junk bonds in three tranches, which came in tight executions on Wednesday.

Presidio Holdings priced $800 million at the conclusion of a roadshow.

The LBO deal included $400 million of seven-year senior secured notes (B1/B) which priced at par to yield 4 7/8%. The yield printed at the tight end of yield talk in the 5% area. Initial talk was in the 6% area.

The deal also included a $400 million tranche of eight-year senior unsecured notes (Caa1/CCC+), which priced at par to yield 8¼%. The yield on the unsecured notes printed a hefty 37.5 basis points inside of yield talk in the 8¾% area. Initial talk on the unsecured notes was in the high 9% area.

Timing on the deal was moved ahead. When announced, it was scheduled to remain in the market until Thursday.

In a drive-by, Ladder Capital Corp. priced an upsized $750 million issue of seven-year senior notes (Ba2/BB-) at par to yield 4¼%.

The issue size increased from $500 million.

The yield printed at the tight end of the 4¼% to 4½% yield talk.

Meanwhile PBF Holding expects to price $1 billion of eight-year senior notes (existing ratings B1/BB/BB) on Thursday.

Pending official talk, initial guidance has the notes coming to yield in the low 6% area.

Novelis active

Novelis’ 4¾% senior notes due 2030 remained in focus on Wednesday although the notes were largely trading sidewise.

The 4¾% notes continued to trade in the 101 to 101¼ context in heavy volume.

The bonds saw more than $34 million in reported volume during the session, according to a market source.

The 4¾% notes have put in a strong secondary market performance since the aluminum producer priced the $1.6 billion issue at par on Monday.

Tegna improves

Tegna’s recently priced 4 5/8% senior notes due 2028 continued to improve in the secondary space with the notes rising to a 102 handle over the past two sessions, a market source said.

The 4 5/8% notes were changing hands in the 102 3/8 to 102½ context during Wednesday’s session.

They rose to a 102 handle on Tuesday.

The 4 5/8% notes initially had a tepid introduction to the aftermarket with the notes trading with only a nominal premium.

However, they have steadily gained strength.

News broke on Tuesday that Standard General, Tegna’s third largest shareholder, was planning to nominate 4 directors to the board, a source said.

The board nominees include Standard General’s CEO Soo Kim – a nomination which Tegna said it had serious concerns about.

Standard General has been calling on the broadcast company to explore strategic alternatives, including a possible sale, Bloomberg reported.

Chemours down

Chemours’ junk bonds were down on Wednesday after the chemical company was named as a defendant in a lawsuit.

The chemical company’s 7% senior notes due 2025 dropped almost 2 points in active trading.

The bonds sunk below par and stood poised to close the day at 99, a source said.

Chemours’ 5 3/8% senior notes due 2027 also dropped ¾ point to close the day at 89, sources said.

Chemours was one of 17 defendants named in a lawsuit filed by the state of Michigan over contamination caused by PFAS chemicals.

Chemours was formed in a spin-off from former parent company DuPont in 2015.

The chemical maker filed suit against DuPont in 2019 alleging DuPont misled it about the amount of liabilities it would be taking on in the spin-off.

That lawsuit is still pending.

DuPont was also named as a defendant in Michigan’s lawsuit.

Teva gains

Teva’s junk bonds were among the major gainers of Wednesday’s session.

The 7 1/8% senior notes due 2025 were up 1 3/8 point to 104 5/8, a source said.

The 3.15% senior notes due 2026 rose 3 points to 87¼.

The 6¾% notes due 2028 were up 2 3/8 point to 104 1/8.

The generic drug maker recently presented at the JPMorgan healthcare conference in San Francisco, a source said.

$403 million Tuesday inflows

The dedicated high-yield bond funds saw $403 million of net inflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $383 million of inflows on the day.

Actively managed high-yield funds saw $20 million of inflows on Tuesday, the source said.

With only Wednesday's totals left to figure into the flows for the present week, the dedicated funds are tracking $1.4 billion of inflows for the week to Wednesday's close, the market source added.

Indexes mixed

Indexes were again mixed on Wednesday as they have been for much of the week.

The KDP High Yield Daily index rose 4 points to 71.96 with the yield now 4.81%. The index was up 3 bps on Tuesday and 2 bps on Monday.

The ICE BofAML US High Yield index gained another 6 bps with the year-to-date return now 0.683%. The index was up 8 bps on Tuesday and 8 bps on Monday.

The CDX High Yield 30 index was down 2 bps to close Wednesday at 109.52. The index dropped 12 bps on Tuesday and was down 10 bps on Monday.

© 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.