R.R. Donnelley prices; Frontier notes improve; Beacon Roofing unchanged

By Cristal Cody and Paul A. Harris

Tupelo, Miss., July 18 – R.R. Donnelley & Sons Co. priced Tuesday’s sole junk deal, an upsized $285 million issue (from $250 million) of 9¼% five-year junior-lien secured notes (B3/B-), which came at 95.28089 to yield 11%, in line with talk.

That leaves one announced deal on the active forward calendar.

Ontario Gaming is on the road with a $400 million offering of seven-year senior secured notes.

Pending official talk, early guidance is in the 8½% to 8¾% area, with pricing set for Thursday.

There is also a pipeline of telegraphed deals, some or all of which could price ahead of Friday’s close.

BrandSafway Solutions LLC, which formerly operated as Brand Industries, is expected to show up sooner than later with an offering of senior secured notes that are being pre-marketed with guidance of 10½% to 11½%, sources say.

Arconic Corp. is also heard to be near at hand with $1.625 billion of notes offerings: a $900 million secured tranche and a $725 million unsecured tranche.

And Resorts World Las Vegas is heard to be pre-marketing dollar-denominated seven-year senior notes (Fitch: BBB-), which kicked off on a global investor call on Monday.

When pressed for more precise timing on this pipeline a syndicate banker remained non-committal on Tuesday afternoon, but allowed that if the markets and the financial headlines stay positive there could be more deal announcements ere the end of the week.

Market tone stayed mostly positive over the session with stocks stronger and volatility waning following strong financial earnings results from Bank of America Corp. and Morgan Stanley.

The iShares iBoxx High Yield Corporate Bond ETF rose 21 cents, or 0.28%, to $75.45.

“The market was up a bit, but accounts had put out some [bids wanted in competitions] and some [offers wanted in competitions],” a trader said of the high-yield space.

Frontier Communications Holdings LLC’s paper saw gains Tuesday after coming under pressure along with other issuers in the telecom space over potential liability from leaking lead cables, sources said.

Frontier’s bonds declined about 2½ points to 4 points on Monday and were trading about 1¾ points or better Tuesday, sources said.

The 8¾% first-lien secured notes due 2030 (B3/B) recovered 2 1/8 points after dropping to the low 90s on Monday.

“They are very volatile,” a trader said. “Today, they have bounced back 2 points.”

Beacon Roofing Supply Inc.’s new 6½% senior secured notes due 2030 (Ba3/BB) topped junk secondary supply over the session as the most active issue, a source said.

The bonds went out flat on the day but were trading ¼ point better than where they priced on Monday.

Frontier higher

Frontier Communications’ 8 5/8% first lien secured notes due 2031 (B3/B) added over 1¾ points to head out at 94 on $22 million of secondary supply Tuesday, a source said.

The 8¾% first-lien secured notes due 2030 (B3/B) also climbed 2 1/8 points to 94¾ on $21.7 million of volume.

The bonds were up more than 1 point around 94 in early trading Tuesday.

On Thursday, the 8¾% notes traded around a 97 handle but dropped to 94 3/8 on Friday and to 92 5/8 on Monday.

Beacon Roofing steady

Beacon Roofing’s new 6½% senior secured notes 2030 (Ba3/BB) went out Tuesday flat at 100¼ and a 6.44% yield on $64 million of trading, a source said.

The bonds topped junk secondary supply over the session as the most active name.

The issue was seen early in the session at par 1/8.

Beacon Roofing sold an upsized $650 million of the bonds on Monday at par in a deal upsized from $500 million and said to have attracted $3 billion of orders.

The yield printed at the tight end of the 6½% to 6¾% yield talk. Initial talk was in the 6¾% to 7% area.

Indexes

The KDP High Yield Daily index rose Tuesday to 51.06 and a 7.14% yield from 50.94 with a 7.19% yield on Monday.

The index posted a cumulative gain of 81 points in the prior week.

The CDX High Yield 30 index moved higher Tuesday to 103.14 from 102.95 in the prior session.

The index posted a cumulative loss of 122 bps in the previous week.

Fund flows

High-yield ETFs saw $235 million of daily cash inflows on Monday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds were negative on the day, sustaining $32 million of outflows on Monday.

The combined funds are tracking $1.63 billion of net inflows for the week that will conclude with Wednesday’s close, according to the market source.

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