ABC Supply downsizes; Neptune, Fair Isaac price tight; Oasis dominates; WeWork’s losses continue

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 1 – Dollar-denominated new issuances saw an uptick of activity on Tuesday with three deals pricing and the forward calendar continuing to build.

ABC Supply Co., Inc. priced a downsized $600 million issue of eight-year senior notes (B3/B+) at par to yield 5 7/8% in a quick-to-market trade on Tuesday.

Neptune Energy Group Midco Ltd. and Neptune Energy Bondco plc priced an upsized $550 million issue of eight-year senior notes (B2/BB-) at par to yield 6 5/8%.

While the new notes priced early in the session, they saw limited trading activity and were quoted below par.

Fair Isaac Corp. priced a $400 million issue of non-callable eight-year senior notes (Ba2/BB+) at par to yield 5¼%.

Avation plc launched a $300 million offering of three-year senior notes (S&P: expected B/Fitch: expected BB-) on Tuesday, and TransDigm Group plans to price $500 million of TransDigm UK Holdings plc senior subordinated notes due May 2026 (B3/B-) on Wednesday.

In the European primary market, investors are eyeing a €200 million offering of Odyssey Europe Holdco senior secured notes (B2), backing the LBO of Tallinn, Estonia-based Olympic Entertainment Group, which is scheduled to roadshow through Friday.

As the primary market prepared new paper, Oasis Petroleum Inc.’s newly priced 6¼% senior notes due 2026 (B3/BB-) were among the most actively traded in the secondary space with the notes continuing to trade just north of par, a market source said.

WeWork Cos. Inc.’s newly priced 7 7/8% senior notes due 2025 (Caa1/B+/BB-) continued to disappoint on Tuesday with the notes dipping into the 95 range after pricing at par on April 25.

Continental Resources Inc.’s junk bonds were major volume movers on Tuesday ahead of the independent oil producer’s first quarter earnings report, which is scheduled to be announced after the market close Wednesday.

CommScope Holding Co.’s junk bonds were down about 2.5 points after the company reported first quarter earnings prior to the market open. While the earnings per share beat analyst expectations, the network infrastructure provider lowered its future guidance.

Neptune upsized and tight

Neptune Energy priced an upsized $550 million issue of eight-year senior notes (B2/BB-) at par to yield 6 5/8% on Tuesday.

The issue size increased from $500 million.

The yield printed tight to yield talk in the 6¾% area and tight to initial talk in the high 6% to 7% area.

Global coordinator and sole physical bookrunner J.P. Morgan will bill and deliver. Citigroup and Deutsche Bank were also global coordinators for the debt refinancing deal.

While the notes broke for trading early in the session, few bonds traded with only $5 million on the tape, a market source said.

The notes dipped below their issue price in the scattered trading activity and were quoted at 99½ bid, 99 7/8 offered, the source said.

ABC Supply downsizes

ABC Supply Co. priced a downsized $600 million issue of eight-year senior notes (B3/B+) at par to yield 5 7/8% in a quick-to-market trade.

The issue size was decreased from $800 million.

The yield printed at the wide end of yield talk in the 5¾% area and in line with initial talk in the mid-to-high 5% area.

Deutsche Bank managed the sale.

The Beloit, Wis.-based wholesale distributor of roofing and exterior building products plans to use a portion of the proceeds to refinance $200 million of its 5 5/8% senior notes due 2021 via a tender offer announced Tuesday and/or by means of redemption at the current redemption price of 101.406.

Proceeds will also be used to repay debt under the ABL facility and for general corporate purposes.

Fair Isaac prices tight

Fair Isaac priced a $400 million issue of non-callable eight-year senior notes (Ba2/BB+) at par to yield 5¼%.

The yield printed at the tight end of yield talk in the 5 3/8% area and inside of initial price talk in the 5½% area.

Wells Fargo was the left bookrunner for the debt refinancing deal.

TransDigm for Wednesday

TransDigm Group plans to price $500 million of TransDigm UK Holdings plc senior subordinated notes due May 2026 (B3/B-) on Wednesday.

The deal was scheduled to be shopped on a conference call with investors on Tuesday.

Citigroup is the left bookrunner. Credit Suisse, Morgan Stanley, RBC, Barclays, JP Morgan, KKR, Credit Agricole, HSBC, Goldman Sachs and PNC are the joint bookrunners.

The Cleveland-based aircraft components supplier plans to use the proceeds, along with proceeds from its incremental term loan, to replenish cash used to fund a portion of the acquisitions of Extant Components Group Holdings, Inc. and the Kirkhill elastomers business of Esterline Technologies Corp.

The remaining proceeds will be used for general corporate purposes including potential future acquisitions, dividends or stock repurchases.

Avation’s deal

Avation commenced marketing a $300 million offering of three-year senior notes (S&P: expected B/Fitch: expected BB-).

Initial price talk is in the 6½% area, a trader said.

The offer is set to price Thursday.

Wells Fargo is the left bookrunner. BOC and Goldman Sachs are the joint bookrunners.

The Singapore-based aircraft leaser plans to use proceeds to refinance its 7½% senior notes due 2020 and repay certain junior and senior secured loans.

Junk accounts eye Olympic Entertainment

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

The deal, which is scheduled to be on roadshow through Friday, is helmed by sole bookrunner Morgan Stanley.

Proceeds will be used to help fund the buyout of the gaming group by Novalpina Capital for €288 million.

Oasis dominates

Oasis’ newly priced 6¼% senior notes due 2026 dominated trading activity in the secondary market with the notes continuing to trade around par, a market source said.

About $56 million bonds traded on Tuesday with the notes closing the day relatively unchanged at par ¼.

The Houston-based petroleum and natural gas exploration and production company priced the $400 million issue at par to yield 6¼% in a Monday drive-by.

The yield printed in the middle of yield talk in the 6¼% area and tight to initial price talk in the 6¼% to 6½% area. The notes were seen at par ¼ bid, par ½ offered after breaking for trade on Monday.

WeWork losses continue

WeWork’s recently priced 7 7/8% senior notes due 2025 continued to see losses in high volume trading on Wednesday.

The notes were quoted at 95 bid, 95¾ offer Tuesday afternoon after starting the day at 95 7/8 bid, market sources said.

“Losses, more losses,” a market source said.

The notes continued to see heavy trading volume and were second only to Oasis as a volume leader with more than $54 million bonds in play on Tuesday.

The notes are now squarely in the gunsights of short players, a trader said.

WeWork’s notes have steadily traded down since the upsized $702 million issue priced at par on April 25. The notes were trading on a 96 handle on Monday.

Continental Resources active

Continental Resources’ junk bonds were active but relatively unchanged on Tuesday in the run up to the petroleum and natural gas company’s first quarter earnings report.

Continental Resources’ 4½% senior notes due 2023 were the most actively traded with more than $35 million bonds in play during Tuesday’s session. The notes closed the day largely flat at 101 3/8.

The 4 3/8% senior notes due 2028 were seen down about 3/8 point to trade at 98 3/8. The 4.9% senior notes due 2044 were off about 1/8 point to trade at 97 3/8.

The 3.8% notes were unchanged at 97¼.

Continental Resources will report its first quarter earnings after the market close Wednesday and an earnings beat is expected with several analysts upgrading the company’s equity in recent days.

Continental also announced last Thursday it had reached a transportation agreement that will allow it to ship an additional 400 million cubic feet per day from Oklahoma through Enable Midstream Partner’s Project Wildcat.

The agreement will provide Continental with direct access to the Dallas/Fort Worth area where supplies of natural gas are declining, according to a company news release.

CommScope drops

CommScope’s junk bonds were down 2¼ to 2½ points after the network infrastructure provided reported first quarter earnings prior to the market open.

The 5% notes due 2027 were seen down 2½ points to trade at 93½. The 6% senior notes due 2025 were down 2¼ points to trade at 100¾, a market source said.

CommScope’s equity hit a new 52-week low, dropping to $27.59, a decrease of 27.81%, at market close, as investors responded to the earnings report.

While CommScope reported non-GAAP earnings per share of 49 cents, which beat analyst expectations of 47 cents, guidance was cut by 23 cents due to anticipated price reductions from “certain large North American operators,” according to a company news release.

Non-GAAP earnings per share for 2018 are now expected to be $2.33 to $2.48, compared to the previous guidance of $2.56 to $2.71.

Indexes mixed

The KDP High Yield index is back on a losing streak with its second consecutive day of losses after seeing gains last Friday. The index was down 4 basis points to 70.46 on Tuesday with the yield now 5.85%.

The index was down 1 basis point on Monday.

The index saw gains on April 27, breaking a losing streak that had existed since April 19.

The Merrill Lynch High Yield index was down 13.3 basis points on Tuesday with the negative year-to-date return now 0.387.

The CDX High Yield 30 index closed Tuesday up slightly. The index was up 2 bps to close Tuesday at 106.93 after sliding 7 bps on Monday.

The index broke a losing streak late last week that had existed since April 17. The index was up 5 bps to close Friday at 106.98.

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