Shelf Drilling, Mineral Resources price; Acushnet at a premium; Worldpay breaks below par

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 28 – Three issuers, each bringing a single tranche of junk-rated, dollar-denominated notes, raised an overall total of $2.71 billion during Thursday’s session in the primary market.

Two of the three deals upsized.

All three came on the heels of relatively brief roadshows.

Executions ran the gamut, with one deal pricing at the wide end of talk, one in the middle and one at the tight end of talk.

The tight-pricing deal came from Australia-based Mineral Resources Ltd., which issued an upsized $1.1 billion amount (from $850 million) of five-year senior notes (Ba3//BB) at par to yield 9¼%.

The deal was heard to be playing to $2 billion of demand on Thursday morning, according to a sellside source.

Also in the market were Shelf Drilling, Ltd. with an upsized $1.095 billion issue of Shelf Drilling Holdings Ltd. 9 5/8% 5.5-year senior secured notes (B3/B-/B), which priced at 98.184 to yield 10 1/8%, and AmeriTex Pipe & Products with $530 million of AmeriTex Holdco Intermediate LLC 10¼% five-year senior secured notes (B2/B), which priced at 99.035 to yield 10½%.

Tug-of-war

Meanwhile, it was a tug-of-war between buyers and sellers in the secondary space on Thursday with the market strong early in the session before being dragged lower as the session progressed.

While the market dipped mid-session, buyers reemerged to lift it into the close with the secondary space ending the session largely unchanged, a source said.

Credit spreads have jumped dramatically since the Federal Reserve’s Sept. 20 announcement with the CDX index spread hitting 482 early in the session, a new recent high, sources said.

However, the secondary space has held in well with the market not yet responding.

“Guys are holding,” a source said. “There’s no real reason to sell.”

And while several recent issues have priced well tight of the index, they continue to perform well with investors putting cash to work in new deals.

The lack of reaction in the secondary to widening spreads may be a result of the market holding out until the end of the quarter.

“Monday may be a completely different market,” a source said.

Acushnet at a premium

Acushnet Holdings Corp.’s new 7 3/8% senior notes due 2028 (Ba3/BB) became the latest deal to trade to a premium in the secondary.

The notes continued to trade in the par ¼ to par ¾ context and stood poised to close the day wrapped around par ½.

The strong demand for the notes lifted them in the aftermarket despite pricing tight to the BB index.

Acushnet Holdings priced a $350 million issue of the 7 3/8% notes at par on Wednesday.

The yield printed tighter than the 7½% to 7¾% yield talk.

The deal was heavily oversubscribed and heard to be playing to $1.75 billion of demand across 100 accounts.

Worldpay breaks below par

GTCR W-2 Merger Sub LLC’s 7½% senior secured notes due 2031 (Ba3/BB/BBB-) backing the buyout of Worldpay saw some selling pressure with the notes giving back all gains since pricing and breaking below par.

The notes traded down to a 99-handle as selling set in mid-way through the session.

They traded as low as 99 3/8 but fought back as the session progressed to end the day in the 99 7/8 to par 1/8 context, sources said.

The notes saw a strong start in the aftermarket and traded as high as 101 after the $2.18 billion tranche priced at par on Sept. 20.

While the notes have wavered between gains and losses amid the volatility in the broader market, they have held a nominal premium since pricing.

However, the widening of spreads may start to affect the trading level of some of the more frothy recent issues in the market, a source said.

Indexes

The KDP High Yield Daily index dipped 4 basis points to close Thursday at 49.37 with the yield 7.97%.

The index gained 6 bps on Wednesday after falling 20 bps on Tuesday and 12 bps on Monday.

The ICE BofAML US High Yield index added 0.1 bp with the year-to-date return now 5.692%.

The index was down 16.7 bps on Wednesday.

The CDX High Yield 30 index added 8 bps to close Thursday at 101.

The index dropped 70 bps on Wednesday, 36 bps on Tuesday and 7 bps on Monday.

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