Performance Food, IBP price to demand; ADT, Ryman, Uber and WPX trade; big ETF inflows

By Paul A. Harris and James McCandless

Chicago, Sept. 16 – The new week started strong in the high-yield primary market.

Deals from Performance Food Group Co. and Installed Building Products, Inc. were significantly oversubscribed, both pricing at par and at the low end of talk.

In the secondary market, new paper from ADT Inc.’s and Ryman Hospitality Properties, Inc.’s new notes made a splash.

Uber Technologies, Inc.’s and WPX Energy, Inc.’s recent paper was also gaining.

Friday’s inflows to ETFs were the highest they have been since June.

Massive Performance book

Primary market news came at a steady drumbeat on Monday, as two deals priced – both highly oversubscribed – and dealers set the stage for a busy Sept. 16 week.

Performance Food Group Co. priced a $1.06 billion issue of eight-year senior notes (B1/B+) at par to yield 5½% in a quick-to-market trade.

The yield printed at the tight end of the 5½% to 5¾% yield talk. Initial talk was in the mid-to-high 5% area.

The Credit Suisse-led acquisition financing deal played to massive demand, according to an investor who added that the order book was heard to be seven times oversubscribed.

Oversubscribed IBP

Meanwhile Installed Building Products, Inc. priced a $300 million issue of 8.5-year senior notes (B3/B+) at par to yield 5¾%.

The yield printed 12.5 basis points tighter than the 5 7/8% to 6% yield talk. Early guidance was in the 6% to 6¼% area.

The deal played to $1.8 billion of orders, according to a bond trader.

BofA was the left bookrunner.

Calendar builds

The active forward calendar saw a big buildup as the week got underway.

Peabody Energy Corp. kicked off a $900 million offering of seven-year senior secured notes (existing ratings Ba3/BB).

The debt refinancing deal, via left bookrunner Goldman Sachs, is expected to price during the present week.

Early talk is in the 8% area.

Shutterfly Inc. plans to start a roadshow on Tuesday for a $500 million offering of seven-year senior secured notes (expected ratings B1/B).

Citigroup is the lead left bookrunner for the buyout financing.

Initial talk is in the low-to-mid 7% area.

Granite Holdings US Acquisition Co. began a roadshow for a $300 million offering of eight-year senior notes (Caa1) backing KPS Capital Partners' acquisition of the Howden air and gas handling business from Colfax Corp.

The deal, in the market with early talk in the 10% area, is expected to price on Friday.

Stelco Holdings Inc. plans to price a $300 million offering of five-year senior secured notes late in the Sept. 16 week.

Early talk is in the 9% area.

And in business carried over from last week, InfraBuild Australia Pty. Ltd. increased the price talk on its $475 million offer of restructured five-year senior secured notes (Ba3) to the 10% area from earlier talk of 8¾% to 9%.

The J.P. Morgan Securities LLC deal, which had previously been in the market with an unsecured structure, is expected to price during the Sept. 16 week.

Friday notes active

New junk brought to the market on Friday was active Monday, traders said.

Boca Raton, Fla.-based security name ADT’s new 5¾% senior secured notes rose ¼ point to close at 102¼ bid.

The upsized $600 million issue priced at 102 on Friday, firming up to a high of 102½.

The notes were issued through subsidiaries Prime Security Services Borrower LLC and Prime Finance Inc.

Elsewhere, Nashville-based hotel and media company Ryman Hospitality’s new 4¾% senior notes due 2027 rose ½ point to close at 101¼ bid.

The notes came to market through a Rule 144A and Regulation S transaction via subsidiaries RHP Hotel Properties, LP and RHP Finance Corp.

Uber, WPX gain

Other recent paper was also seen gaining, traders said.

San Francisco-based consumer transportation company Uber’s 7½% senior paper due 2027 picked up ½ point to close at 101 bid.

The newer notes have seen gains despite a dispute between the company and California over the classification of its workers.

Tulsa, Okla.-based oil and natural gas exploration and production name WPX Energy’s recent 5¼% senior notes due 2027 added 1½ points to close at 102¼ bid.

The notes were lifted with the rest of the sector.

Oil names up

Oil and gas names were lifted on Monday, market sources said.

On Saturday, drone attacks on Saudi Arabian oil production facilities temporarily limited the country’s crude oil output.

Fears of a shortage of crude oil from one of the world’s major suppliers led to a spike in crude oil futures in Monday activity.

West Texas Intermediate crude oil futures for October delivery gained $8.05 to settle the day at $62.90 per barrel.

North Sea Brent crude oil futures for November delivery ended at $69.02 per barrel after a $8.80 jump.

“Energy names were all that anybody could focus on today,” a trader said. “It’s too soon to tell if we’re staying at these levels, but short sellers are lining up to take advantage.”

Los Angeles-based independent oil and gas producer California Resources Corp.’s paper shifted higher.

The 6% senior paper due 2024 rose 1¼ points to close at 50 bid. The 8% senior paper due 2022 shot up 8 points to close at 63 bid.

Oklahoma City, Okla.-based producer Chesapeake Energy Corp.’s notes also jumped.

The 8% senior notes due 2025 added 5½ points to close at 86 bid. The 8% senior notes due 2027 picked up 5¾ points to close at 83 bid.

Denver-based sector peer Whiting Petroleum Corp.’s issues followed the day’s trend.

The 6¼% senior notes due 2023 gained 6½ points to close at 86¼ bid. The 6 5/8% senior notes due 2026 were elevated by 6¼ points to close at 80¼ bid.

Big Friday inflows to ETFs

On Friday, the dedicated high-yield bond funds saw their biggest daily inflows of cash since June, according to a market source.

High-yield ETFs saw a massive $1.08 billion of inflows on the day.

Actively managed high-yield funds, the asset managers, saw $55 million of inflows on Friday, the source added.

For the year to date to Friday's close the combined high-yield funds have seen $12.3 billion of inflows, according to the source.

Indexes rise

Three high-yield indexes started a new week with a positive push.

The KDP High Yield Daily index shot up 17 basis points on Monday, closing at 71.97 with the yield at 5.34%.

The index dropped 11 bps on Friday, lost 1 bps on Thursday and inched up 1 bps on Wednesday.

The ICE BofAML US High Yield index improved by 26.4 bps to end the session with the year-to-date return now at 11.891%.

The index fell 11.3 bps on Friday, ticked up 7 bps on Thursday and shed 2.8 bps on Wednesday.

The index has operated above the 10% threshold for three weeks.

The CDX High Yield 30 index added 31.48 bps on Monday to finish at 107.7127.

The index garnered 31.66 bps on Friday, improved by 31.90 bps on Thursday and rose 32.20 bps on Wednesday.

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