Novelis megadeal prices; forward calendar surges; DishTV weakens; Builders gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 26 – The domestic high-yield primary market was active on Monday with one megadeal pricing in a drive-by and the forward calendar swelling to $7.29 billion.

Novelis Corp. priced a $1.5 billion two-part offering of senior notes (B1/BB).

The active forward calendar also ballooned to $7.29 billion with several megadeals on deck.

Meanwhile, it was a quiet day in the secondary space with volume light as market players eyed the new deals in the pipeline.

New and recent issues continued to dominate the tape.

DirecTV Entertainment Holdings LLC’s 5 7/8% senior secured notes due 2027 (Ba3/BB/BBB-) remained in focus although the notes were coming in slightly from the heights reached the previous session.

However, Builders FirstSource, Inc.’s 4¼% senior notes due 2032 (B1/B+) were gaining steam in active trading.

Novelis’ megadeal

Novelis came in a Monday's drive-by, pricing a $1.5 billion two-part offering of senior notes (B1/BB).

Both tranches blew through talk.

The deal included $750 million of notes due Nov. 15, 2026 that priced at par to yield 3¼%, versus yield talk in the 3½% area.

It also included $750 million of 10-year notes that priced at par to yield 3 7/8%, versus yield talk in the 4 1/8% area.

The deal was heard to be playing to $8 billion of orders at price talk.

As the secondary space awaited Novelis’ latest offering, the company’s 4¾% notes due 2030 were down slightly in active trading.

The 4¾% notes traded off about ¼ point to close the day at 106 3/8, according to a market source.

There was about $20 million in reported volume.

The forward calendar

Although Novelis was the only issuer to price bonds on Monday, the new-issue market generated a heavy volume of news, as the active forward calendar ballooned to $7.29 billion.

Those announcing deals include three issuers with plans to price billion dollar-plus offers by the end of July's final week.

Air Canada began marketing $2.75 billion equivalent of senior notes (expected ratings Ba2/BB-/BB) in a two-part U.S. dollar-denominated and Canadian dollar-denominated offering.

The U.S. dollar-denominated tranche comes as a five-year bullet with initial guidance in the mid-to-high 4% area.

The Canadian dollar-denominated tranche comes as an eight-year note.

Venture Global Calacasieu Pass LLC, a unit of Venture Global LNG, Inc., set out with a $1.5 billion two-part offering of senior secured bullet notes.

The deal includes a tranche of eight-year notes with initial guidance in the 4½% area, and a tranche of 10-year notes initially guided to price 25 basis points behind the eight-year notes.

And Jefferies Finance LLC and JFIN Co-Issuer Corp. started a brief roadshow for a $1 billion offering of seven-year senior notes (B1/BB-/BB+) with initial guidance in the 5% area (see related stories in this issue).

DirecTV weakens

DirecTV’s 5 7/8% senior notes due 2027 were coming in from the heights reached the previous session.

The 5 7/8% notes were down about ¼ point.

They returned to a 103-handle with the notes changing hands in the 103½ to 103¾ context heading into the market close, a source said.

The notes remained active with more than $60 million in reported volume.

The 5 7/8% notes have outperformed since the broadcast satellite service provider priced the $2.3 billion issue at par on Thursday.

The deal looked cheap compared to where the BB index has been trading with sellers only really appearing once the notes hit the 104 level, a source previously said.

The 5 7/8% notes closed out the previous session in the 103¾ to 104 1/8 context.

Builders gains

Builders FirstSource’s 4¼% senior notes due 2032 were gaining steam in the aftermarket. The notes were up about 3/8 point in active trading on Monday.

They were changing hands in the 101 5/8 to 101 7/8 context heading into the market close.

The 4¼% notes have performed well since the building supplies company priced the $1 billion issue at par on July 22.

$429 million Friday inflows

The dedicated high-yield bond funds saw $429 million of net daily inflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $378 million of inflows on the day.

Actively managed high-yield funds saw $51 million of inflows on Friday, the market source said.

Indexes mixed

The KDP High Yield Daily index rose 3 points to close Monday at 70.21 with the yield now 3.68%.

The index was flat on the week last week.

The CDX High Yield 30 index shaved off 12 bps to close Monday at 109.63.

The index gained 23 bps on the week last week.

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