Morning Commentary: ‘Big Thursday’ deals trade well in secondary; McClatchy on deck

By Paul A. Harris

Portland, Ore., June 29 – Junk firmed Friday morning against a backdrop of rallying stock prices and better energy prices, sources said.

High-yield ETFs were better at midmorning. The iShares iBoxx $ High Yield Corporate Bd (HYG) was up 9 cents, or 0.11%, at $85.37 per share.

The barrel price of West Texas Intermediate crude oil was up 68 cents, or 0.93%, at $74.13.

‘Big Thursday’ deals

Bonds that price in a dramatic burst of issuance on Thursday – the biggest session year to date with six issuers placing $4.68 billion of junk in seven dollar-denominated tranches – were trading well Friday morning, sources said.

Among them, the new Stars Group Holdings BV 7% senior notes due July 2026 (Caa1/B-/B-) were 101 bid on Friday.

The upsized $1 billion issue (from $750 million) priced at par.

Stars was a bridged deal that also had an equity component and a bank loan, an investor remarked. Those investors who participated in all three components – the bridge, the bank loan and the bonds – received preferential treatment when it came to bond allocations, the source added.

The deal played to an order book that was four-times oversubscribed and came in the middle of yield talk in the 7% area and tight to initial price talk in the low to mid 7% area.

No one dropped out of the deal as talk tightened, the investor said.

Elsewhere bonds in both tranches of the Nationstar Mortgage Holdings Inc. $1.7 billion two-part senior notes deal (B2/B+) were trading above new issue price on Friday.

The Nationstar 8 1/8% notes due July 2023 were 101 3/8 bid. The $950 million issue priced at par, in the middle of the 8% to 8¼% talk.

The Nationstar 9 1/8% notes due July 15, 2026 were 101 5/8 bid. The $750 million issue also priced at par, coming at the wide end of yield talk in the 9% area.

In a smaller trade, the new AmWINS Group, Inc. senior notes due July 2026 (Caa1/B-) were 101¼ bid on Friday.

The investor characterized the AmWINS trade as a “clubby” deal.

The $300 million issue priced at par, in the middle of yield talk in the 7¾% area.

McClatchy on deck

In the wake of Big Thursday, new issue activity was muted on Friday.

On deck is McClatchy Co., which talked its $310 million offering of eight-year senior secured notes (expected B1/confirmed B-) with a 9% coupon at a discount to yield 9½%, on top of initial guidance.

The deal is set to price on Friday.

And in Europe, Radisson Hospitality AB priced a €250 million issue of 6 7/8% five-year senior secured notes (expected ratings B1//BB-) at 99.473 to yield 7%.

The yield printed on top of yield talk and at the wide end of initial talk in the high 6% area to 7%.

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