Transdigm, CommScope, Colfax, Greif on tap; Lions Gate, Altice, Transocean weaken; Zayo jumps

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 28 – The high-yield primary market’s active forward calendar rocketed to $10 billion on Monday, as dealers announced new business, some of which had been anticipated.

TransDigm, Inc. set an investor conference for Tuesday to launch $3.7 billion of high-yield notes.

CommScope Inc. began a roadshow on Monday for a $3 billion offering of high-yield notes that are coming in three $1 billion tranches.

Colfax Corp. started a roadshow on Monday for a $1 billion two-part offering of senior notes.

Greif Inc. started a roadshow on Monday for a $500 million offering of eight-year senior notes.

They join Dun & Bradstreet Corp. and Studio City Co. Ltd. who are expected to price their offerings in the coming week.

The European primary market’s active forward calendar also grew when Stonegate Pub Co. Financing plc began a roadshow on Monday for a £150 million offering of floating-rate notes.

Meanwhile, it was a soft day for the secondary space with the market in general down about 1/8 point.

The new paper to price over the past week was slightly weaker on Monday, sources said.

Altice USA Inc.’s 6½% senior notes due 2029 (Ba2/BB-), Lions Gate Capital Holdings LLC’s 6 3/8% senior notes due 2024 (B2/B) and Transocean Poseidon Ltd.’s 6 7/8% senior notes due 2027 (B1/B+) were down slightly on Monday.

As CommScope began marketing its new offering, its outstanding junk bonds were trading down in light volume.

Zayo Group Holdings Inc.’s 5¾% senior notes due 2027 jumped on news that several companies were eyeing the potential acquisition of the communications infrastructure services company.

TransDigm sets Tuesday call

TransDigm set an investor conference call to take place at 10:30 a.m. ET on Tuesday to launch $3.7 billion of high-yield notes.

The deal includes a $2.7 billion offering of eight-year senior secured notes (current rating Ba3/B+/BB) and $1 billion of eight-year senior subordinated notes (current ratings B3/B-/B-), expected to price Wednesday.

Morgan Stanley, Credit Suisse, Citigroup, Barclays, RBC, Credit Agricole, KCM, JP Morgan and PNC are joint bookrunners.

The Cleveland-based producer of highly engineered aircraft components plans to use the proceeds to fund its acquisition of Esterline Technologies Corp.

CommScope $3 billion

CommScope began a roadshow on Monday for a $3 billion offering of high-yield notes, which are coming in three tranches sized at $1 billion each.

The Hickory, N.C.-based provider of infrastructure services for communication networks is selling $1 billion of five-year senior secured notes, which come with two years of call protection.

JP Morgan Securities LLC is the left bookrunner for the tranche. Initial talk has the notes pricing to yield in the 6% area.

In another secured tranche, CommScope intends to sell $1 billion of seven-year senior secured notes with three years of call protection. JP Morgan is the left bookrunner.

Initial talk has the seven-year secured notes pricing to yield in the 6½% area.

In the sole unsecured tranche, the company is selling $1 billion of eight senior notes with three years of call protection.

BofA Merrill Lynch is the left bookrunner for the unsecured tranche.

Initial talk has the unsecured paper pricing to yield in the high 8% area.

A roadshow started on Monday. An investor conference call is scheduled for Tuesday.

The deal is set to price on Feb. 7.

Proceeds will be used to help fund the acquisition of Arris International plc, a Suwanee, Ga.-based telecommunications company, for about $7.4 billion, including the repayment of debt.

In addition, CommScope held a bank meeting on Monday for its $3.87 billion term loan, which is also part of the acquisition financing.

Colfax starts roadshow

Colfax Corp. started a roadshow on Monday for a $1 billion two-part offering of senior notes (Ba2/BB+).

The deal is coming in tranches of five-year notes and seven-year notes.

Initial indications have the deal split evenly between the tranches, with $500 million of the five-year notes pricing to yield in the 6½% area, and $500 million of the seven-year notes pricing to yield in the 7% area.

The notes are set to price on Thursday.

JP Morgan, Credit Suisse, Barclays, BNP Paribas, Citigroup, Citizens Bank, Goldman Sachs and HSBC are the joint bookrunners.

The Annapolis Junction, Md.-based technology company that provides fabrication technology and air and gas handling products and service plans to use the proceeds to help finance acquisition of DJO Global, Inc.

Greif roadshowing $500 million

Greif Inc. started a roadshow on Monday for a $500 million offering of eight-year senior notes.

Initial talk has the deal pricing to yield in the 6¾% to 7% area.

The roadshow wraps up Wednesday, and the life offer, via left bookrunner Wells Fargo, is also expected to price on Wednesday.

The Delaware, Ohio-based producer of industrial packaging products and services plans to use the proceeds to fund its acquisition of Caraustar Industries Inc., an Austell, Ga.-based producer of recycled paperboard, from H.I.G. Capital.

Greif also intends to use some of the proceeds to redeem its 7¾% senior notes due August 2019, and to repay its existing senior secured credit facilities.

The forward calendar

The active calendar already featured two deals, which were announced last week and are set to price in the January-February crossover week.

They include the Dun & Bradstreet buyout deal: $500 million of 7.5-year senior secured notes (expected ratings B2/B/BB) with initial price talk in the 7% area and $850 million of eight-year senior unsecured notes (expected ratings Caa2/CCC/B-) with initial talk in the 10¼% to 10½% area.

Also, Studio City is selling $425 million of five-year senior notes (S&P: B+) with initial talk in the mid to high 7% area.

Stonegate Pub £150 million FRN

Stonegate Pub began a roadshow on Monday for a £150 million offering of senior secured floating-rate notes due March 15, 2022 (expected ratings B2/B-).

Barclays is the sole bookrunner.

The roadshow wraps up on Wednesday.

The maturity of the notes is coterminous with the company's existing senior secured floating-rate notes due March 15, 2022.

The Luton, England-based privately-owned managed pub company plans to use the proceeds to repay its senior secured credit facility, as well as to finance completion of the second phase of its acquisition of Novus Leisure, fund certain capital expenditures in relation to recent acquisitions, and to put cash on the balance sheet.

CommScope trades down

As CommScope readied new financing, its existing junk bonds were trading down in light volume, according to a market source.

CommScope’s 5½% senior notes due 2024 dropped 1 5/8 point to 91 5/8. However, only one $1 million-plus print of the bonds was on the tape by the late afternoon.

The 5% senior notes due 2027 were more active. The 5% notes traded down 1 3/8 points to 82 1/8.

More than $7 million of the bonds were in play during Monday’s session.

With the yield on the prospective offering significantly higher, the outstanding notes were trading down.

Holders are most likely making room for the new paper, a market source said.

Prior to launching its roadshow, CommScope announced preliminary fourth quarter results that beat analyst expectations, a source said.

CommScope announced expected revenue of $1.045 billion to $1.07 billion versus analyst expectations of revenue of $1.04 billion.

CommScope expects to announce EBITDA of $188 million to $203 million versus analyst expectations for EBITDA of $169 million.

Weaker

Several issues that priced last week were seen slightly weaker on Monday after performing well in the secondary space after breaking for trade.

Altice’s new 6½% senior notes due 2029 were slightly weaker on Monday. The notes were quoted at par 5/8 bid, par 7/8 offered on Monday.

The notes traded down about 1/8 point to close Monday around par 7/8, sources said.

More than $30 million of the bonds were on the tape by the late afternoon.

The 6½% notes were quoted at par ¾ bid on Friday and traded as high as 101, sources said.

Altice USA priced an upsized $1.5 billion issue of the 6½% notes at par in a Thursday drive-by.

The issue size increased from $1 billion.

Lions Gate’s 6 3/8% senior notes due 2024 dropped ¼ point to close Monday at par ½, according to a market source.

The notes were quoted at par ¼ bid, par ¾ offered on Friday and closed the day at par ¾.

More than $12 million of the bonds changed hands during Monday’s session.

Lions Gate priced an upsized $550 million issue of the 6 3/8% notes at par in a Thursday drive-by.

The deal size increased from $400 million.

Transocean’s new 6 7/8% senior notes were also down about 1/8 point on Monday, according to a market source.

The notes were quoted at par ½ bid, par ¾ offered and closed the day around par 5/8, sources said. More than $19 million of the bonds were on the tape by the late afternoon.

The notes were quoted at par 5/8 bid, 101 1/8 offered on Friday.

Transocean priced a $550 million issue of the 6 7/8% notes at 99.25 to yield 7.026% last Wednesday.

The notes are senior secured. While down on Monday, they were faring better than other issues in Transocean’s capital structure.

Transocean’s 6.8% senior unsecured notes due 2038 dropped 3¼ points on Monday to 73¾.

In contrast to several other deals that priced last week, the new paper from Altice, Lions Gate, and Transocean Poseidon were trading at a premium to their issue price in the secondary space.

The majority of deals to price last week were largely wrapped around their issue price.

Zayo jumps

Zayo Group’s 5¾% senior notes due 2027 jumped on Monday on news several different companies were eyeing it as an acquisition target.

The 5¾% notes rose 2 points to 97¼, a market source said. More than $7 million of the bonds were on the tape by the late afternoon.

Zayo’s bonds and equity were on the rise on Monday after a report that Alphabet Inc. and CenturyLink Inc. were eyeing the communications infrastructure company as a potential acquisition target.

The private equity firm EQT Partners is also believed to be eyeing the company, a market source said.

Zayo has long been considered an attractive acquisition target with several other private equity firms including Blackstone and KKR showing interest in the company.

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 saw $362 million of inflows on the day.

However actively managed high-yield funds sustained $90 million of outflows on Friday, the trader said.

Indexes drop

Indexes launched the week with losses after a mixed week last week.

The KDP High Yield Daily index dropped 3 basis points to close Monday at 68.77 with the yield now 6.48%.

The index saw a cumulative drop of 12 bps on the week last week.

The ICE BofAML US High Yield index dropped 16.7 bps with the year-to-date return now 3.738%.

The index was down a cumulative 1.5 bps on the week last week.

After closing 2018 with a year-to-date return of negative 2.265%, the index catapulted past 3% returns in the first two weeks of 2019.

The CDX High Yield 30 index dropped 22 bps to close Monday at 104.92.

The index saw a cumulative gain of 36 bps on the week last week.

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