Global Aircraft, Nesco price; Trivium up again; Sprint’s upward momentum continues

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 26 – The high-yield primary market rounded out an active week with two deals pricing.

Global Aircraft Leasing Co., Ltd. priced an upsized $1.55 billion issue of five-year cash contingent senior PIK toggle notes (Ba2) at par to yield 6½%.

Nesco Holdings I, Inc. and Investment Corp. IV priced a $475 million issue of five-year senior secured second-lien notes at par to yield 10%.

While the calendar is thin and new issue activity is expected to remain light due to an earnings season blackout, some deals remain on the horizon.

Advisor Group Inc. remains in the market with its $400 million offering of eight-year notes (Caa1/B-).

Dubai-based private education provider GEMS Education is also expected to price an $800 million equivalent of seven-year senior secured notes (B2/B/B+) in the coming week.

Meanwhile, the secondary space ended the week on strong footing.

Trivium Packaging Finance BV’s recently priced secured and unsecured tranche continued to skyrocket in secondary trading with the notes now 3 and 6 points above their issue price respectively.

Sprint Corp.’s junk bonds were again in focus with the capital structure continuing to improve after the U.S. Department of Justice gave its official nod of approval to the telecom’s merger with T-Mobile.

Refinitiv’s first-lien and unsecured notes jumped in active trading on Friday on news the company was in talks to combine with the London Stock Exchange.

Global Leasing upsizes

In Friday's new issue market, Global Aircraft Leasing, a holding company which has a 70% ownership stake in Dublin-based aircraft leasing firm Avolon, priced an upsized $1.55 billion issue of five-year cash contingent senior PIK toggle notes (Ba2) at par to yield 6½%.

The issue size increased from $1.5 billion

The yield printed at the wide end of the 6¼% to 6½% yield talk. Initial talk had been in the mid 6% area.

The coupon steps up by 75 basis points, to 7¼%, for PIK payments.

Elsewhere, Nesco Holdings I, Inc. and Investment Corp. IV priced a $475 million issue of five-year senior secured second-lien notes at par to yield 10%.

The yield printed in the middle of yield talk in the 10% area.

Talk widened significantly from initial guidance in the 9% area. There were also covenant changes.

The week ahead

A seasonal earnings blackout, in which some potential issuers need to post new earnings numbers before making a pass at the capital markets, and a pending decision on interest rates by the Federal Reserve Bank's Federal Open Market Committee could damp down new issue activity in the early part of the week ahead, an investment banker said, late Friday.

However, one deal will carry over from the current week.

Advisor Group Inc. roadshowed a $400 million offering of eight-year notes (Caa1/B-). The deal was marketed by roadshow through the July 22 week and was expected to price Friday.

However, no terms were available at press time, Friday, sources said.

Pending the announcement of formal price talk, initial talk was in the 10% area.

There have also been covenant changes.

The Phoenix-based wealth management platform company may also have to sweeten pricing on its concurrent term loan, sources say.

Also in the week ahead, Dubai-based private education provider GEMS Education is expected to price $800 million equivalent of seven-year senior secured notes (B2/B/B+).

The deal is coming in tranches sized at $500 million and $300 million equivalent of euro-denominated notes.

Trivium continues to skyrocket

Trivium’s secured and unsecured tranches continued to skyrocket in the secondary space with the notes now trading up to 3 and 6 points above their issue price.

Trivium’s 5½% senior notes due 2026 (B2) were up about ½ point on Friday. They were quoted at 103 1/8 bid, 103 5/8 offered early in the session and closed the day at 103 1/8, sources said.

Trivium’s 8½% senior notes due 2027 (Caa2) were also bid up ½ point. They were quoted at 105¾ bid, 106¼ offered and closed the day at 106, sources said.

The 8½% notes were active with more than $16 million in reported volume during Friday’s session.

Both tranches priced at par on July 19.

The notes have skyrocketed since hitting the secondary space.

Sprint in focus

Sprint’s junk bonds were once again in focus with the telecom’s capital structure improving after the DOJ officially announced its much anticipated approval for the merger with T-Mobile.

Sprint’s 8¾% notes due 2032 were up another 2 points to 126¼. More than $30 million of the bonds were on the tape by the late afternoon.

The notes have gained more than 6 points over the past week.

The 6 7/8% senior notes due 2028 gained 1 point to 112 with $22 million in reported volume, according to a market source.

The notes also rose more than 6 points over the past week.

The 7 5/8% notes due 2025 were also up 1 point to 112½ on Friday. The notes have gained more than 3 points over the past week.

The 7 1/8% notes due 2024 were up 1¼ points to 110½. The notes also gained about 3 points over the past week.

With the divestiture of Sprint and T-Mobile assets to DISH Networks Corp. solidified, the DOJ gave its formal support to the merger between the two telecoms.

While a major hurdle to the merger was crossed with DOJ approval, the merger is still being challenged by a lawsuit brought by the attorneys general of several states.

Refinitiv jumps

Refinitiv’s junk bonds, which priced in September 2018 in a closely watched LBO financing deal, jumped in active trading on Friday.

Refinitiv’s 6¼% first-lien notes due 2026 (B2/B/BB+) gained more than 3 points during Friday’s session. The notes traded up to 108 and closed the day at 107 5/8, sources said.

The 8¼% senior unsecured notes due 2026 (Caa2/B-/B+) gained almost 5 points on Friday to close the day at 109½.

The junk bonds priced at par in September 2018 to help fund the acquisition of a 55% stake in Thomson Reuters Financial & Risk unit by Blackstone, Canada Pension Plan Investment Board and GIC.

The notes were off to a rough start in the secondary market with both tranches lagging their issue price until as recently as March and April.

The notes received an extra boost on Friday on news Refinitiv is in talks to combine with the London Stock Exchange Group Plc. A deal could be announced as early as next week, Reuters reported.

Mixed Thursday flows

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

High-yield ETFs sustained $8 million of outflows on the day.

However, actively managed high-yield funds saw $50 million of inflows on Friday.

News of Thursday's daily flows follows a late Thursday afternoon report that the combined high-yield funds saw $1.3 billion of net inflows in the week to Wednesday's close, according to Lipper US Fund Flows.

That's the seventh consecutive positive weekly flow, according to the market source, totaling $8.7 billion, as the market anticipates that the Fed will further fuel the present rally by means of a rate cut in the week ahead.

Indexes gain

Indexes closed out Friday with gains with all seeing cumulative gains on the week.

The KDP High Yield Daily index rose 3 bps to close Friday at 71.71 with the yield now 5.45%.

The index shaved off 1 bp on Thursday, gained 10 bps on Wednesday, rose 5 bps on Tuesday, and shaved off 1 bp on Monday.

The index saw a cumulative gain of 16 bps on the week.

The ICE BofAML US High Yield index gained 10.3 bps with the year-to-date return now 10.697%.

The index was up 7 bps on Thursday, 13.7 bps on Wednesday, 15.4 bps on Tuesday and 9.4 bps on Monday.

The index saw a cumulative gain of 55.8 bps on the week.

The CDX High Yield 30 index gained 10 bps to close Friday at 108.04.

The index gained 32 bps on Thursday, 16 bps on Wednesday, 29 bps on Tuesday and 22 bps on Monday.

The index saw a cumulative gain of 109 bps on the week.

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