Herbalife, Newell price; Goodyear adds on; Edgewell, Park Hotels gain; Talen flat

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 20 – While the domestic high-yield primary market slowed its pace on Wednesday, it did not come to a stop with three drive-by deals clearing the market.

Newell Brands Inc. priced a $500 million issue and Herbalife Nutrition Ltd. and HLF Financing, Inc. sold a $600 million issue.

Goodyear Tire & Rubber Co. also priced an upsized $200 million add-on to its recent issue 9½% senior notes due May 31, 2025 (B2/B+/BB-).

Three small deals remain on the forward calendar. Clark Equipment Co. is expected to price its $300 million offering, Northwest Fiber, LLC its $250 million offering and Cooper-Standard Automotive Inc. its $250 million offering by Friday.

Meanwhile, the secondary space was strong on Wednesday with the cash bond market up 1 point on optimism over the slow reopening of certain states and regions.

“The market was very well bid,” a source said.

New paper continued to dominate trading activity.

Cushman & Wakefield’s 6¾% senior notes due 2028 (Ba3/BB-) jumped in high-volume activity.

Edgewell Personal Care Co.’s 5½% senior notes due 2028 (Ba3/BB) and Park Hotels & Resorts Inc.’s 7½% senior notes due 2025 (B1/BB-) were also trading with large premiums.

However, Talen Energy Supply LLC’s 7 5/8% senior notes due 2028 (Ba3/BB-) fell flat in the aftermarket.

Big book for Newell

Junk issuance pace eased on Wednesday.

Newell Brands priced a $500 million issue of 4 7/8% five-year senior notes (Ba1/BB+/BB) at 99.5 to yield 4.989% in a drive-by.

The deal, which came yielding 12.5 basis points through the 5% to 5¼% yield talk, was heard to be playing to an order book which was at one point 10-times oversubscribed, a trader said.

Initial guidance was in the 5½% area.

The Atlanta-based marketer of consumer and commercial products plans to use the proceeds for general corporate purposes.

Newell stated in filings related to Wednesday's issue that it may elect to use some of the proceeds to retire $305 million of its 4.7% senior notes due Aug. 15.

When minted as an investment-grade issue those notes paid a 4.2% coupon, the trader recounted. The coupon stepped up by 50 basis points, to 4.7%, because of two ratings downgrades, each of which cost the company 25 bps, apiece.

The new 4 7/8% notes due June 2025 do not contain coupon step-ups triggered by downgrades, the trader added.

Herbalife and Goodyear

Elsewhere, Herbalife Nutrition priced a $600 million issue of 5.25-year senior notes (B1/BB-) at par to yield 7 7/8%.

The yield printed in the middle of yield talk in the 7 7/8% area, and tight to initial talk in the 8% area.

And Goodyear Tire & Rubber priced an upsized $200 million add-on to its 9½% senior notes due May 31, 2025 (B2/B+/BB-) at 101.75, resulting in a 9.056% yield to maturity.

The issue size increased from $150 million.

The issue price came rich to price talk in the 101.5 area. Initial talk was 101 to 101.5.

The calendar

Clark Equipment, a subsidiary of Hong Kong-based Doosan Bobcat Inc., announced a $300 million offering of five-year senior secured notes (Ba3/BB+) which it plans to price on Thursday.

Initial talk has the deal coming to yield in the 6½% area, a trader said.

J.P. Morgan Securities LLC is leading the deal.

Also in the market are Northwest Fiber, LLC with $250 million of eight-year senior notes (Caa1/CCC) with initial talk in the low 11% area at OID 97 to 98.

And Cooper-Standard Automotive with $250 million of four-year senior secured notes (B1/B-) initially guided in the 13½% area, a trader said.

All three are expected to clear the market ahead of Friday's recommended 2 p.m. ET early close which will give way to the extended Memorial Day holiday weekend in the United States.

Cushman & Wakefield in demand

The demand seen during bookbuilding for Cushman & Wakefield’s 6¾% senior notes due 2028 followed them into the secondary space with the notes jumping to trade with a steep premium.

The 6¾% notes traded in a range of 101 to 103 during Wednesday’s session with the notes gaining strength into the market close.

They were marked at 102½ bid, 103½ offered towards the end of Wednesday’s session, a source said.

The bonds had more than $40 million in reported volume.

The Chicago-based real estate services provider is a good credit and the notes were secured with a decent coupon, a source said.

There also continued to be strong demand for new issuance.

Cushman & Wakefield priced an upsized $650 million issue of the 6¾% notes at par on Tuesday.

The issue size increased from $400 million.

The yield printed in the middle of the 6 5/8% to 6 7/8% yield talk and tight to the 6¾% to 7% initial talk.

Park Hotels trades up

Park Hotels’ 7½% senior notes due 2025 were also trading with a healthy premium in the secondary space.

The notes were marked at 101½ bid, 102 offered.

“There’s good demand for them. They’re trading well,” a source said.

The bonds had more than $40 million in reported volume during Wednesday’s session.

The Tysons, Va.-based lodging real estate investment trust is a highly rated credit.

The notes also carried a large coupon for a secured deal, a source said.

Park Hotels priced an upsized $550 million issue of the 7½% notes at par on Tuesday.

The issue size increased from $500 million.

The yield printed in the middle of yield talk in the 7½% area.

Edgewell gains

Edgewell Personal Care’s 5½% senior notes due 2028 were putting in a strong performance on Wednesday.

The 5½% notes were wrapped around 102, a source said.

The Shelton, Conn.-based consumer products company “is a name people like,” a source said. “Consumer products isn’t really going to be affected by what’s going on. It’s pretty resilient.”

Edgewell priced an upsized $750 million issue of the 5½% notes at par on Tuesday.

The issue size increased from $600 million.

The yield printed at the tight end of the 5½% to 5¾% yield talk.

Talen flat

Talen Energy’s 7 5/8% senior notes due 2028 fell flat in high-volume activity on Wednesday.

The notes were largely wrapped around par, a source said.

They were trading in the par to par ¼ context throughout the session.

The bonds had more than $58 million in reported volume during Wednesday’s session.

Talen Energy priced an upsized $400 million issue of 7 5/8% notes at par on Tuesday.

The issue size increased from $330 million.

The yield printed tighter than the 7¾% to 8% yield talk.

$885 million Tuesday inflows

The dedicated high-yield bond funds had $885 million of net daily inflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

High yield ETFs had $465 million of inflows on the day.

Actively managed high yield funds had $420 million of inflows on Tuesday, according to the source who added that those inflows were broad-based.

Indexes gain

Indexes were on the rise on Wednesday.

The KDP High Yield Daily index gained 33 basis points to close Wednesday at 63.37 with the yield now 7.35%.

The index gained 22 bps on Tuesday and was up 45 bps on Monday.

The ICE BofAML US High Yield index gained 69.1 bps on Wednesday with the year-to-date return now negative 7.855%.

The index dropped 28 bps on Tuesday after jumping 103.5 bps on Monday.

The CDX High Yield 30 index gained 133 bps to close Wednesday at 95.39. The index shaved off 20 bps on Tuesday after jumping 166 bps on Monday.

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