LPL Holdings, Albertsons price; Ardagh gives back; CommScope gains, PartyCity tanks

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 7 – The dollar-denominated high-yield primary market continued to actively turn out new paper on Thursday.

Albertsons priced an upsized $750 million issue of senior guaranteed notes.

LPL Financial Holdings Inc. priced a $400 million issue of eight-year senior notes.

The European primary market was also active with Quatrim SAS pricing an upsized €800 million issue of 4.25-year senior secured notes (B1/B+) and Owens-Illinois Group, Inc. pricing an upsized €500 million issue of 5.25-year senior green notes (Ba3/BB-).

Meanwhile, the secondary space was again largely flat on Thursday even as news the United States and China would roll back tariffs if a deal is signed buoyed equities.

New deals and earnings continued to be the main drivers of trading activity.

Ardagh’s recently priced 6½% senior secured toggle notes due 2027 were active with the notes giving back some of their gains.

CommScope Inc.’s junk bonds jumped in active trading following its third-quarter earnings report.

However, Party City Holdings Inc.’s junk bonds tanked after its earnings report with both of the party store chain’s tranches dropping double digits.

Avon Products Inc.’s 8.95% senior notes due 2043 made large gains following news the acquisition of the company had cleared a regulatory hurdle.

Billion-a-day

The dollar-denominated primary market continued to chug along at its torrid $1 billion-plus per day November pace on Thursday.

Albertsons priced an upsized $750 million issue of senior guaranteed notes due Jan. 15, 2027 (B3/BB-) at par to yield 4 5/8% in a quick-to-market trade.

The issue size increased from $500 million.

The yield printed in the middle of yield talk in the 4 5/8% area. Initial guidance had the notes coming to yield in the high 4% area.

The new deal was lagging its issue price after breaking for trade.

The 4 5/8% notes were trading in a range of 99 3/8 to par ¾. However, the majority of trades were on a 99 handle, a market source said.

LPL Financial Holdings Inc. priced a $400 million issue of eight-year senior notes (B1/BB) at par to yield 4 5/8%.

The yield printed at the tight end of yield talk in the 4¾% area. Initial guidance had the notes coming to yield in the high 4% to 5% area.

Thursday's pair of dollar-denominated deals brought month-to-date issuance to $5.07 billion.

With decent economic data, a better-than-expected earnings season, an accommodative Fed (for the moment) and an apparent diminishment of trade tensions between the United States and China, the high-yield primary market is definitely open, sources say.

With a $1 billion-plus per day issuance pace across the first five sessions of the month, November 2019 could make a run for the record amount of November issuance.

Average November issuance since 2010 is $22.8 billion, according to Prospect News data.

The biggest November, by a nose, came in 2014, with $31.2 billion.

The slowest November came last year. November 2018 turned out just $3.5 billion.

Whither Wesco?

One deal remains on the active calendar as business that could clear ahead of the weekend.

The Wesco PattonAir upsized $2,175,000,000 acquisition/merger deal, marketed on a roadshow that got underway in mid-October, remains in the market, but may face further revisions, sources say.

Although books were heard to become subject on Wednesday, pricing is now expected on Friday, according to traders.

The deal was upsized from $1.6 billion with the withdrawal of a proposed $600 million bank loan tranche, earlier in the week.

The revised bond deal includes senior secured notes (B3/B) coming in two tranches with minimum sizes of $500 million apiece. They include five-year notes talked to yield 8¼% to 8½% and seven-year notes talked to yield 8¾% to 9%.

There were also covenant changes.

The financing also includes a $575 million tranche of eight-year senior unsecured notes (Caa2/CCC+) talked at 425 to 450 basis points behind the seven-year secured notes, implying a yield in the range of 13% to 13½%. Earlier guidance had the unsecured notes coming 350 bps behind the seven-year secured notes (then talked in the high 7% area) that would have implied a yield in the low-to-mid 11% area.

The unsecured portion is proving to be the toughest part of the deal, sources say.

It has been radio silence on Wesco since early in the week, a trader said on Thursday.

Busy euro market

Dealers began wrapping up business on the week's busy euro-denominated calendar on Thursday.

Quatrim SAS, a wholly owned subsidiary of French supermarket operator Casino, Guichard-Perrachon, priced an upsized €800 million issue of 4.25-year senior secured notes (B1/B+) at par to yield 5 7/8%.

The issue size increased from €750 million.

The yield came at the tight end of revised yield talk in the 6% area, which was tightened from earlier talk in the 6¼% area. Initial guidance was in the mid 6% area.

And Owens-Illinois Group, Inc. priced an upsized €500 million issue of 5.25-year senior green notes (Ba3/BB-) at par to yield 2 7/8%.

The issue size increased from €300 million.

The yield printed at the tight end of revised yield talk in the 3% area; earlier talk was 3% to 3¼%.

Ardagh gives back

Ardagh’s recently priced 6½% senior secured toggle notes due 2027 (Caa2/B-) gave back some of their initial gains on Thursday.

The notes were down about 3/8 point.

They were hovering just above par in active trading, a market source said. They saw more than $50 million in reported volume.

They traded up to par ½ after breaking for trade on Wednesday.

Ardagh priced $1.13 billion of the 6½% toggle notes on Wednesday as part of a two-tranche dual-currency offering.

The cash coupon priced 12.5 basis points inside of the yield talk in the 6¾% area. Initial talk was in the 7% area.

The PIK coupon steps up 75 bps to 7¼%.

CommScope gains

CommScope’s junk bonds were on the rise in active trading following its third-quarter earnings report.

The network infrastructure provider’s 6% senior notes due 2025 were up almost 6 points to 93½.

The 5½% senior unsecured notes due June 15, 2024 gained 3½ points to 96½, according to a market source.

CommScope’s 5½% senior secured notes due March 1, 2024 gained 2¼ points to 103¼.

The 8¼% senior notes due 2027 stood poised to close the day at 95.

CommScope had a mixed earning report with revenue that missed expectations, according to a market source.

Revenue was $2.39 billion versus analyst expectations for revenue of $2.43 billion.

However, the company’s EBITDA was better than expected, according to the source.

EBITDA was $370 million versus the $343 million expected.

Party City tanks

Party City’s junk bonds tanked following its earnings report with both tranches dropping double digits.

Party City’s 6 5/8% senior notes due 2026 dropped 12½ points to 84, according to a market source.

The bonds were among the most actively traded during Thursday’s session with $36 million in reported volume.

Party City’s 6 1/8% senior notes due 2023 were down more than 10 points to 90½ with $7 million in reported volume.

The party store retailer’s full capital structure was taking a hit after it reported a large earnings miss and slashed its forward guidance.

The company’s stock lost more than 50% of its value.

Party City reported declining revenue and sales in the third quarter, which were compounded by a disappointing Halloween.

Revenue was $540 million versus the $551 million expected, which the company attributed to a helium shortage.

Avon approved

Avon’s 8.95% senior notes due 2043 were the largest gainers of Thursday’s session.

The notes jumped 7 points to 122¾ in decent volume, according to a market source.

The large move came after Brazil’s antitrust authority approved the cosmetic maker’s acquisition by Natura & Co.

The transaction is expected to close in the first quarter of 2020, according to a company news release.

Funds see $574 million outflows

In the face of the week's notable executions, with deals upsizing and pricing tight, the cash flows of the dedicated high-yield bond funds were negative for the week to Wednesday's close.

The combined funds saw $574 million of outflows in the most recent week, according to information reported on the Internet by Lipper US Fund Flows.

However, the daily fund flows were positive on Wednesday, the most recent session for which data was available at press time, a market source said.

High-yield ETFs saw $35 million of inflows on the day.

Actively managed high-yield funds saw $60 million of inflows on Wednesday, the source said.

Indexes mixed

Indexes were flat to up slightly on Thursday.

The KDP High Yield Daily index gained 1 bp to close the day at 71.22 with the yield 5.37%.

The index was down 10 bps on Wednesday and 1 bp on Tuesday after a 14-bps gain on Monday.

The ICE BofAML US High Yield index dipped 0.3 bps with year-to-date returns now 12.012%.

The index slid 10.2 bps on Wednesday and 6.4 bps on Tuesday after a 5.8 bps gain on Monday.

The CDX High Yield 30 index rose 10 bps to close Thursday at 107.75. The index was down 5 bps on Wednesday and 1 bp on Tuesday after a 37-bps gain 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.