Junk primary prices $4.2 billion in seven dollar-denominated tranches; Copeland under pressure

By Abigail W. Adams

Portland, Me., May 24 – The domestic high-yield primary market saw one of the busiest sessions of the year on Wednesday with $4.2 billion pricing in seven dollar-denominated tranches.

Venture Global LNG Inc. returned to the market three sessions after pricing the largest offering of the year with a $500 million tap of its new senior secured notes due 2028 and 2031 (B1/BB/BB-).

The add-on drove down the trading level of the 8 1/8% senior secured notes due 2028 and 8 3/8% senior secured notes due 2031; however, they remained above par.

Olympus Water US Holding Corp. (Solenis) priced its upsized $2.38 billion equivalent two-tranche offering of long five-year senior secured notes (B3/B-) to back the acquisition of Diversey Holdings Ltd.

However, the notes struggled on the break and closed the day on a 99-handle.

Seagate HDD Cayman priced a $1 billion two-tranche offering of senior notes due 2029 and 2031 (Ba3/BB/BB+).

Unlike several recent deals that struggled in the secondary, Seagate’s new notes skyrocketed on debut.

A $1 billion offering of three-year and five-year senior bullet notes from GGAM Finance Ltd., an aircraft leasing company formed by Griffin Global Asset Management, also cleared the forward calendar.

The new deals priced on a heavy day for the market with cash bonds falling ½ to 5/8 point as selling pressure accelerated amid continued gridlock in debt ceiling negotiations.

While Wednesday’s focus was new issue-centric, Copeland’s 6 5/8% senior secured notes due 2030 (Ba3/BB-/BB-) were under pressure in heavy volume with the notes sinking to a new low.

Venture Global back for more

Venture Global returned to the high-yield market with a $500 million tap of its new secured notes.

Venture Global priced a $250 million tap of its 8 1/8% senior secured notes due 2028 and a $250 million tap of its 8 3/8% senior secured notes due 2031 at par in a Wednesday drive-by, according to a market source.

Pricing came on top of talk for a reoffer price of par.

The LNG producer and exporter initially priced a $2 billion tranche of the 8 1/8% notes and a $2 billion tranche of the 8 3/8% notes at par on May 19.

The total size of the initial offering was $4 billion, which was upsized from the initial size of $3.5 billion.

The offering was well subscribed, but its gains in the secondary space were subdued.

The 8 1/8% notes and 8 3/8% notes were lower following the add-on but without “much concession,” a source said.

Both tranches were marked at par ½ bid, 101 offered heading into Wednesday’s session.

They closed the day in the par to par ½ context, a source said.

Solenis prices, weak on break

Solenis priced its upsized $2.38 billion equivalent two-tranche offering of long five-year senior secured notes (B3/B-) to back the acquisition of Diversey on Wednesday.

The deal included a downsized $1.7 billion tranche that priced at par to yield 9¾%.

Pricing came at the wide end of tightened talk for a yield of 9 5/8% to 9¾%. Initial price talk was in the 9¾% area.

The tranche size was downsized after previously upsizing to $1.83 billion from $1.63 billion.

The offering also included an upsized €630 million tranche that priced at par to yield 9 5/8%.

Pricing came at the tight end of tightened talk for a yield of 9 5/8% to 9¾%. Initial price talk was in the 9¾% area.

Early guidance for both tranches was for a yield in the high 8% area.

While the offering upsized with the dollar-denominated tranche slightly oversubscribed, demand seemed tepid with pricing coming well wide of early guidance, a source said.

The new 9¾% notes saw a weak break.

The notes fell to 99¾ bid, par ¼ offered shortly after freeing for trade.

They continued to weaken into the close with the notes ending the day on a 99-hanlde, a source said.

Seagate prices, jumps on break

Seagate priced a $500 million tranche of 8¼% senior notes due Dec. 15, 2029 and a $500 million tranche of 8½% senior notes due July 15, 2031 (Ba3/BB/BB+) at par on Wednesday.

Pricing of the long six-year notes came at the tight end of talk for a yield in the 8 3/8% area; early guidance was in the 8½% area.

The eight-year notes priced at the tight end of talk for a yield in the 8 5/8% area; early guidance was in the 8¾% area.

In contrast to several recent deals that struggled in the aftermarket, Seagate’s new notes saw a strong break.

The notes jumped to a 101-handle and stood poised to close the day in the 101 to 101½ context.

Seagate is a well-known name in the high-yield market and a strong credit, a source said.

The new notes priced cheap compared to the company’s outstanding issues, which continued to come in on the heels of the new offering.

Seagate’s 9 5/8% notes due 2032 fell 1 point to close Wednesday at 108 1/8 with the yield about 8 1/8%, a source said.

The 5¾% notes due 2024 fell 1½ points to close the day at 86 with the yield about 7½%.

Griffin prices

Griffin Global priced a $400 million tranche of 7¾% senior notes due May 15, 2026 and a $600 million tranche of 8% senior notes due 2028 (/BB-/BB) at par on Wednesday at the conclusion of a roadshow, according to a market source.

Pricing of the five-year notes came at the wide end of talk for a yield of 7¾% to 8%.

The three-year notes priced at the wide end of talk for a yield of 7½% to 7¾%.

Early guidance for the five-year notes was in the high 7% to 8% area with the three-year notes guided as 25 basis points tighter.

Copeland under pressure

Copeland’s recently priced 6 5/8% senior secured notes due 2030 were under pressure on Wednesday with the notes falling to a new low.

The 6 5/8% notes sank 5/8 to ¾ point with the notes breaking below a 99-handle.

They were changing hands in the 98 5/8 to 99 context throughout the session.

There was $52 million in reported volume.

Copeland’s notes have struggled since the $2.28 billion tranche priced at par on May 4 with the notes falling to a 99-handle shortly after pricing.

However, Wednesday’s trading level marked the lowest for the notes since pricing.

Indexes

The KDP High Yield Daily index fell 24 points to close Wednesday at 50.04 with the yield now 7.56%.

The index fell 7 points on Tuesday after gaining 4 points on Monday.

The ICE BofAML US High Yield index fell 49.4 basis points with the year-to-date return now 3.414%.

The index was down 12 bps on Tuesday after gaining 23.9 bps on Monday.

The CDX High Yield 30 index fell 30 bps to close Wednesday at 100.18.

The index was down 28 bps on Tuesday after gaining 49 bps on Monday.

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