Clean Harbors, SiriusXM, Multi-Color, Cedar Fair, LSB add-on price; DriveTime postpones; Nexstar on tap

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 18 – For the seventh time in 2019, the domestic high-yield primary market topped the $4 billion mark on Tuesday with most of the session's issuers selecting the drive-through window.

SiriusXM priced an upsized $1.5 billion of five-year senior notes (Ba3/BB) at par to yield 4 5/8% in a deal that nearly doubled in size.

After revisions to talk and size and covenant changes, Multi-Color priced a $1.39 billion two-tranche offering.

Clean Harbors, Inc. priced an upsized $845 million two-tranche offering of senior notes (Ba3/BB+).

Cedar Fair, LP priced a $500 million issue of 10-year senior notes (B1/BB-) at par to yield 5¼%.

And LSB Industries, Inc. priced a $35 million add-on to its 9 5/8% senior secured notes due May 1, 2023 (Caa1/CCC+) at 102.125 to yield 8.955%.

Meanwhile, DriveTime Automotive Group, Inc. postponed its $350 million offering of seven-year senior secured notes (B3/B-), citing market conditions.

The primary market will continue to churn out new deals on Wednesday with Nexstar Broadcasting, Inc.’s $1.12 billion offering of eight-year senior notes (S&P: B) on deck.

Norbord Inc. is also scheduled to wrap up its roadshow for $350 million of eight-year senior secured notes (existing ratings Ba1/BB+) on Wednesday.

Meanwhile, the secondary space was strong on Tuesday as equities skyrocketed and crude oil futures rallied due to optimism surrounding a potential rate cut from the Federal Reserve and progress in trade talks with China.

The influx of new paper from issuers capitalizing on the market conditions kickstarted trading activity in the secondary space.

The new paper was in focus with most deals trading at a premium to their issue price.

Outside of the new paper, the energy sector was benefiting from the rally in crude oil futures with California Resources Corp.’s bellwether 8% senior notes due 2022 and Chesapeake Energy Corp.’s 8% senior notes due 2027 posting gains in active trading.

SiriusXM doubles size

Bringing the largest amount of Tuesday's $4.27 billion in new paper was an ultra-familiar high-yield name.

SiriusXM doubled the size of its deal to $1.5 billion, pricing its issue of five-year senior notes (Ba3/BB) at par to yield 4 5/8%.

The issue, which came into the market sized at $750 million, priced at the tight end of yield talk in the 4¾% area.

It was driven into the market on a significant amount of reverse inquiry, a trader said.

JPMorgan, Barclays, Citigroup, BofA Securities, BMO, BNP Paribas, Credit Agricole, Goldman Sachs, Mizuho, Morgan Stanley, RBC, SunTrust, Scotia, US Bancorp and Wells Fargo were the joint bookrunners.

The upsize enables the audio entertainment company to take out all of its 6% senior notes due 2024 at 103, rather than just a portion of those notes.

Multi-Color completes $1.39 billion issue

At the conclusion of a roadshow and protracted negotiations involving covenants and its unsecured tranche, Multi-Color priced $1.39 billion of both secured and unsecured notes on Tuesday.

An upsized $700 million amount of seven-year senior secured notes (B2/B) priced at par to yield 6¾%.

The issue size increased from $650 million.

The yield printed at the tight end of final yield talk in the 6 7/8% area. Earlier talk was in the 7% area. Initial talk on the secured notes was in the low 7% area.

A downsized $690 million amount of eight-year senior unsecured notes (Caa2/B-) priced at par to yield 10½%.

The issue size decreased from $740 million. The yield printed at the wide end of the 10¼% to 10½% final yield talk, which was revised from 10% to 10½%.

Talk on the unsecured notes blew out from initial guidance in the low 9% area, according to market sources.

The unsecured paper also came with covenant changes.

The deal remained in the market over the past weekend as the unsecured tranche engendered pushback from investors objecting to the 10% to 10¼% price talk, as well as a covenant package that was perceived to afford too little protection for lenders, market sources say.

The secured tranche was heard to have been oversubscribed since early in the roadshow.

The issuing entity is LABL Escrow Issuer, LLC.

BofA was the left bookrunner.

Proceeds will be used to help fund the buyout of the company by Platinum Equity LLC and fund the merger of Multi-Color with W/S Packaging Group, a portfolio company of Platinum Equity.

Clean Harbors upsizes

Clean Harbors priced an upsized $845 million amount of senior notes (Ba3/BB+) in two tranches.

The deal, which was upsized from $800 million, featured a $545 million tranche of eight-year notes which priced at par to yield 4 7/8%.

The yield printed at the tight end of the 4 7/8% to 5% yield talk.

Initial talk was in the 5% area.

Clean Harbors also priced $300 million of 10-year notes at par to yield 5 1/8%.

The yield printed at the tight end of the 5 1/8% to 5¼% yield talk. Initial talk was in the 5¼% area.

The company intended to make the final tranche sizes roughly even, a trader said, but added that demand was greatest for the shorter maturity notes.

Goldman Sachs was the left bookrunner for the debt refinancing deal.

Cedar Fair drives by

Cedar Fair priced a $500 million issue of 10-year senior notes (B1/BB-) at par to yield 5¼% in a quick-to-market Tuesday trade.

The yield printed at the tight end of yield talk in the 5 3/8% area and inside of initial guidance in the 5 5/8% area.

Like the SiriusXM deal, Cedar Fair was driven into the market by a significant amount of reverse inquiry, a trader said.

JP Morgan was the lead bookrunner.

The Sandusky, Ohio-based amusement-resort operator plans to use the proceeds for the proposed acquisition of Schlitterbahn Waterpark and Resort New Braunfels and Schlitterbahn Waterpark Galveston; the purchase of the land upon which California’s Great America Amusement Park is located; to pay down its senior secured revolving credit facility; and for general corporate purposes.

LSB Industries taps 9 5/8% notes

LSB Industries priced a $35 million add-on to its 9 5/8% senior secured notes due May 1, 2023 (Caa1/CCC+) at 102.125 to yield 8.955% in a quick-to-market Tuesday trade.

The issue price came at the rich end of price talk in the 102 area and rich to the 101.5 to 102 initial guidance.

Goldman Sachs was the sole bookrunner for the capex deal.

Nexstar talk 5 7/8% area

Looking to the Wednesday session, Nexstar Broadcasting is on deck with a $1.12 billion offering of eight-year senior notes (S&P: B).

The deal was talked to yield in the 5 7/8% area on Tuesday.

BofA, Credit Suisse, Deutsche Bank, MUFG, SunTrust, BNP Paribas and Citizens are the joint bookrunners.

Meanwhile, DriveTime Automotive Group cited market conditions as it postponed its $350 million offering of seven-year senior secured notes (B3/B-) on Tuesday.

The deal was talked earlier in the session to yield 8% to 8¼%, which was at the tight end of initial price talk in the 8% to 8½% area.

Brief roadshow for Norbord

Norbord will hold a roadshow for a $350 million offering of eight-year senior secured notes (existing ratings Ba1/BB+) through Wednesday.

Initial guidance has the debt refinancing deal coming to yield in the high 5% to 6% area.

BofA and RBC are the joint bookrunners.

New paper

The influx of new paper on Tuesday jumpstarted trading activity in the secondary space with most deals trading at a premium to their issue price.

The one notable exception was Multi-Color’s 10½% senior unsecured notes due 2027, which was largely hovering at par, a market source said.

Multi-Color’s 6¾% secured tranche due 2026, in contrast, was at par bid, par ¼ offered after breaking for trade but rose to par ¾ heading into the market close, sources said.

Both issues were active with the secured tranche seeing more than $45 million in reported volume and the unsecured tranche $27 million in volume.

SiriusXM’s 4 5/8% senior notes were also posting gains in high-volume activity.

The notes traded up to par ½ with more than $164.5 million on the tape by the late afternoon.

Cedar Fair’s 5¼% senior notes due 2029 were an outperformer in the secondary space with the notes trading up to 101, according to a market source.

More than $54 million of the bonds were on the tape by the late afternoon.

Energy rallies

Names in the energy sector rallied alongside crude oil futures on Tuesday as optimism swept over the market following Trump’s statement that he would meet with President Xi at the upcoming G-20 summit in Japan.

California Resources’ bellwether 8% senior notes due 2022 rose almost 2 points on Tuesday, according to a market source.

The notes were at 69¼ bid, 71¼ offered in the mid-afternoon and were changing hands around 69 7/8 heading into the market close, sources said.

The bonds saw about $11 million in reported volume.

Chesapeake Energy’s 8% senior notes due 2027 gained 1¾ points to 88¾ with more than $7 million in reported volume.

Crude oil futures rallied on Tuesday amid a thawing in trade war tensions between the U.S. and China.

The barrel price of WTI crude oil for July delivery rose $1.97, or 3.8%, to settle at $53.90 a barrel.

Monday outflow

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

High-yield ETFs sustained $323 million of outflows on the day.

Actively managed high-yield funds saw $75 million of outflows on Monday, the source added.

Week to date, beginning with last Thursday's open, the combined funds are tracking $256 million of net outflows, according to the market source.

Indexes gain

Indexes posted strong gains on Tuesday after a mixed start to the week.

The KDP High Yield Daily index gained 8 basis points to close Tuesday at 70.22 with the yield now 5.65%.

The index shaved off 1 bp on close Monday.

The ICE BofAML US High Yield index again shot past the 9% threshold on Tuesday.

The index gained 34.1 bps with the year-to-date return now 9.32%. The index was down 2.1 bps on Monday.

The index initially crossed the 9% year-to-date return threshold on June 11 only to fall below it the following day.

The CDX High Yield 30 index popped 70 bps to close Tuesday at 106.88. The index dropped 8 bps on Monday.

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