Junk primary sells $2.08 billion of calendar deals; NGL jumps; Truck Hero gains

By Paul A. Harris and Abigail W. Adams

Portland, Ore., Jan. 21 – The new issue market put up another $2.08 billion in five dollar-denominated tranches from five issuers on Thursday.

Meanwhile, the secondary space remained firm on Thursday with new issues continuing to dominate the tape.

Truck Hero Inc.'s 6¼% senior notes due 2029 (Caa2/CCC) continued to gain after a strong break with the notes rising to a 103-handle.

NGL Energy Partners LP’ outstanding issues skyrocketed after the company announced a new $2 billion offering of five-year senior secured notes, reinstated its 2021 fiscal guidance and gave an upbeat forecast for 2022.

The midstream company’s 7½% notes due 2023 rocketed more than 11 points on the news.

While NGL skyrocketed, the energy sector was under pressure on Thursday as the Biden administration’s new Secretary of the Interior Scott de la Vega announced a temporary moratorium on new leasing and drilling permits for oil and gas companies.

While Murphy Oil USA’s new notes were in demand, the company’s former parent company Murphy Oil Corp.’s junk bonds were trading off on the news.

MEG Energy Corp.’s 5 7/8% senior notes due 2029 (B3/B-) were also coming in from their highs.

Meanwhile, high-yield mutual and exchange traded funds continued to have outflows with $905 million leaving the space through Thursday’s close, according to the Refinitiv Lipper Fund Flow report.

Calendar deals

In Thursday’s new issue business, there were no drive-bys. All of the session's deals had been in the market at least overnight.

Two of the five issuers upsized.

And one metric continues to reflect what market sources are characterizing as a huge demand for new junk bonds: two of the five deals came at the tight ends of yield talk, while three priced inside of talk.

To amplify briefly on that theme, Beasley Broadcast Group, Inc. priced an upsized $300 million issue (from $280 million) of five-year senior secured notes (B3/B-) at par, on Thursday, to yield 8 5/8%.

The yield printed 12.5 bps inside of talk.

The low single-B deal played to around $1.5 billion of demand, and traded sharply higher late Thursday afternoon, according to a bond trader who spotted the new bonds at 103 bid, 103½ offered, shortly after the close.

In the wake of Thursday's action two deals remained on the active calendar as business expected to clear ahead of the coming weekend.

TechnipFMC plc has been in roadshow mode for $850 million of five-year senior notes (Ba1/BB+) with initial talk in the low-to-mid 7% area.

And Colgate Energy Partners III, LLC has been on the high-yield road with a $300 million offering of seven-year unsecured notes (B3/B) which are guided in the mid-to-high 7% area.

Looking beyond the coming weekend, NGL Energy Partners unveiled a megadeal on Thursday, a $2.05 billion offering of five-year senior secured notes (B1) set to price early in the week ahead.

Initial guidance has the notes coming to yield 7¾% to 8% (see related stories in this issue).

Truck Hero gains

Truck Hero’s 6¼% senior notes due 2029 continued to gain on Thursday after a strong break.

The notes rose to a 103-handle in high-volume activity after hitting a 102-handle shortly after breaking for trade the previous session.

The notes were marked at 103 bid, 103¼ offered heading into Thursday’s close.

There was more than $80 million in reported volume.

The notes are now trading with a 5½% yield, a source said.

The automotive parts manufacturer is a well-known and liked name in the high-yield space.

However, the company is still a triple-C credit and the notes carry an eight-year duration, the source said.

“It seems like guys are buying anything,” the source said.

The 6¼% notes were met with heavy demand during bookbuilding.

Truck Hero priced an upsized $600 million, from $550 million, issue of the 6¼% notes at par on Wednesday.

Pricing came at the tight end of the 6¼% to 6½% yield talk. Initial guidance was in the 7% area.

NGL skyrockets

NGL’s outstanding issues skyrocketed after the midstream company launched a new offering of $2.05 billion five-year senior secured notes.

The notes jumped more than 11 points.

They were changing hands in the 92 to 92½ context early in the session and continued to climb to a 93-handle as the session progressed.

There was more than $26.5 million on the tape.

In addition to launching a new $2 billion offer to refinance its term loan, NGL announced that it had reached an agreement with former customer Extraction Oil & Gas, reinstated its guidance, and gave an upbeat forecast for 2022 for a forecast for 15% growth in adjusted EBITDA.

A tale of two Murphys

While NGL was the outperformer of Thursday’s session, the majority of exploration and production companies were under pressure as the incoming Secretary of the Interior announced a temporary moratorium on new oil and gas drilling leases.

While Murphy USA’s offering was in demand during bookbuilding, the gas station owner’s former parent company Murphy Oil Corp.’s junk bonds were trading off alongside the broader sector.

Murphy Oil’s 5 7/8% senior notes due 2027 dropped about one point.

The notes were marked at 99 bid, par offered on Thursday. “They’re better for sale,” a source said.

The 5 7/8% notes closed out the previous session at par ¾ bid, 101 offered.

Murphy USA was spun off from Murphy Oil and has a separate capital structure, a source said.

MEG Energy’s recently priced 5 7/8% senior notes due 2029 were also slightly weaker as the high-yield market braced for tighter restrictions for the energy sector.

The 5 7/8% notes were off about ½ point.

They were marked at par ¾ bid, 101 offered on Thursday after trading as high as 101½ on Wednesday, a source said.

Indexes mixed

Indexes were mixed on Thursday.

The KDP High Yield Daily index rose 7 points to close Thursday at 69.37 with the yield now 4.16%.

The index was up 10 points on Wednesday and 4 points on Tuesday.

The ICE BofAML US High Yield index rose 1.7 bps with the year-to-date return now 0.668%.

The index gained 16.3 bps on Wednesday and was up 12.1 bps on Tuesday.

The CDX High Yield 30 index was down 7 points to 108.98.

The index was up 4 bps on Wednesday and 27 bps on Tuesday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.