Bausch Health, Lamar Media, PowerTeam price; Ford breaks par; Callon Petroleum gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 11 – The domestic high-yield primary market began the May 11 week at a healthy pace with three deals pricing and the forward calendar growing.

Bausch Health Cos. Inc. priced an upsized $1.5 billion issue (B3//B), PowerTeam Services, LLC priced $586,735,000 of five-year notes at a discount (B3/B-) and Lamar Media Corp. priced a $400 million issue of senior notes due Jan. 15, 2029 (Ba3/BB-).

Viking Cruises Ltd. also kicked off an offering of $600 million five-year senior secured notes.

The European primary market also showed signs of life with deal announcements from France's Rubis Terminal Infra and Germany-based Synlab Group.

Meanwhile, the secondary space launched the week on soft footing. However, volume was light and activity was subdued as market players eyed the new deals in the pipeline, sources said.

While the overall market was soft on Monday, Ford Motor Co.’s three tranches of senior notes (Ba2/BB+/BBB-) popped on Monday with each tranche up 1 to 3 points and two out of three tranches closing above par.

Callon Petroleum Co.’s deeply distressed junk bonds made large gains due to an exchange offer made on the heels of a better-than-expected earnings report.

Bombardier Inc.’s junk bonds continued to decline in active trading as investors continue to digest the company’s recently reported earnings.

Bausch upsized and tight

Bausch Health priced an upsized $1.5 billion issue of senior notes due Feb. 15, 2029 (B3//B) at par to yield 6¼% in a Monday drive-by, according to market sources.

The issue size increased from $1.25 billion.

The yield printed at the tight end of the 6¼% to 6½% yield talk, and inside of initial talk in the 6¾% area.

PowerTeam at a discount

PowerTeam Services priced $586,735,000 of 9.033% senior secured notes due Dec. 4, 2025 (B3/B-) at 96.00 to yield 9.987% at the conclusion of a roadshow.

The coupon, issue price and yield came in line with talk (9% area coupon, discounted to around 96, to yield in the 10% area).

The deal underwent covenant changes.

Lamar’s drive-by

Lamar Media priced a $400 million issue of 4 7/8% senior notes due Jan. 15, 2029 (Ba3/BB-) at par to yield 4.877% in a drive-by.

The yield printed tight to yield talk in the 5% area. Initial talk had the notes coming to yield in the mid-5% area.

Viking on deck

Meanwhile, Viking Cruises was set to kick off a $600 million offering of five-year senior secured notes on an investor conference call on Monday.

The deal is expected to price on Wednesday.

Initial talk has the notes coming with a 13% coupon to yield in the 14% area, including three- to four points of discount, according to a bond trader.

Viking is the third issuer from the coronavirus-stricken cruise line sector to make a pass at the speculative grade new issue market since the beginning of April.

Carnival Corp. priced a $4 billion issue of 11½% three-year first-priority senior secured notes (Baa2/BBB-) at 99.00 to yield 11.901%, in a high-yield style execution on April 1.

And in a straight-out junk trade, Norwegian Cruise Line priced $675 million of 12¼% four-year senior secured bullet notes (Ba2/BB) at 99.00 to yield 12.575% on May 5.

New euro deals

The European high-yield primary market, which has been nearly dormant (but not completely dead) since the global coronavirus pandemic took hold, heard two new deal announcements on Monday.

France's Rubis Terminal Infra expects to price €410 million of five-year senior secured notes (expected B1/confirmed B+) during the May 11 week.

And Germany-based Synlab Group is in the market with a €400 million offering of five-year senior secured floating-rate notes (B2/B/B+).

Ford pops

Ford Motor’s recently priced three tranches of senior notes popped on Monday with two of the three tranches closing the day above par after all three have languished below since pricing.

Ford’s 8½% senior notes due 2023 gained 1 point to close the day at par ¼, a market source said.

The 9% senior notes due 2025 traded up 1½ points.

While the notes broke par in intraday activity, they closed the day at 99¼.

Ford’s 9 5/8% senior notes due 2030 gained 1¾ points to close the day at 101½.

The notes remained among the most actively traded issues in the secondary space with each tranche seeing more than $20 million in reported volume.

The notes were making gains as Ford prepares to reopen its North American plants by the end of May, a source said.

Callon’s exchange

Callon’s senior notes were making gains after the oil and natural gas company announced a distressed debt exchange.

The company’s 6¼% senior notes due 2023, 6 1/8% senior notes due 2024 and 6 3/8% senior notes due 2026 were up several points due to the exchange offer, which gave holders an opportunity to jump up in the capital structure, a source said.

The 6¼% senior notes gained 5¾ points to 27.

The 6 1/8% senior notes gained 6¾ points 23¾.

The 6 3/8% senior notes gained 3 points to 19.

Callon announced plans to exchange $650 million of the 6¼% notes, $600 million of the 6 1/8% notes, $250 million of the 8¼% senior notes due 2025, and $400 million of the 6 3/8% senior notes due 2026.

The notes, which are all unsecured, will be exchangeable for $300 million of 8% second-lien senior secured notes due 2025. (See related article in this issue.)

The distressed debt exchange is a popular tool used by companies to avoid bankruptcy, a source said.

The exchange was announced on the heels of a better-than-expected first quarter earnings report, according to a market source.

Callon reported adjusted EBITDA of $217.5 million, which beat analyst expectations.

Bombardier down again

Bombardier’s senior notes continued to trend lower as investors continued to digest the company’s recently reported earnings.

Bombardier’s 6 1/8% senior notes due 2023 sank 3½ points to close Monday at 56, according to a market source.

The notes were active with more than $15 million in reported volume.

The 6% senior notes due 2022 were down 3 points to 62.

The 8¾% senior notes due 2021 sank 6 points to close Monday at 67½.

The drop off in the notes was most likely related to the company’s earnings, which were reported on May 7.

The company has $7 billion in debt due by 2025 and is expected to have over $3 billion in cash burn in the first half of 2020, a market source said.

Its pending asset sales are key to the company’s future viability, including the sale of its rail business to Alston SA.

When news broke of the sale in February, the deal was believed to be talked at €7 billion.

$1.3 billion Friday inflows

The dedicated high-yield bond funds saw a hefty $1.3 billion of net inflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $580 million of inflows on the day.

Actively managed funds saw $720 million of inflows on Friday, the source said.

Indexes soft

Indexes opened the week with losses after all closed the previous week with cumulative gains.

The KDP High Yield Daily index dropped 10 basis points to close Monday at 62.92 with the yield 7.48%.

The index saw a cumulative gain of 21 bps on the week last week.

The ICE BofAML US High Yield index was largely flat on Monday. The index shaved off 0.4 bps with the year-to-date return now negative 9.202%.

The index saw a cumulative gain of 87.5 bps on the week last week.

The CDX High Yield 30 index dropped 24 bps to close Monday at 94.26.

The index saw a cumulative gain of 70 bps on the week last week.

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