Presidio on deck; Novelis in focus; Mr. Cooper, Ashton Wood at a premium; Range Resources improves

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 14 – The domestic high-yield primary market slowed its pace on Tuesday with no deals pricing.

However, Presidio Holdings Inc. is expected to price its $800 million two-part offering on Wednesday, which may also see other deals launch.

The European primary market saw some action on Tuesday with Banco BPM pricing an upsized €400 million issue of 6 1/8% additional tier 1 perpetual notes.

Meanwhile, the secondary space was largely unchanged on Tuesday, sources said.

Focus remained on the new paper with several recent deals trading at a large premium to their issue price.

Novelis Corp.’s recently priced 4¾% senior notes due 2030 (B2/B+) were among the most actively traded issues in the secondary space with the notes trading up.

Mr. Cooper Group Inc.’s 6% senior notes due 2027 and Ashton Woods Homes Co.’s 6 5/8% senior notes due 2028 (expected ratings Caa1/B-) were putting in a strong performance in the aftermarket with both issues trading at a large premium to their issue price.

Meanwhile, Range Resources Corp.’s 9¼% senior notes due 2026 (B1) were gaining strength in active trading with the notes brushing up against par after a lackluster reception in the secondary space.

Presidio talk, timing

The Tuesday session saw the primary market put up a goose egg, with no deals pricing.

Amid a thin news flow Presidio Holdings set price talk and moved up timing in its $800 million two-part offering of notes backing the leveraged buyout of the company by BC Partners.

The secured tranche features $400 million of seven-year senior secured notes (B1/B) talked to yield in the 5% area.

Official talk comes a full 100 basis points inside of initial talk which was in the 6% area.

The unsecured tranche features $400 million of eight-year senior notes (Caa1/CCC+) talked to yield in the 8¾% area.

Official talk on the unsecured notes also has them coming 100-plus bps inside of initial talk in the high 9% area.

Timing on the deal, which is set to price Wednesday, moved ahead; it was originally scheduled to remain in the market until Thursday.

Aside from the timing being moved ahead it has been difficult to gauge demand for the Presidio notes, a trader said on Tuesday.

Away from the Presidio talk the market was quiet, with no new roadshow announcements.

Look for Goldman Sachs to announce a deal soon, perhaps as early as Wednesday, the trader said.

In the euro-denominated market Banco BPM priced an upsized €400 million issue of 6 1/8% additional tier 1 perpetual non-call-five notes on Tuesday.

At one point that deal was playing to as much as €4.9 billion of demand among yield hungry euro investors, sources say.

Novelis in focus

Novelis’ 4¾% senior notes due 2030 were in focus in the secondary space with the notes trading at a premium to their issue price.

The 4¾% notes were changing hands just shy of 101 in the late afternoon, according to a market source.

There was more than $142 million in reported volume.

The Atlanta-based aluminum rolled products producer and aluminum recycler priced a $1.6 billion issue of the 4 ¾% notes at par in a Monday drive-by.

The yield printed tighter than talk in the 5% area. Initial guidance was in the low 5% area.

Proceeds from the large offering will be used to refinance its 6 ¼% notes due 2024 but also fund the metal producer’s acquisition of Aleris.

While Moody’s Investors Service initially changed its outlook for Novelis to negative from stable as a result of the acquisition, the outlook was revised in July 2019 with Moody’s reinstituting a stable outlook for the company.

Mr. Cooper jumps

Mr. Cooper’s new 6% senior notes due 2027 were changing hands at a large premium in active trading on Tuesday.

The 6% notes traded up to 102 in the late afternoon, according to a market source. More than $67 million of the bonds were on the tape.

The Dallas-based provider of mortgage services priced a $600 million issue of the 6% notes at par in a Monday drive-by.

Initial guidance was for a yield in the low-to-mid 6% area.

The deal was driven to the market by a significant amount of reverse inquiry, sources said. The deal was heard to be playing to $3 billion in demand.

Ashton Woods gains

Ashton Woods’ 6 5/8% senior notes due 2028 continued to see decent trading, despite the small size of the issue.

The 6 5/8% notes were up another 5/8 point on Tuesday and stood poised to close the day at 101¼, according to a market source. The bonds saw more than $22 million in reported volume.

They closed Monday at par 5/8, sources said.

Ashton Woods Homes priced a $250 million issue of the 6 5/8% notes at par in a Monday drive-by.

The yield printed at the tight end of the 6 5/8% to 6¾% yield talk and in line with initial guidance in the mid-to-high 6% area.

Range Resources improves

Range Resources recently priced 9¼% senior notes due 2026 were rebounding from their lows on Tuesday.

The 9¼% notes were up about ½ point on Tuesday, according to a market source. They stood poised to close the day at 99 7/8.

The notes have struggled since hitting the aftermarket with the notes trading well below their issue price.

Range Resources priced a $550 million issue of the 9¼% notes at par on Jan. 9.

$855 million inflows on Monday

The dedicated high-yield bond funds saw $855 million of net inflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw a hefty $830 million of inflows on the day.

Actively managed high-yield funds saw $25 million of inflows on Monday, the source said.

With three of the present week's five market sessions in the tally, the combined funds are tracking $1 billion of inflows on the week that will conclude with Wednesday's close, the market source added.

Indexes

Indexes were again mixed on Tuesday.

The KDP High Yield Daily index rose 3 points to 71.92 with the yield now 4.85%.

The index was up 2 bps on Monday.

The ICE BofAML US High Yield index gained another 8 bps with the year-to-date return now 0.623%. The index was up 8 bps on Monday.

The CDX High Yield 30 index dropped 12 bps to close Tuesday at 109.54. The index was down 10 bps on Monday.

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