Adient, Greystar price; Netflix active; CRC sells off; Bombardier down; funds lose $521 million

By Abigail W. Adams

Portland, Me., April 25 – The domestic primary market remained active on Thursday with one upsized deal and one add-on deal pricing.

Adient US LLC priced an upsized $800 million issue of seven-year senior secured notes (Ba2/BB-) at par to yield 7%.

Greystar Real Estate Partners, LLC priced an upsized $90 million add-on to its 5¾% senior notes due Dec. 1, 2025 (B1) at 99.5 in a quick-to-market Thursday trade.

The active forward calendar remains robust heading into Friday’s session, although some of the deals may be pushed into the April 29 week.

The European primary market was also active with FNAC Darty SA pricing €650 million of senior notes (expected ratings Ba2/BB+) in two tranches.

Meanwhile, the secondary space was soft on Thursday with several names under pressure. However, new paper continued to perform well.

Adient’s new notes soared in high-volume activity out of the gate, while the automotive seating company’s 4 7/8% senior notes due 2026 also continued to gain ground.

Netflix, Inc.’s newly priced 5 3/8% senior notes due 2029 remained active although largely flat in secondary trading.

California Resources Corp.’s junk bonds saw a sell-off on Thursday in response to concern over legislation limiting oil and gas production in California.

Bombardier Inc.’s junk bonds were also trading down after the aerospace and transportation company slashed its first quarter and full-year guidance.

Meanwhile, fund flows reversed course over the past week with high-yield mutual and exchange-traded funds seeing their first outflow in seven weeks.

Funds saw outflows of $521 million for the week ended Wednesday, according to fund-flow statistics generated by AMG Data Services Inc.

Adient upsized and tight

Adient priced an upsized $800 million issue of seven-year senior secured notes (Ba2/BB-) at par to yield 7%.

The issue size was increased from $750 million.

The yield printed tight to yield talk in the 7 1/8% area and inside of initial guidance in the low-to-mid 7% area.

The debt refinancing deal went well and was up 2½ points in the secondary market shortly after the Thursday close, a trader said.

BofA Merrill Lynch was the left bookrunner. J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Barclays and Credit Agricole CIB were the joint bookrunners.

Greystar upsizes

Greystar Real Estate Partners priced an upsized $90 million add-on to its 5¾% senior notes due Dec. 1, 2025 (B1) at 99.50 in a quick-to-market Thursday trade.

The tap was increased from $75 million

Capital One Securities Inc. and J.P. Morgan Securities LLC managed the transaction.

Looking to Friday

Dealers began setting the stage for what figures to be a busy Friday in the primary market.

However, some of the deals announced earlier in the week, although they had been expected to clear ahead of the coming weekend, could move into the April 29 week, sources said on Thursday.

Brookfield Property REIT Inc. is in the market with a $750 million seven-year secured deal (Ba3/BB+), expected to price Friday.

As the market awaits official talk, the early guidance has the deal coming to yield 5 5/8% to 5 7/8%.

Truck Hero, Inc. is marketing a $335 million offering of first-lien paper (B2) that has undergone structural changes, market sources say.

The tenor is decreased to five years from seven years. Call protection decreased to two years from three years.

There are covenant changes, which include a special earnings call, a trader said, and added that guidance on the deal has widened to 8½% from earlier whisper of 8% to 8 3/8%.

The deal was scheduled to price late in the present week.

And Moss Creek Resources Holdings, Inc. is scheduled to wrap up its roadshow Friday on the West Coast.

Its $500 million offering of eight-year senior notes (B3), with 10% initial guidance, was heard to be playing to $300 million of interest on Thursday, a market source said.

FNAC Darty, tighter and tighter

The European new issue market also continues to generate a steady or better volume of news.

Thursday's attention-grabbing deal came from France-based consumer electronics retailer FNAC Darty, which priced €650 million of senior notes (expected ratings Ba2/BB+) in two tranches.

The short-maturity tranche came as €300 million of five-year notes which priced at par to yield 1 7/8%.

The long tranche featured €350 million of seven-year notes which priced at par to yield 2 5/8%.

Pricing on both tranches ratcheted tighter as the deal made its way through the market, sources said.

The short-maturity notes coming at the tight end of the 1 7/8% to 2% final yield talk and tighter than early talk in the 2 1/8% area and initial guidance in the low-to-mid 2% area.

The long-dated notes came in the middle of final talk in the 2 5/8% area and blew through both early talk in the 2 7/8% area and initial guidance in the 3% area.

In spite of an increased supply of issuance, deals are coming very tight, a market source in Europe commented.

Global coordinator Credit Agricole CIB will bill and deliver. BNP Paribas and Natixis are also global coordinators.

Adient soars

Adient’s new 7% notes dominated the secondary space after breaking for trade with the notes soaring out of the gate.

The new notes traded up to 102 by the late afternoon with more than $153 million on the tape, according to a market source.

With a successful refinancing deal under its belt, Adient’s 4 7/8% notes continued to climb on Thursday.

The notes were up 1 1/8 point to 82 7/8 by late Thursday afternoon, according to a market source.

The 4 7/8% notes have been active and making gains since news of Adient’s new offering circulated the market.

Netflix flat

Netflix’s new 5 3/8% senior notes due 2029 were active but flat on Thursday after a strong performance after breaking for trade on Wednesday.

The 5 3/8% notes continued to trade between 101 1/8 and 101¼ on Thursday, a market source said. More than $45.5 million of the bonds were on the tape by the late afternoon.

Netflix priced an upsized $2.24 billion equivalent amount of 10.5-year senior bullet notes (Ba3/BB-) in two tranches on Wednesday.

The deal included $900 million of the 5 3/8% notes and €1.2 billion of 3 7/8% notes with both tranches pricing at par.

California Resources sells off

California Resources’ junk bonds saw a sell-off on Thursday with the notes dropping several points due to concern over legislation that would restrict oil and gas production in California.

The bellwether 8% senior notes due 2022 dropped 3 points to 79¼ with more than $69 million of the bonds on the tape by the late afternoon, according to a market source.

While less active, California Resources’ 5½% notes due 2021 dropped 5 points to 77½.

While California Resources’ 8% notes are a highly liquid issue that typically moves in line with crude oil futures, the notes dropped on Thursday over concern about the passage of California Assembly Bill 345.

The bill would establish a 2,500-foot setback for all new oil and gas development work in the state.

Bombardier’s guidance

Bombardier’s junk bonds were trading down in high-volume activity on Thursday after the aerospace and transportation company slashed its first-quarter and full-year guidance.

The 7 7/8% notes due 2027 dropped 1 point to 101 3/8, according to a market source. More than $36 million of the bonds were on the tape.

The 7½% notes due 2025 dropped 1¼ points to 101 1/8 with more than $29 million of the bonds on the tape.

The notes were trading down after Bombardier announced a reduction in guidance, which the company attributed to the timing of aircraft deliveries and the ramp up of transportation projects, a market source said.

The company now expects first-quarter EBITDA to be $265 million versus analyst expectations for EBITDA of $340 million.

Indexes dropped

Indexes dropped on Thursday after a mixed week.

The KDP High Yield Daily index fell 14 basis points to close Thursday at 70.50 with the yield now 5.74%. The index was up 4 bps on Wednesday, was flat on Tuesday and slid 2 bps on Monday.

The ICE BofAML US High Yield index slid 7.5 bps with the year-to-date return now 8.71%.

The index gained 10.6 bps on Wednesday and was up 13.2 bps on Tuesday after slipping 0.6 bps on Monday.

The index shot past 8% year-to-date returns on April 8 after only recently surpassing the 7% threshold on March 26 and passing 6% year-to-date returns on March 11.

The CDX High Yield 30 index dropped 10 bps to close Thursday at 104.35. The index was down 25 bps on Wednesday, gained 18 bps on Tuesday, and dropped 12 bps on Monday.

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