CDK prices, trades up; forward calendar builds; Cimpress trading ‘not so hot’; PetSmart gains

By Abigail W. Adams

Portland, Me., June 4 – After a sluggish week last week, the domestic and European high-yield primary market was in high gear on Monday with one dollar-denominated issue pricing and several more joining the forward calendar.

CDK Global, Inc. priced $500 million of eight-year senior notes (Ba1/BB+) at par to yield 5 7/8% in a drive-by sale on Monday.

The new notes were major volume movers in the secondary space after breaking for trade and were seen up about 1 point.

Shelf Drilling Holdings, Ltd. launched a $300 million add-on to its 8¼% senior notes due Feb. 15, 2025 with pricing expected Tuesday.

Albertsons Cos., Inc. will begin a roadshow on Tuesday for a $500 million offering of 5.5-year senior secured floating rate notes with pricing expected on Wednesday.

Aleris International, Inc. launched a $400 million offering of five-year senior secured junior priority notes with pricing expected at the end of the week. Initial guidance is whispered in the 11¼% area, according to a market source.

Frontera Energy Corp. will begin a roadshow for a $500 million offering of five-year senior notes on Tuesday, which is scheduled to run through June 13.

Matterhorn Telecom SA began a roadshow on Monday for a CHF 2.09 billion equivalent offering of senior secured notes in four tranches (expected B2/B+), which will include a dollar-denominated tranche.

In the European market, SAS AB priced a SEK 750 million tap of its senior bonds due Nov. 24, 2022 at a reoffer price of 102.5 to yield 4.73%.

Outokumpu Oyj plans to start a roadshow in Europe on Tuesday for an offering of €250 million of six-year senior secured notes (expected Ba3) and Vivat NV mandated Deutsche Bank, NatWest Markets, ABN Amro, and BNP Paribas to arrange a series of investor meetings in Europe with an issue of euro-denominated perpetual callable restricted tier 1 notes to follow.

Meanwhile, Cimpress NV’s recently priced 7% senior notes due 2026 had a lackluster performance in the secondary space with the notes seen hovering around their issue price.

PetSmart Inc.’s junk bonds were in focus and on the rebound on Monday after the company’s asset transfer of Chewy.com was less than expected.

CDK’s drive-by

CDK priced $500 million of eight-year senior (Ba1/BB+) at par to yield 5 7/8% in a drive-by sale on Monday, according to a market source.

Pricing came tighter than price talk and initial guidance that were both set in the 6% area.

The deal was marketed via an investor call.

J.P. Morgan, BofA Merrill Lynch, Morgan Stanley, MUFG, US Bancorp and Wells Fargo Securities were bookrunners for the registered deal.

The 5 7/8% notes were major volume movers in the secondary space after breaking for trade. They were seen at par ½ bid, 101½ offered shortly after pricing.

They were seen at 101¼ bid, 101¾ offered later in the afternoon.

More than $60 million bonds had traded by late afternoon with the majority of trades between par ¾ to 101½, a market source said.

With a credit spread of 295 and a credit rating that is just one notch below investment grade, the deal looks interesting, a market source said.

The week ahead

The forward calendar for dollar-denominated deals filled up on Monday with several issuers launching offerings that are expected to price before the week is through.

Shelf Drilling launched a $300 million add-on to its 8¼% senior notes due Feb. 15, 2025 with pricing expected Tuesday, according to a market source.

The deal is being marketed via an investor call which is scheduled for 10 a.m. ET on Tuesday with pricing to take place thereafter.

Credit Suisse Securities LLC is lead left for the Rule 144A and Regulation S for life deal. RBC Capital Markets Corp., HSBC Securities Inc. and ING are also bookrunners.

Albertsons will begin a roadshow on Tuesday for a $500 million offering of 5.5-year senior secured floating rate notes with pricing expected on Wednesday, according to a market source.

BofA Merrill Lynch is lead left on the Rule 144A for life offering. Credit Suisse Securities LLC, Goldman Sachs & Co., Morgan Stanley & Co. Inc., Barclays Capital Inc., Deutsche Bank Securities Inc., RBC Capital Markets Corp., Wells Fargo Securities LLC and MUFG are joint bookrunners.

Aleris launched a $400 million offering of five-year senior secured junior priority notes with initial guidance whispered for a yield in the 11¼% area, according to a market source.

The deal is being marketed via an investor conference call, which is scheduled for Tuesday.

Pricing is expected at the end of the week, according to a market source.

Deutsche Bank is left lead for the Rule 144A and Regulation S deal. Barclays, BofA Merrill Lynch and JP Morgan are also bookrunners.

The closing of the offering is contingent upon the company’s entry into a new first lien term loan facility and an amendment to its ABL Facility, according to a company news release.

Matterhorn began a roadshow on Monday for a CHF 2.09 equivalent offering of senior secured notes in four tranches (expected B2/B+), according to a market source.

The roadshow will run in Europe and the United States until Thursday with pricing expected thereafter.

Credit Suisse is left lead and Goldman Sachs and Société Générale are global coordinators. BNP Paribas, JPMorgan and Natixis are joint bookrunners for the Rule 144A and Regulation S deal.

The offering will consist of a euro-denominated tranche of seven-year notes that are non-callable for one-year, a CHF-denominated tranche of seven-year notes that are non-callable for three-years, a euro-denominated tranche of eight-year notes that are non-callable for three-years and a dollar-denominated tranche of eight-year notes that are non-callable for three years.

While further out, Frontera Energy announced plans to start a roadshow on Tuesday, which is scheduled to run through June 13.

BofA Merrill Lynch, Citigroup, HSBC, Itau BBA and J.P. Morgan were mandated to arrange investor meetings in Canada, Chile, Europe and the United States for the Rule 144A and Regulation S deal, a market source said.

Proceeds will be used to repurchase $250 million of the company’s 10% senior secured notes due 2021 under a tender offer, also announced Monday.

Europe active

With markets firming, the European primary market also launched into action on Monday.

SAS AB priced a SEK 750 million tap of its senior bonds due Nov. 24, 2022 at a reoffer price of 102.5 to yield 4.73%, according to a company news release.

Danske Bank, Nordea Bank, SEB and Swedbank were joint bookrunners for the offering.

The add-on increased the outstanding amount of the 2022 bonds to SEK 2.25 billion.

Outokumpu will start a roadshow in Europe on Tuesday for an offering of €250 million of six-year senior secured notes (expected Ba3) that will run through Thursday, according to a market source.

BNP Paribas and Nordea are coordinators and joint lead managers for the Regulation S deal. Danske Bank and Swedbank are also joint lead managers.

Vivant mandated Deutsche Bank, NatWest Markets, ABN Amro, and BNP Paribas to arrange a series of investor meetings in Europe with an issue of euro-denominated perpetual callable restricted tier 1 notes to follow, according to a market source.

Deutsche Bank and NatWest are structuring advisers and lead managers with ABN Amro and BNP.

Meetings are scheduled to begin on Wednesday for the Regulation S offering.

Cimpress ‘not so hot’

Cimpress’ recently priced 7% senior notes due 2026 were “not so hot,” in the secondary market, a market source said. The notes were seen at 99¾ bid, par ¼ offered early in the session.

They were trading in a range of 99 7/8 to par ¼ with about $17 million of the bonds traded during Monday’s session.

“They’re really not active,” another market source said.

Cimpress priced $400 million of eight-year senior notes (B1/B+) on Friday at par with a coupon of 7%.

Pricing came within price talk for a coupon of 7% and wider than initial price talk in the mid to high 6% area, according to a market source.

Proceeds will be used to redeem the company’s 7% senior notes due 2022 (B1/B+). The 7% notes were seen trading at 105.5 on Monday although few bonds traded, according to a market source.

PetSmart in focus

PetSmart’s junk bonds were on the rebound on Monday with the bonds up 3 to 5 points in high-volume trading, a market source said.

PetSmart’s 7 1/8% notes due 2023 were the volume leader of Monday’s session with more than $85 million of the bonds traded. The notes were up about 5 points to trade at 53½.

The 5 7/8% notes due 2025 were up about 3 points to trade at 72. More than $66.5 million of the bonds traded by late afternoon.

PetSmart’s 8 7/8% notes due 2025 were up about 5 points to trade at 53 with about $40 million of the bonds traded.

PetSmart’s bonds were up after news broke that the company had transferred 20% of its stake in Chewy.com to a holding company.

Investors were concerned PetSmart would transfer 100% of their stake in the company, a market source said.

“It was perceived as credit positive that they didn’t move more than 20%,” a market source said.

PetSmart has been under pressure in May with the notes losing ground after Amazon announced the launch of its own dog food line and the announcement of a new CEO.

Indexes mixed

Benchmarks for the high-yield secondary market were again mixed on Monday after closing last week mixed.

The KDP High Yield index posted a slight loss on Monday. The index was down 3 basis points to close Monday at 70.32 with the yield now 5.95%. The index was also down 3 bps on Friday after a 5 bps gain on May 31.

The Merrill Lynch High Yield index’s negative year-to-date return is zeroing in on positive territory after Monday’s gains.

The index was up 12.8 bps on Monday with the year-to-date return now negative 0.057. The index has posted negative year-to-date returns since May 15.

The CDX High Yield 30 index was up for the second consecutive trading day on Monday. The index was up 22 basis points to close Monday at 106.72.

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