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Morning Commentary: High-yield primary market quiet; Oldcastle notes at a premium
By Abigail W. Adams
Portland, April 18 – The domestic high-yield bond primary market remained quiet on Monday on a slow return from the long holiday weekend.
Sources were mixed on what to expect for new issuance in the coming week.
While some high-quality credits were heard to be in the wings with offerings, those deals are largely dependent on Treasuries.
There was no visibility on any deals for Monday’s session, a source said.
Meanwhile, the secondary space was equally quiet at Monday’s open with the market flat.
With European markets closed on Monday, it was expected to be a relatively quiet session.
Oscar AcquisitionCo LLC’s (Oldcastle BuildingEnvelope) 9½% senior notes due 2030 (Caa1/CCC+), the only deal to price the previous week, was trading at a premium to their deeply discounted issue price.
The notes were marked at 93 7/8 bid, 94¼ offered, a source said.
The securities have been wrapped around 94 since breaking for trade on Thursday.
Oldcastle priced a downsized and restructured $585 million issue of the 9½% notes at 92.19 to yield 11% late Thursday.
The leveraged buyout deal was funding KPS Capital Partners LP’s buyout of the building supplies company from CRH plc.
While the notes were performing well in the secondary, the offering experienced pushback during bookbuilding.
Investors have been wary of leveraged buyout deals, especially from CCC credits.
Oldcastle’s leverage was most likely understated and investors were concerned about a slowdown in building, a source said.
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