Freeport-McMoRan, Albertsons, Mattel, iHeart price; Advisor Group skyrockets; funds lose $115 million

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 1 – The domestic high-yield primary market was in full force on Thursday with four issuers pricing five tranches totaling $2.95 billion.

iHeartCommunications, Inc. priced an upsized $750 million issue of 5¾% eight-year senior secured first lien notes (B1/BB-) on Thursday, in a deal that was initially slated for Friday’s business.

Freeport-McMoRan Inc. priced $1.2 billion of senior notes (Ba1/BB/BB+) in two evenly split tranches.

Albertsons priced an upsized $750 million issue of 8.5-year senior guaranteed notes (B3/BB-) at par to yield 5 7/8% in a quick-to-market trade.

Mattel, Inc. priced a $250 million issue of eight-year senior guaranteed notes (B1/BB-) at par to yield 6% in a drive-by.

Meanwhile, the secondary space was volatile on Thursday, beginning the day with a rally only to close the day with a dip.

While the CDX traded off, the cash market held up amid the sell-off in equities with trading activity quieting into the afternoon. People were spooked, a market source said.

While equity markets started the day strong, they sold off after renewed tariff talk from U.S. President Donald Trump.

While the overall market was down, Advisor Group Inc.’s newly priced 10¾% senior notes due 2027 (Caa1/B-) continued to skyrocket in the secondary space with the notes almost 4 points above their issue price.

Wind Tre SpA’s 5% senior notes due 2026 also made large gains following earnings.

However, the oil patch was under pressure on Thursday as crude oil futures sold off on the renewed trade tensions.

Whiting Petroleum Corp.’s 6 5/8% senior notes due 2026 were in focus with the notes trading down after a large earnings miss.

Meanwhile, the seven-week consecutive stretch of inflows was broken over the past week.

High-yield mutual funds and exchange-traded funds saw a modest outflow of $115 million for the week ended on Wednesday, according to fund-flow statistics generated by AMG Data Services Inc.

Thursday drive-bys

Hot on the heels of a capital markets energy drink from the Fed, served up in the form of a 25 basis points reduction in the Federal Reserve Bank's benchmark Fed Funds rate on the last day of July, the primary market roared into August, market sources said.

Four issuers brought a combined five tranches of junk, raising $2.95 billion.

All Thursday's business came quick-to-market. Two of the four issuers upsized their offers.

One deal, from iHeartCommunications, was initially announced as Friday business, but through the course of Thursday's topsy-turvy session – replete with a tariff Tweet from President Trump that was said to have drained the market of its ebullience – timing on the deal was moved ahead.

iHeartCommunications priced an upsized $750 million issue of 5¾% eight-year senior secured first-lien notes (B1/BB-).

The deal, which had been talked in the 5 3/8% area, was heard to have played to high demand, a trader said.

Freeport-McMoRan priced $1.2 billion of senior notes (Ba1/BB/BB+) in two evenly split tranches, in a drive-by.

The sale included $600 million of eight-year notes that priced at par to yield 5%. The yield printed at the wide end of the 4 7/8% to 5% yield talk, but inside of initial talk in the 5¼% area.

The sale also included $600 million of 10-year notes that priced at par to yield 5¼%. The yield printed at the wide end of the 5 1/8% to 5¼% yield talk, but at the tight end of the 5¼% to 5½% initial talk.

Albertsons priced an upsized $750 million issue of 8.5-year senior guaranteed notes (B3/BB-) at par to yield 5 7/8% in a quick-to-market trade.

The issue size increased from $500 million.

The yield printed at the tight end of the 5 7/8% to 6 1/8% yield talk.

And Mattel priced a $250 million issue of eight-year senior guaranteed notes (B1/BB-) at par to yield 6% in a drive-by.

The yield printed at the tight end of the 6% to 6¼% yield talk.

Forgital talk 7½% area

Forgital Group is on deck for Friday.

The deal, supporting the buyout of the Vicenza, Italy-based manufacturer by the Carlyle Group, was talked Thursday in the 7½% area, according to a syndicate source.

Meanwhile the Sirius Minerals plc/York Potash Intermediate Holdings plc, which had been radio silent for more than a week, blinked back onto the screens, on Thursday.

There is guidance on the $500 million offering of eight-year senior secured notes (/B-/B) in the 13½% area, according to a sellside source.

Although initial price talk was in the 12% area, pricing discussions were heard to have gone as wide as 15%, market sources said.

The capital expenditures deal is slated to price during the Aug. 5 week.

Freeport-McMoRan lags

The new paper from Freeport-McMoRan was lagging its issue price after breaking for trade in the secondary space.

The 5¼% senior notes due 2029 were traded as low as 99 3/8.

However, most prints were between 99 7/8 and par, a source said. More than $33 million of the bonds were on the tape by the late afternoon.

The 5% senior notes due 2027 were also off to a lackluster start after breaking for trade with most prints between 99 7/8 and par, a source said.

The 5% notes saw $40 million in reported volume shortly before the market close.

The new offering jumpstarted activity in the mining company’s outstanding issuances.

Freeport-McMoRan’s 5.45% senior notes due 2043 gained about 1 point following the announcement of the debt refinancing deal.

The 5.45% notes rose to 93½ bid, 94½, offered on Thursday with more than $20 million in reported volume. They were previously trading in the 92¼ to 92¾ context, a source said.

Advisors Group skyrockets

While volume was light, Advisors Group’s 10¾% senior notes due 2027 skyrocketed in secondary trading.

The notes priced at a steep discount and the deal took a long time to complete.

However, they traded up to par soon after breaking for trade on Wednesday and continued to climb on Thursday, a source said.

The notes were trading between par ½ and 101½ with about $14 million in reported volume by late Thursday afternoon.

After a delay of about one week, Advisors Group priced a downsized $350 million issue of the 10¾% notes at 96.14 to yield 11½% on Wednesday.

The issue size decreased from $400 million. The deal also underwent document revisions.

While the coupon came on top of coupon talk and the yield printed at the tight end of the 11½% to 11¾% yield talk, pricing came wide of initial talk for a yield in the 10% area.

Wind Tre jumps

Wind Tre’s 5% senior notes due 2026 were among the major gainers of Thursday’s session with the notes jumping on earnings related news.

The 5% notes rose 5 1/8 points to 105 1/8 with more than $18 million in reported volume heading into the market close, according to a market source.

The notes jumped after owner CK Hutchinson announced earnings.

The Italian mobile telecommunications company saw its EBITDA grow 6% to €1.03 billion in the first half of the year, telecompaper.com reported.

The 5% notes have seen an upward trajectory since multinational conglomerate CK Hutchinson took full control of the company in July 2018.

Whiting Petroleum trades off

The oil patch was under pressure on Thursday with crude oil futures down over 7% on renewed trade tension between the U.S. and China.

However, Whiting Petroleum’s 6 5/8% senior notes due 2026 were selling off due to a large earnings miss.

The 6 5/8% notes dropped about 3 point to close Thursday at 86½, according to a market source.

With more than $88 million in reported volume, the notes were the most active during Thursday’s session.

Whiting reported a loss per share of 28 cents versus analyst expectations for earnings per share of 27 cents.

The company also slashed its forecast for oil production and announced that it was reducing staff by 33%, Bloomberg reported.

Indexes drop

Indexes were down on Thursday after renewed tariff talks rattled markets.

The KDP High Yield Daily index dropped 13 points to close Thursday at 71.65 with the yield now 5.48%.

The index gained 11 bps on Wednesday after shaving off 1 bp on Tuesday and 3 bps on Monday.

The ICE BofAML US High Yield index dropped 11.9 bps with the year-to-date return now 10.601%.

The index gained 9.2 bps on Wednesday, dropped 9.9 bps on Tuesday, and rose 3 bps on Monday.

The CDX High Yield 30 index dropped 36 bps to close Thursday at 107.04. The index was down 38 bps on Wednesday, 9 bps on Tuesday and 17 bps on Monday.

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