Inmarsat, CSC upsize, price; WeWork, Uber declines; Netflix shifts lower; PG&E negative

By James McCandless and Paul A. Harris

San Antonio, Sept. 23 – A news-heavy Monday session in the high-yield primary market saw two upsized roadshow deals and one drive-by clear the market, while the secondary space was weaker, with top traders trailing.

Inmarsat plc launched and priced an upsized $2,075,000,000 issue of seven-year senior secured notes (B1/B+) at par to yield 6¾%.

In a drive-by CSC Holdings LLC priced a $1.25 billion add-on to its 5¾% senior notes due Jan. 15, 2030 (expected ratings B3/B) at 104.

In the secondary, WeWork Cos. Inc.’s notes declined amid news that its board and others are pushing for the ouster of its chief executive officer.

Meanwhile, Uber Technologies, Inc.’s issues also fell as the company adapts to a continually shifting regulatory landscape.

Streaming name Netflix, Inc.’s paper shifted lower after negative headlines about its common stock.

PG&E Corp.’s notes were negative as a dispute between the company and its creditors over its restructuring intensified.

Twice-upsized Inmarsat bonds price

A news-heavy Monday session in the high-yield primary market saw two upsized roadshow deals and one drive-by clear the market.

Inmarsat launched and priced an upsized $2,075,000,000 issue of seven-year senior secured notes (B1/B+) at par to yield 6¾%.

The yield printed at the wide end of the 6½% to 6¾% yield talk. Initial talk was in the low-to-mid 6% area.

The upsize, from $1,825,000,000, represented the second shift of proceeds, totaling $950 million, from the concurrent term loan (see related story in this issue).

Elsewhere, in a drive-by CSC Holdings priced a $1.25 billion add-on to its 5¾% senior notes due Jan. 15, 2030 (expected ratings B3/B) at 104.

The reoffer price, which came at the rich end of the 103.5 to 104 price talk, rendered a 5.149% yield to worst.

And BidFair/Sotheby's priced an upsized $600 million issue of eight-year senior secured notes (B1/B+) at par to yield 7 3/8%.

The issue size increased from $550 million as $50 million of proceeds were shifted to the notes from the term loan.

The yield printed on top of final yield talk, which had tightened form earlier talk of 7½%.

Looking to the week ahead, Shutterfly Inc. announced covenant changes to its upsized $785 million offering of seven-year senior secured notes (B1/B), and set the deal to price on Tuesday.

At the same time the Redwood City, Calif.-based company affirmed official price talk at 8¼% to 8½%.

Early guidance on the deal was in the low-to-mid 7% area, according to a bond trader.

Roadshows in Europe

The European primary market generated news on Monday.

CABB Group plans to market €640 million of notes in three tranches by means of an investor roadshow this week.

Two tranches of secured notes – one a fixed-rate tranche, the other a floater – are coming from issuing entity Montichem Holdco 3 SA, while Montichem Holdco 2 SA will issue a tranche of unsecured notes.

And Grupo Cirsa will market a €375 million offering of LHMC Finco 2 six-year senior PIK toggle notes (S&P: CCC+) on a roadshow this week.

The Madrid-based gaming and leisure company plans to use the proceeds to fund a distribution to shareholders.

Blackstone Group completed its acquisition of Cirsa in July 2018.

Mixed Friday flows

The cash flows of the dedicated high-yield bond funds were mixed on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $307 million of inflows on the day.

However actively managed high-yield funds sustained $65 million of outflows on Monday, the source said.

WeWork declines

WeWork’s notes were in decline throughout the session, traders said.

The 7 7/8% senior notes due 2025 dropped 2½ points to close at 94¾ bid.

The notes saw about $22 million on the tape at the end of the day.

On Monday, news broke that the New York City-based co-working company’s board of directors and some large shareholders are on the verge of calling for CEO Adam Neumann’s resignation.

The potential move comes after last week’s announcement that the company would be suspending its initial public offering after a dispute over its valuation.

“They are going to have to get rid of him,” a trader said. “It brings some of the confidence back.”

Uber down

Meanwhile, transportation name Uber’s issues also fell, market sources said.

The 8% senior notes due 2026 dipped ¼ point to close at 102½ bid. The 7½% senior notes due 2027 declined by ¼ point to close at 100½ bid.

On Friday, the San Francisco-based transportation technology name sued New York City to reverse a new rule that would limit the amount of time drivers can spend in Manhattan without passengers.

The company claims that the rule undermines its business model.

Recently, the name was embroiled in a dispute with California over a law that would guarantee contract workers the same benefits that full-time employees get.

Netflix lower

Streamer Netflix’s paper was seen shifting lower, traders said.

The 5 7/8% senior paper due 2028 shaved off ¾ point to close at 108½ bid.

The paper was active to the tune of about $12 million.

The Los Gatos, Calif.-based entertainment name was marred by negative headlines on Monday after its common stock wiped out its 46% gain for the year.

On Friday, the structure saw pressure after its CEO said that competition from traditional media’s streaming services would be tough to compete against.

PG&E lower

PG&E’s notes moved lower in Monday’s activity, traders said.

The 6.05% notes due 2034 fell ½ point to close at 111¾ bid.

On Monday, the San Francisco-based bankrupt electric utility announced that it had formalized its $11 billion subrogation settlement with insurance companies.

The settlement was reached in principle earlier in the month.

The name also urged a judge in bankruptcy court to reject a competing reorganization plan that was submitted last week by a group of unsecured creditors and a committee of wildfire victims.

While the company plans to cap wildfire victim payouts at $8.4 billion, the rival plan calls for a $24 billion settlement.

The company argued in a filing that the plan skirts bankruptcy law that requires claims of similar priority to be paid at the same time.

“It isn’t going as smoothly as they had anticipated,” a trader said. “It’s hard to tell what direction the judge will want to go.”

A bankruptcy court judge is expected to render a decision on whether the company retains the exclusive right to a reorganization plan next month.

Indexes up

Three high-yield indexes saw modest gains on Monday.

The KDP High Yield Daily index added 1 basis point, ending Monday at 71.80 with the yield fixed at 5.36%.

The index gained 9 bps on Friday, dipped 17 bps on Thursday and lost 1 bp on Wednesday.

The ICE BofAML US High Yield index garnered 1.6 bps on Monday with the year-to-date return at 11.926%.

The index inched up 0.2 bps on Friday, gained 6 bps on Thursday and fell 4 bps on Wednesday.

The CDX High Yield 30 index increased by 32.39 bps to 107.3059.

The index lost 32.60 bps on Friday, index dropped 32.37 bps on Thursday and lopped off 31.72 bps on Wednesday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.