Morning Commentary: ABC Supply, Fair Isaac, upsized Neptune Energy on deck, WeWork continues slide

By Paul A. Harris

Portland, Ore., May 1 – With the recent earnings issuance blackout now in its wake, a reenergized high-yield primary market generated a steady stream of news as the May Day session got underway.

Three deals were on deck slated for Tuesday executions.

Neptune Energy Group Midco Ltd. and Neptune Energy Bondco plc launched an upsized $550 million offering of eight-year senior notes (B2/BB-) at 6 5/8%, at the tight end of official yield talk in the 6¾% area.

The issue size was increased from $500 million.

Official talk came tight to initial talk in the high 6% to 7% area.

Fair Isaac Corp. talked its $400 million offering of non-callable eight-year senior notes (Ba2/BB+) to yield in the 5 3/8% area.

Official talk comes tight to initial price talk in the 5½% area.

Books close at 2 p.m. ET on Tuesday, and the Wells Fargo Securities LLC deal is set to price thereafter.

And in drive-by action American Builders & Contractors Supply Co., Inc. (ABC Supply Co., Inc.) plans to price an $800 million offering of eight-year senior notes.

Initial guidance has the deal coming in the mid-to-high 5% area.

The deal is coming in conjunction with a tender offer for $200 million of ABC Supply’s 5 5/8% senior notes due 2021, also announced Tuesday.

Meanwhile Avation plc commenced marketing a $300 million offering of three-year senior notes (expected B/BB-).

Wells Fargo is the left bookrunner.

And in Europe, a €200 million offering of Odyssey Europe Holdco senior secured notes (B2) backing the leveraged buyout of Tallinn, Estonia-based Olympic Entertainment Group has generated interest among European high-yield investors in Europe, according to a London-based senior debt capital markets banker.

The deal, which is scheduled to be marketed on a roadshow through Friday, is being led by bookrunner Morgan Stanley.

WeWork continues slide

Against a backdrop of weaker equity prices, high-yield ETFs were lower at mid-morning.

The SPDR Blmbg Barclays High Yield Bd ETF (JNK) was down 0.2%, or 7 cents, at $35.63 per share.

Meanwhile the debut issue from WeWork Cos. Inc. continued what has become a protracted slide in the secondary market, traders say.

The WeWork 7 7/8% senior bullet notes due May 2025 (Caa1/B+/BB-) were 95 7/8 bid on Tuesday, squarely in the gunsights of short players, a trader said.

The upsized $702 million issue (from $500 million) priced at par on April 25 and was said to have been driven into the market by significant reverse inquiry generated on a non-deal roadshow conducted by bookrunner JPMorgan and to have played to a big book.

However, that book apparently was not big enough, according to market sources, who have watched the deal steadily slide lower from new issue price.

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