Global Partners, Nesco on tap; Trivium, TPC Group gains continue; Tekni-Plex lags; Sprint in focus

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 22 – While no deals priced during Monday’s session, the domestic high-yield primary market’s forward calendar continued to grow.

Nesco Holdings I, Inc. started a roadshow for a $475 million offering of five-year second lien notes, and Global Partners LP began marketing a $400 million offering of eight-year senior notes.

The two new offerings join Citgo Holding, Inc., Advisor Group Inc., and Sirius Minerals plc on the forward calendar.

The European primary market also has a sizeable new issue calendar to work through with offerings from Oriflame Holding AG, Intrum AB, Cirsa Gaming Corp. SA, and Vivion Capital Partners SA on deck.

Meanwhile, volume was on the lighter side on Monday. However, the secondary space was, in general, well bid, sources said.

Recently priced paper remained active with most continuing to perform well in the secondary space.

Trivium Packaging Finance BV’s unsecured tranche continued to skyrocket while the secured tranche held onto its premium.

TPC Group Inc.’s 10½% senior notes due 2024 (B2/B/B-) rose several points during Monday’s session.

However, Tekni-Plex, Inc.’s 9¼% senior notes due 2024 (Caa2/CCC+) were, at times, lagging their issue price.

Outside of the new paper, Sprint Corp.’s junk bonds were also active and on the rise on news that approval of the telecommunications company’s merger with T-Mobile was imminent.

Dollar calendar builds

With signals green along the tracks ahead, the junk bond new issue calendar continued to grow on Monday.

Investors, anticipating a cut in the Fed Funds rate when the Federal Open Market Committee meets in late July, are taking on risk, anticipating that cheap money will continue to drive a vigorous technical bid for high yield, a sellside source remarked.

Thus, stellar performances are being seen in the stock markets and a robust appetite for junk bonds, the source added.

Nesco Holdings started roadshowing $475 million five-year second lien notes to help fund a merger and refinance debt.

Global Partners began marketing a $400 million offering of eight-year senior notes (current ratings B2/B+) on a roadshow set to run through Wednesday.

The Waltham, Mass.-based energy supply company plans to use the proceeds to fund the tender for its 6¼% senior notes due 2022 and to pay down debt outstanding under its credit agreement.

Those prospective issuers board an active calendar that carried over from last week.

It includes Citgo Holding, with $1.37 billion five-year secured notes, Advisor Group, with $400 million of eight-year senior notes (Caa1/B-), and Sirius Minerals, with $500 million of eight-year secured notes. (/B-/B).

European calendar

The European new issue market is poised to work its way through a sizable late July calendar.

Sweden's Oriflame Holding plans to sell €775 million equivalent of five-year senior secured notes (B1//B+).

Another Swedish company, Intrum AB began a brief roadshow for a €600 million offering of seven-year senior notes (Fitch: BB).

Goldman Sachs is leading both of those deals.

Madrid-based gaming and leisure firm Cirsa Gaming Corp. plans to sell €440 million of six-year floating-rate notes.

And Vivion Capital Partners began a brief roadshow for a €500 million offering of five-year notes.

All of the above is expected to clear before Friday's close, according to a London-based investment banker who added that this could be the last big week of summer, as the market in Europe is expected to begin clearing out for August holidays, beginning in the week ahead.

Trivium gains continue

Trivium Packaging’s two tranches of dollar-denominated senior notes remained in focus on Monday with the unsecured tranche continuing to see gains and the secured tranche holding onto its premium.

Trivium’s 5½% senior notes due 2026 (B2) were holding on to their large premium in active trading.

The notes were seen at 101 7/8 bid, 102 3/8 offered and were changing hands at 102 1/8 Monday afternoon, sources said.

The notes traded as high as 102¾ after breaking for trade on Friday.

Trivium’s 8½% senior notes due 2027 (Caa2) topped 104 on Monday. The notes were quoted at 103 7/8 bid, 104 3/8, sources said.

Trivium’s euro-denominated tranches also skyrocketed after pricing with both tranches around 103.

Trivium priced $1.75 billion and €980 million of high-yield notes in four tranches.

The Luxembourg-based metal packaging business priced a $1.05 billion tranche of the 5½% notes and a $700 million tranche of the 8½% notes at par on Friday.

The company also priced a €355 million of floating rate notes of Euribor plus 375 basis points and €625 million tranche of 3¾% notes at par.

TPC Group rises

TPC Group’s 10½% senior notes due 2024 also continued to post gains in active trading.

The 10¼% notes were “up pretty meaningfully,” on Monday, a market source said.

The notes were quoted at 103 1/8 bid, 103½ offered after closing out Friday at 101½.

More than $24 million of the bonds were on the tape by the late afternoon.

TPC Group priced a $930 million issue of the 10½% senior notes at par on Friday.

The yield printed at the wide end of the 10¼% to 10½% price talk.

Tekni-Plex lags

While the other deals to price during last Friday’s session skyrocketed in the secondary space, Tekni-Plex’s 9¼% senior notes due 2024 were, at times, lagging their issue price.

The 9¼% senior notes traded as low as 97.98. However, the majority of trades were around the notes issue price, according to a market source.

The notes were largely changing hands at 98¾ bid, 99¼ offered.

Tekni-Plex priced a $345 million issue of the 9¼% notes at 99.02 to yield 9½% on Friday.

The yield came wide of yield talk in the 9% area.

Sprint gains

Sprint’s junk bonds were again active and making gains on news regulatory approval of the telecommunications company’s merger with T-Mobile was imminent.

The 8¾% senior notes due 2032 rose 1¼ point to 120¼, according to a market source. More than $21 million of the bonds were on the tape by the late afternoon.

Sprint’s 7 7/8% senior notes due 2023 were up ½ point to 110 with more than $16 million in reported volume.

News broke over the weekend that U.S. Department of Justice officials were ready to approve the merger of Sprint and T-Mobile with T-Mobile’s divestiture plan nearing completion.

The Department of Justice was leery of approving the merger unless a fourth wireless telecommunications company was created.

To appease those concerns, T-Mobile agreed to sell some of its assets to Dish Networks Corp. and enter into a spectrum-hosting agreement that will allow Dish to launch a wireless service.

Details of the deal with Dish and regulatory approval for the T-Mobile/Sprint deal are expected by the end of the week.

ETFs see big Friday inflows

In keeping with the robust appetite for junk bonds mentioned above, high-yield ETFs saw chunky daily inflows of cash, $691 million, last Friday, the most recent session for which data was available at press time, a market source said.

However, actively managed high-yield funds, the asset managers, were negative on the day, sustaining $30 million of outflows on Friday, the source added.

For 2019 to Friday's close, the combined high yield funds saw $14.2 billion of net inflows, the largest amount of net inflows, relative to that asset class, in any year to July 19 since 2012, the market source said.

Indexes mixed

Indexes were mixed at the start of the week with some seeing minor gains and others minor losses.

The KDP High Yield Daily index was down 1 basis point to 71.55 although the yield remained flat at 5.48%.

The index was down 27 bps on the week last week.

The ICE BofAML US High Yield index rose 9.4 bps with the year-to-date return now 10.237%.

The index was down 18.2 bps on the week last week.

The CDX High Yield 30 index gained 22 bps to close Monday at 107.17.

The index was down 58 bps on the week last week.

© 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.