Power Solutions prices, dominates secondary; ADT on tap; Worldplay jumps; Intelsat drops

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 18 – One highly anticipated deal cleared the domestic high-yield primary market on Monday with another hefty offering joining the forward calendar.

Power Solutions priced $2.95 billion and €700 million notes in three tranches early in Monday’s session.

ADT Corp. stepped forward to fill the vacuum left by Power Solutions clearing the primary market. ADT plans to start a roadshow for a $2.75 billion three-tranche offering, which is scheduled to price before the week comes to a close.

Power Solutions’ dollar-denominated tranches dominated activity in the secondary space with both tranches skyrocketing upon hitting the secondary space.

Worldpay Inc.’s 4 3/8% senior notes due 2025 also soared on Monday following news the company would be acquired.

Intelsat SA’s junk bonds were again on the decline in high-volume activity on Monday as political opposition to the company’s C-band proposal continues to mount.

Power Solutions prices megadeal

Early in the Monday session, Power Solutions priced $2.95 billion and €700 million notes in three tranches.

The deal, via issuing entities Panther BF Aggregator 2 LP and Panther Finance Co., Inc., featured a downsized $1 billion tranche of seven-year senior secured notes (Ba3/B+/BB) that priced at par to yield 6¼%.

The tranche was downsized from $2 billion, with the shift of $1 billion of proceeds to the term loan, increasing the loan size to $4.2 billion from $3.2 billion.

The yield printed on top of yield talk, which had tightened from earlier talk of 6½% to 6¾%; initial guidance was in the 7% area.

In a euro-denominated secured tranche, Power Solutions also priced €700 million of seven-year senior secured notes (Ba3/B+/BB) at par to yield 4 3/8%.

The yield printed on top of yield talk, which had tightened from earlier talk of 4½% to 4¾%; initial guidance was in the 5% area.

The sole unsecured tranche featured $1.95 billion of eight-year senior notes (B3/B/B-), which priced at par to yield 8½%. The yield printed on top of yield talk.

The deal was held in the market over the weekend. It had been expected to price last Friday.

A supplement to the offering memorandum was posted on Monday morning.

A couple of hours ahead of the scheduled close of books, on Friday, the deal was said to be playing to more than $12 billion of orders across all three tranches.

Proceeds will be used to fund Brookfield Business Partners’ acquisition of Johnson Controls’ Power Solutions business.

ADT to roadshow for $2.75 billion

In the vacuum left with the clearing of the Power Controls deal, Florida security services provider ADT comes to the primary market with a hefty three-tranche offering of its own, set to price before the end of the week.

ADT plans to start a roadshow on Tuesday for a $2.75 billion offering of notes.

It features first priority senior secured notes (Ba3/BB-) coming in two bullet tranches: $750 million of five-year notes and $750 million of seven-year notes.

In addition, ADT is selling $1.25 billion of senior unsecured notes (B3/B-). The unsecured notes come with three years of call protection.

Deutsche Bank, Barclays, Citigroup and RBC are joint bookrunners for the debt refinancing deal.

Power Solutions dominates

The demand for Power Solutions’ senior notes seen during bookbuilding followed it into the secondary space with the dollar-denominated tranches dominating trading activity.

The 6¼% senior notes due 2026 shot up after breaking for trade, sources said.

The 6¼% notes were trading between 102 and 102¼ in the late afternoon.

More than $206 million of the bonds were on the tape.

The 8½% senior notes due 2027 were trading in a wide range, a market source said.

The notes were trading between par 5/8 to 102¼ with most trades towards closing between 101 1/8 and 101½, a market source said.

More than $252 million of the bonds were on the tape by the late afternoon.

Worldpay soars

Worldpay’s 4 3/8% senior notes due 2025 soared in active trading on Monday in the wake of buyout news.

The 4 3/8% notes rose almost 6 points to 103, according to a market source. More than $17 million of the bonds were on the tape by the late afternoon.

The notes shot up following news Fidelity National Information Services would acquire Worldpay for $43 billion, including debt, according to a market source.

Worldpay recently acquired Vantiv, the original issuers of the 4 3/8% senior notes, in a deal that was completed in January 2018.

The deal is expected to close in the second half of 2019 pending shareholder and regulatory approval.

The buyout would be the largest in the fintech space.

Intelsat drops

Intelsat junk bonds remained under pressure with the notes losing ground in high-volume activity on Monday as political opposition to its C-band proposal intensified.

Intelsat Jackson Holdings’ 8½% senior notes due 2024 dropped 1½ points to 98 5/8. More than $18 million of the bonds were on the tape by the late afternoon.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 dropped 4½ points to 74 1/8. More than $22.25 million of the bonds were on the tape by the late afternoon.

Intelsat SA’s 9½% senior notes due 2023 dropped 1 5/8 point to 92¼. More than $23.5 million of the bonds changed hands by the late afternoon.

Intelsat’s 9¾% senior notes due 2025 dropped 1 point to 102½.

Intelsat’s junk bonds have been under pressure for much of March as political opposition to its C-band proposal mounts.

Intelsat has joined with other satellite communications providers to form the C-band Alliance, which is proposing selling a portion of the C-band to aid in the adoption of 5G in the United States.

The proposal has recently been met with political opposition with the congressional leaders calling for its rejection.

Mixed Friday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Friday, the most recent session for which data was available at press time, a trader said.

High-yield ETFs were essentially flat on the day, with $8 million of outflows.

However, actively managed high-yield funds saw $149 million of inflows on Friday, the sources said.

Indexes gain

After closing out last week with strong gains, indexes were again on the rise on Monday.

The KDP High Yield Daily index rose 6 basis points to close Monday at 69.95 with the yield now 5.97%.

The index saw cumulative gains of 41 bps on the week last week.

The ICE BofAML US High Yield index gained 6 bps with the year-to-date return now 6.74%.

The index saw cumulative gains of 84.8 bps on the week.

After sinking below 6% year-to-date returns on Friday, the index popped back above it on Monday.

The index initially shot past 6% returns on Feb. 25 after passing 5% returns on Feb. 12.

The CDX High Yield 30 index gained 6 bps to close Monday at 106.53.

The index saw a cumulative gain of 97 bps on the week last week.

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