Nexi joins large forward calendar; new notes active; PG&E lower; Aramark, L Brands gain

By James McCandless and Paul A. Harris

San Antonio, Oct. 9 – On a quiet Wednesday, with high-yield primary market activity muted by the Yom Kippur holiday, Italy's Nexi SpA started a roadshow for an €825 million offering of senior notes, while the secondary space was focused on fresh issuance and newsmakers.

Nexi takes a place aboard a chunky $7.7 billion equivalent forward calendar featuring dollar-, euro- and sterling-denominated tranches. With just two sessions left to play out in the present workweek, all of that business has been routed to clear ahead of the coming weekend.

In the secondary, new notes from Scotts Miracle-Gro Co. and D.R. Horton, Inc. were active on Wednesday, taking different paths.

Utilities name PG&E Corp.’s issues edged lower as the company prepares to cut power to around 500,000 customers to head off a potential wildfire.

In food service, Aramark’s paper ended better in the wake of a chief executive officer appointment.

Retailer L Brands, Inc.’s notes gained by the end of the day.

Nexi roadshow

Nexi started a roadshow for an €825 million offering of senior notes (Ba3/BB-/BB-) in two bullet tranches with maturities in 2024 and 2027.

The roadshow is scheduled to run through Thursday.

Nexi takes a place aboard a chunky $7.7 billion equivalent forward calendar featuring dollar-, euro- and sterling-denominated tranches, in what the syndicate people refer to as a back-loaded week. That is to say, with just two sessions left to play out in the present workweek, all of that business has been routed to clear ahead of the coming weekend.

Tuesday outflows

The dedicated high-yield bond funds saw sizable daily outflows of $776 million on Tuesday, according to a market source.

Highyield ETFs sustained $561 million of outflows on the day.

Actively managed highyield funds saw $215 million of outflows on Tuesday, the source said.

With only Wednesday's daily fund flows number remaining to go into the tally, the combined funds are tracking a hefty $2.3 billion of net outflows in the week to Wednesday's close.

New notes trade

New notes took up much of the attention on Wednesday’s session, traders said.

Marysville, Ohio-based supplier of lawn and garden care products Scotts Miracle-Gro’s new 4½% senior notes due 2029 closed its first day at 100¼ bid.

The upsized $450 million issue was priced in a quick-to-market trade at par on Tuesday, printing at the tight end of the 4½% to 4¾% yield talk.

Fort Worth-based homebuilder D.R. Horton’s new 2.5% senior notes due 2024 finished their first day active but unchanged at par.

The $500 million issuance was sold on Monday.

PG&E lower

Utilities name PG&E’s issues edged lower, market sources said.

The 6.05% notes due 2034 shaved off ¼ point to close at 109¾ bid.

The San Francisco-based bankrupt electric utility has seen a rash of negative headlines over the past few days as it prepares to temporarily cut power to around 500,000 homes and businesses in California.

The move serves as a precaution as the weather in the area increases chances of another wildfire.

“Cutting power temporarily is better than having to pay billions more down the road,” a trader said.

Amid the preparations to head off another wildfire, the company is embroiled in a dispute with various stakeholders over how much it should have to pay out to wildfire victims.

Under its proposed plan, PG&E would cap victim payouts at $8.4 billion while a group of creditors and others are arguing for $13.5 billion.

Late Wednesday, news broke that a bankruptcy judge had terminated the company’s exclusive right to put forward a restructuring plan, opening the door for the creditor proposal to gain traction.

Aramark better

Food service provider Aramark’s paper was performing better, traders said.

The 5% senior paper due 2028 gained ½ point to close at 104 bid.

The Philadelphia-based food and facilities name’s structure has seen mixed movements after it announced a new CEO on Monday.

Former executive John Zillmer has been brought in to serve in the top post after applied pressure from activist investors led to the previous chief’s resignation.

L Brands gains

In retail, L Brands’ notes gained by the close, market sources said.

The 7½% senior notes due 2029 improved by ½ point to close at 99¾ bid.

The Columbus, Ohio-based retailer has been under constant pressure from creditors and investors to improve performance, especially in its Victoria’s Secret brand.

Quarterly reports have been disappointing in a time of weakness in the sector, as traditional retailers struggle to adapt to prevailing e-commerce trends.

Indexes positive

Three high-yield indexes spent the day climbing.

The KDP High Yield Daily index added 2 basis points on Wednesday, closing the day at 70.99 rising to 5.64%.

The index fell 12 bps on Tuesday, gained 4 bps on Monday and shed 1 bps on Friday.

The ICE BofAML US High Yield index garnered 11.7 bps with the year-to-date return now at 11.007%.

The index declined by 17.6 bps on Tuesday, rose 5.1 bps on Monday and gained 15.8 bps on Friday.

The CDX High Yield 30 index rose 36.32 bps to 106.0888.

The index lost 36.75 bps on Tuesday, declined by 36 bps on Monday and picked up 35.68 bps on Friday.

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