Frontier, Centennial, Target Hospitality price; Sunoco in focus; Manitowoc trades up

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 12 – The domestic high-yield primary market was in high-gear on Tuesday with $2.49 billion pricing over three deals and the forward calendar growing.

Frontier Communications Corp. priced a $1.65 billion issue of eight-year first lien senior secured notes (B2/B/BB) at par to yield 8% in a drive-by.

Centennial Resource Production, LLC priced a $500 million issue of 6 7/8% eight-year senior notes (B3/BB-) at 99.235 to yield 7%.

Target Hospitality priced a $340 million issue of 9½% five-year senior secured notes (B2/B) at 99.029 to yield 9¾%.

Amkor Technology, Inc. plans to price $525 million of 8.5-year senior notes (current ratings B1/BB) on Wednesday.

Meanwhile, ADT Corp. said it is proposing to issue up to $2.65 billion of notes: $750 million each of first-priority senior secured notes due 2024 and 2026 and up to $1.15 billion of senior unsecured notes due 2027.

ADT expects to launch the offerings the week of March 18.

The European primary market also saw its forward calendar grow with France-based Faurecia expected to price its €500 million offering of seven-year notes on Wednesday.

New deal activity spurred activity in the secondary space which remained firm on Tuesday, sources said.

As Frontier Communications’ new offering was in the work, the company’s outstanding issuances were posting gains.

Sunoco LP’s 6% senior notes due 2027 (B1/BB-/BB) were in focus in the secondary space although the notes were slightly weaker from their highs after breaking for trade on Monday.

While volume was lighter, Manitowoc Co. Inc.’s 9% senior notes due 2026 (B2/B) were performing well in the secondary space with the notes trading well above their issue price.

Frontier $1.65 billion drive-by

The dollar-denominated new issue market cranked out $2.48 billion on Tuesday, as the primary market topped the $1 billion mark for the third time in two weeks.

Frontier Communications priced a $1.65 billion issue of eight-year first lien senior secured notes (B2/B/BB) at par to yield 8% in a drive-by.

The yield printed in the middle of initial talk in the 8% area.

JPMorgan, Citigroup, Credit Suisse, Goldman Sachs, Morgan Stanley, Barclays, BofA, Deutsche Bank and Mizuho were the joint bookrunners for the debt refinancing deal.

Centennial Resource at the wide end

Also coming with a drive-by, Centennial Resource Production priced a $500 million issue of 6 7/8% eight-year senior notes (B3/BB-) at 99.235 to yield 7%.

The yield printed at the wide end of yield talk in the 6 7/8% area.

The deal was heard to be playing to a $600 million order book around 1:30 p.m. ET on Tuesday, a trader said.

Citigroup was the lead bookrunner for the debt refinancing deal.

Target Hospitality prices wide

Target Hospitality priced a $340 million issue of 9½% five-year senior secured notes (B2/B) at 99.029 to yield 9¾%.

The yield printed 62.5 basis points beyond the wide end of yield talk in the 9% area. Initial guidance was in the high 8% area.

Credit Suisse was the left bookrunner.

Proceeds, together with funds from other sources, will be used to fund Target Logistics Management, LLC’s (Target Lodging) and RL Signor Holdings LLC’s (Signor Lodging) planned business combination with Platinum Eagle Acquisition Corp., a special purpose acquisition company.

Proceeds will also be used to prepay certain third-party and inter-company debt and provide cash for the combined company’s balance sheet.

Amkor pricing Wednesday

Amkor Technology plans to price $525 million of 8.5-year senior notes (current ratings B1/BB) on Wednesday.

The notes come with initial price indications of 6¼% to 6½%, a bond trader said.

Morgan Stanley & Co. and BofA Securities are the joint bookrunners for the debt refinancing deal.

Faurecia talk 3½% area

In the European market, France-based Faurecia talked its €500 million offering of seven-year notes to yield in the 3½% area.

The deal, which launched Tuesday, will be shopped again at an investor meeting on Wednesday morning in London and is expected to price later on Wednesday, the source said.

Joint global coordinator Credit Agricole will bill and deliver. Citigroup and HSBC are also joint global coordinators.

The auto parts manufacturer, which is headquartered in Nanterre, France, plans to use the proceeds to refinance the €500 million bridge loan which was used to finance its acquisition of Clarion Co, Ltd.

Sunoco in focus

Sunoco’s new 6% senior notes due 2027 were among the most actively traded issues in the secondary space during Tuesday’s session.

However, the notes were weakening in the high-volume activity.

The 6% notes were trading between par and par 1/8 after closing Monday at par ¼, a market source said.

More than $77 million of the bonds changed hands during Tuesday’s session.

The Houston-based wholesale distributor of motor fuels priced an upsized $600 million issue of the 6% notes at par in a Monday drive-by.

The yield printed in the middle of yield talk in the 6% area and tight to initial talk in the low 6% area.

The issue size was increased from $500 million.

Manitowoc trades up

Manitowoc’s new 9% senior notes due 2026 were putting in a strong performance in the secondary space, although volume was light in comparison to Sunoco.

The 9% notes were trading hands between par 3/8 and par ½, a market source said.

About $15 million of the bonds were on the tape by the late afternoon.

Volume was lighter because the Milwaukee-based crane manufacturer is an off-the-run name and the deal size was smaller, a market source said.

Manitowoc priced a $300 million issue of the 9% notes at par on Monday.

Price talk widened to 9% from the initial low 8% area.

The deal was initially slated to price on Friday but was carried over to Monday.

Frontier on the rise

While its new offering was in the works, Frontier Communications’ capital structure was making gains in active trading.

Frontier’s 8¾% senior notes due 2022 rose 2 1/8 points to 70 1/8 with more than $11 million of the bonds changing hands, according to a market source.

The telecommunications company’s 7.45% senior notes due 2035 also rose 2 1/8 points to 50.

The 10½% senior notes due 2022 were up 1½ points to 74½ with more than $19 million of the bonds changing hands.

Frontier’s 11% senior notes due 2025 rose 1 point to 65¾ with more than $25.5 million changing hands.

ETFs see sizable Monday inflows

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

High-yield ETFs saw sizable inflows of $465 million on the day.

However, actively managed high-yield funds sustained $100 million of outflows on the day, the trader said.

With three of the five sessions in the current fund flow reporting week tallied, the combined funds were tracking a modest $145 million of inflows to Monday's close, the source added.

Indexes

Indexes saw another day of solid gains on Tuesday after closing out last week with cumulative losses.

The KDP High Yield Daily index rose 13 basis points on Tuesday to 69.66 with the yield 6.09%.

The index was up 5 bps on Monday after a cumulative loss of 43 bps on the week last week.

The ICE BofAML US High Yield index gained 23.5 bps with the year-to-date return now 6.264%.

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

The index rose 19.7 bps on Monday after a cumulative loss of 57.5 bps on the week last week.

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

The CDX High Yield 30 index rose 15 bps to close Tuesday at 106.22.

The index was up 57 bps on Monday after a cumulative 93 bps drop on the week last week.

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