Uber upsizes; Albertsons in focus; Intelsat gains; Hexion slump continues; L Brands active

By Paul A. Harris and Abigail W. Adams

Portland, Me., Oct. 16 – The primary market remained quiet on Tuesday with no new deals pricing during the session.

Uber Technologies Inc. upsized its two-part private placement and finalized price talk.

The deal is now anticipated to price on Thursday, although the notes are not expected to immediately trade.

Meanwhile, the secondary space was equally uneventful on Tuesday with little notable activity, sources said.

Albertsons Cos., Inc.’s junk bonds remained in focus on Tuesday and continued to see improvement on a positive second-quarter earnings report.

Intelsat Luxembourg SA and Intelsat Jackson Holdings SA’s junk bonds were also making gains in active trading as investors responded favorably to the company’s new business endeavors.

Hexion Inc.’s junk bonds remained under pressure on Tuesday with the notes continuing to trade down.

L Brands Inc.’s 5¼% senior notes due 2028 were active in the secondary space although largely unchanged on the day.

Uber upsizes

Uber Technologies upsized its two-part private placement deal to $2 billion from $1.5 billion on Tuesday.

Meanwhile, price talk was finalized in line with initial guidance.

The deal includes a $500 million tranche of five-year notes, which come with two years of call protection and are talked in the 7½% area.

The tranche of eight-year notes was upsized to $1.5 billion from $1 billion.

The eight-year notes come with three years of call protection and are talked in the 8% area.

The notes could price Thursday but are not expected to immediately clear for trading, a bond trader said.

Morgan Stanley is the placement agent.

Uber's novel execution, in which it has endeavored to circle up a limited number of accounts, has been undertaken with an eye to limiting the proliferation of the San Francisco-based ride-sharing company's financial information, sources say.

Albertsons in focus

Albertsons’ junk bonds remained in focus on Tuesday with the grocery retailer’s 5¾% senior notes due 2025 among the most actively traded issue of the day.

The 5¾% notes jumped another 1 point to close the day at 91, according to a market source. More than $24 million bonds changed hands during Tuesday’s session.

The notes were up about 2¾ point on Monday after the company reported positive second-quarter earnings.

Albertsons reported a 1.4% increase in sales and revenue quarter-over-quarter, adjusted EBITDA of $548.6 million in the second quarter, adjusted EBITDA of $1.36 billion year-to-date, and affirmed its expected EBITDA of about $2.7 billion for the 2018 fiscal year.

Intelsat gains

Intelsat Luxembourg’s and Intelsat Jackson Holdings’ junk bonds both saw gains on Tuesday as investors responded favorably to company news.

After dipping below their reoffer price on Monday, Intelsat Jackson Holdings’ 8½% senior notes due 2024 (Caa2/CCC+) shot up 1 point on Tuesday.

The 8½% notes were seen changing hands at 101¾, a market source said. More than $16 million of the bonds traded during Tuesday’s session.

The notes were seen at par ½ bid, par 7/8 offered on Monday.

Intelsat Jackson priced a $700 million add-on to the 8½% notes at 100.75 on Oct. 2. The satellite communication’s provider initially priced $2.25 billion of the 8½% notes at par in early September.

Intelsat Luxembourg’s 8 1/8% senior notes due 2023 were also seeing gains on Tuesday. The notes also shot up 1 point to trade at 90, a market source said.

Intelsat announced prior to the market open Tuesday a strategic investment in Africa Mobile Networks to increase mobile connectivity in sub-Saharan Africa.

Intelsat announced on Monday a new service called FlexExec to provide broadband connectivity to business jets.

Hexion under pressure

Hexion’s junk bonds continued to drop in high volume activity in the secondary space on Tuesday.

The Columbus, Ohio-based chemical company’s 6 5/8% senior notes due 2020 were down another ½ point to trade at 88¾, according to a market source.

More than $17 million of the bonds traded during Tuesday’s session.

The notes were down about 1 point on Monday.

Hexion’s 9% senior notes due 2020 dropped 2 points to close Tuesday at 72, a market source said.

The notes were down 3 points to 74 bid, 75 offered on Monday.

There did not appear to be any headline news behind the trading activity, a market source said.

However, the chemical sector has been under pressure amid increasing tariffs and trade war tensions, sources said.

L Brands active

L Brands 5¼% senior notes due 2028 saw high-volume activity in the secondary space on Tuesday although with little movement in price.

The 5¼% notes closed the day relatively unchanged at 85¾, a market source said. However, more than $21 million bonds changed hands during the session.

With earnings coming up in November, investors may be placing their bets on the struggling retailer, a source said.

L Brands 5¼% notes have steadily traded down since its second-quarter earnings report in August where it slashed its forward guidance for the third quarter.

Prior to the second-quarter earnings report, the notes were trading in the low 90s.

L Brands is expecting earnings per share of 0 cents to 5 cents in the third quarter.

Mixed Monday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Monday, the most recent session for which data was available at press time, a trader said.

High-yield ETFs saw $660 million of inflows on the day.

Actively managed high-yield funds sustained $15 million of outflows on Monday, the trader said.

Indexes flat to up

Two benchmarks for the high-yield market saw large gains on Tuesday with one remaining level.

The KDP High Yield Daily index was flat for the second consecutive trading day, closing Tuesday at 69.95. However, the yield gained 2 basis points to close the day at 6.01%.

The index also closed Monday at 69.95, flush with Friday’s close. However, the yield on Monday was 5.99%.

The index dropped 43 bps on the week last week.

The ICE BofAML US High Yield index gained 17.6 bps with the year-to-date return now 1.843%. The index rose 9.1 bps on Monday.

The CDX High Yield 30 index jumped 46 bps to close Tuesday at 106.38. The gains surpassed the index’s 29 bps drop on Monday.

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