Primary prices $3.14 billion; Jaguar upsizes; Southeastern Grocers in focus; Uniti active

By Paul A. Harris and Abigail W. Adams

Portland, Me., Oct. 7 – The domestic high-yield primary market picked up its pace on Wednesday with four issuers pricing a cumulative $3.14 billion face amount.

In a revival story, Jaguar Land Rover Automotive plc priced an upsized $700 million issue of five-year guaranteed senior notes (B1/B/B) after previously walking away from the high-yield market in February.

White Cap Buyer LLC priced a $640 million issue of eight-year senior notes (B2/B) and H.B. Fuller Co. priced a $300 million issue of eight-year senior notes (B2/BB-/BB).

The forward calendar also continued to grow.

Meanwhile, the secondary space was firm on Wednesday after President Trump reversed course on stimulus to offer targeted relief.

The risk-on sentiment returned with the market up about ¼ point, a source said.

Southeastern Grocers’ recently priced 5 5/8% senior secured notes due 2028 (B2/B+) were in focus with the notes making large gains in high-volume activity.

Apache Corp.’s 4 7/8% senior notes due 2027 were also on the rise in active trading.

Uniti Group Inc.’s capital structure was active although mixed following a credit upgrade.

Wednesday’s primary

Four issuers priced a $3.14 billion face amount of high-yield notes, each placing a single tranche, on Wednesday.

Given recent turbulence, executions were notable: three of the four deals priced at the tight or rich ends of talk, while the fourth priced inside of talk.

In a revival story, Jaguar Land Rover Automotive priced an upsized $700 million issue (from $500 million) of 7¾% five-year guaranteed senior notes (B1/B/B) at par, at the tight end of talk.

Factoring into the tight execution was a concession to investors in the form of a springing lien provision, a trader said.

The lien targets specified debt in excess of £400 million secured by a lien on principal manufacturing property, capital stock of any manufacturing subsidiary or specified intellectual property prior to the second anniversary of the issue date.

That provision helped to persuade investors that they would not find themselves subordinated in the company's capital structure – or “primed,” in the parlance of the market – to holders of debt issued subsequent to Jaguar's new 7¾% notes.

Jaguar returned to the dollar-denominated high-yield market after abandoning an effort to place dollar-denominated notes in February when it was swept up in the growing coronavirus alarm which was already impacting the British carmarker's supply chain, sources say.

The company was able to print its coupon below 8% on Wednesday, as it had been expected to do in February, prior to pulling the deal.

Also on Wednesday, White Cap Buyer priced a $640 million issue of 6 7/8% eight-year senior notes (B2/B) at par, 12.5 basis points inside of talk.

The deal was oversubscribed, and came to market on the back of significant reverse inquiry, enabling the issuer to push down pricing, a bond trader said.

And H.B. Fuller priced a $300 million issue of 4¼% eight-year senior notes (B2/BB-/BB) at par, at the tight end of talk.

The deal went well, according to a trader who added that the new notes broke to 101½ bid, 102¼ offered.

Meanwhile, the active new issue calendar expanded on Wednesday (see related stories in this issue).

Southeastern Grocers in focus

Southeastern Grocers’ 5 5/8% senior secured notes due 2028 were trading with a large premium in high-volume activity on Wednesday.

The notes rose to a 102-handle heading into the market close.

They were changing hands in the 102 to 102½ context, a market source said.

While the issue was small, there was more than $110 million on the tape heading into the market close.

The Jacksonville, Fla.-based food retailer’s senior notes saw heavy demand during bookbuilding which followed them into the secondary space.

Southeastern Grocers priced a $325 million issue of the 5 5/8% notes at par on Tuesday.

Pricing came tighter than talk for a yield of 5¾% to 6%.

The deal was as much as 9x oversubscribed, a source said.

Apache gains

Apache’s 4 7/8% senior notes due 2027 were among the major gainers of Wednesday’s session.

The notes traded up more than 2 points in active trading, a source said.

They were seen changing hands in the 97 to 98 context.

There was more than $10 million of the bonds on the tape.

The Houston-based oil and gas exploration and production company priced a $750 million tranche of the 4 7/8% notes at par in early August.

However, the notes struggled amid the general market weakness in September.

They traded as low as 94 as recently as last week, a source said.

Apache is a recent fallen angel and one of the companies that is supported through the Federal Reserve’s secondary market corporate credit facility, the source said.

The secondary market corporate credit facility currently holds a par value of $1 million of Apache’s 3.625% senior notes due 2021 and $4 million of Apache’s 3.25% senior notes due 2022, according to the Federal Reserve’s September disclosures.

Secondary market credit facility eligible-bonds have a maturity of five years or less.

Uniti active

Uniti’s capital structure was again active on Wednesday after Moody’s Investors Service upgraded the company.

The total capital structure had $42 million in reported volume, a source said.

However, their secondary performance was mixed with some notes unchanged while others improved.

Uniti’s 8¼% senior notes due 2023 were the most active of the capital structure with $15 million in reported volume.

However, the notes were continuing to trade on a 99-handle, a source said.

Uniti’s 7 7/8% senior notes due 2025 gained about ½ point to trade up to a 107-handle.

While active, the 8¼% notes remained unchanged following the upgrade because they are unsecured whereas the 7 7/8% notes are secured, a source said.

Moody’s upgraded Uniti’s corporate family rating to B3 from Caa2, its secured debt to B2 from Caa1 and its unsecured debt to Caa2 from Ca on Monday.

The upgrade was the result of the company’s improved financial condition due to Windstream Services LLC, its primary customer, exiting bankruptcy in late September, Prospect News reported.

Indexes rise

Indexes were posting gains on Wednesday, which was a strong day for the market.

The KDP High Yield Daily index rose 13 basis points to close Wednesday at 66.55 with the yield now 5.5%.

The index was up 15 bps on Tuesday and 12 bps on Monday.

The ICE BofAML US High Yield index continued to gain on Tuesday.

The index was up another 5 bps with the year-to-date return now 0.666%.

The index gained 37.7 bps on Tuesday and 45.9 bps on Monday.

The CDX High Yield 30 index jumped 74 bps to close Wednesday at 105.4.

The index sank 44 bps on Tuesday after rising 79 bps on Monday.

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