Morning Commentary: Consolidated Communications bond prices improve on Searchlight offer

By Paul A. Harris

Portland, Ore., April 13 – The prices of Consolidated Communications’ bonds increased 6 points or more on Thursday trailing news that Searchlight Capital Partners, LP intends to acquire all the shares of the Mattoon, Ill.-based telecom's shares that it does not already own, according to a bond trader in New York.

The Consolidated Communications Inc. 5% senior secured notes due October 2028 were 74¼ bid, 75 offered at mid-morning on Thursday, up about 6 points, the source said.

The price of the Consolidated Communications Holdings, Inc. 6½% senior secured notes due October 2028 had improved slightly more, said the trader, who spotted them at 78½ bid, 79½ offered.

On Wednesday, Searchlight and British Columbia Investment Management Corp. submitted a letter to the Consolidated Communications board proposing to acquire all the outstanding shares of Consolidated's common stock that they don't already own for $4 in cash per share.

There is no change of control with respect to the proposed transaction, the trader noted.

Elsewhere, news that Hudbay Minerals Inc. will acquire all the outstanding common shares Copper Mountain Mining Corp. saw Copper Mountain's bonds – a small tranche – trading at a hefty premium to recent prices, according to a trader.

The Copper Mountain Mining 8% senior secured notes due April 2026 were 101 bid, 102 offered on Thursday morning, the source said, noting that those bonds changed hands at 96 on April 5.

Meanwhile the Hudbay Minerals 6 1/8% senior notes due April 2029 were unchanged at 94 following the acquisition announcement, the trader said.

The Hudbay/Copper Mountain combination will create a premier Americas-focused copper mining company that is well-positioned to deliver sustainable cash flows from an operating portfolio of three long-life mines, as well as compelling organic growth from a world-class pipeline of copper expansion and development projects, Copper Mountain stated in a Thursday press release.

Away from those situations, after opening slightly lower on Thursday, cash high-yield bonds were up 1/8 of a point at mid-morning, and the high-yield index was up ¼ of a point trailing macroeconomic data indicating that inflation may be cooling off, sources said.

With the S&P 500 stock index up 0.6% at mid-morning, the Shares iBoxx $ High Yield Corporate Bd (HYG) share price was up 0.65%, or 49 cents, at $75.40.

In the secondary market, the Knife River Holding Co. 7¾% senior notes due May 2031 (Ba3/BB) were up 1/8 of a point at 101½ bid, 102 offered on Thursday morning, a trader said, adding that those bonds were 101 3/8 bid, 101 7/8 offered on Wednesday.

The upsized, highly oversubscribed $425 million issue (from $400 million), which came in support of MDU Resources Group's spinoff of Knife River, priced at par on Tuesday.

Elsewhere, the Cloud Software Group Holdings Inc. 9% senior second-lien notes due September 2029 (Caa2/B-) were better on Thursday morning at 85½ bid, 86 offered, a trader said.

Those bonds, which priced at 79, were 82½ bid, 82¾ offered on Tuesday, according to a market source.

The massive $3,837,622,000 issue priced on April 4, clearing some of the Citrix LBO bridge loan debt that had been hung up on dealer balance sheets since late 2022.

In the primary market, Baytex Energy Corp. talked its $750 million offering of seven-year senior notes (B1/BB-/BB-) with a discount of approximately 1 point, to yield 8¾% to 9%.

Price talk comes on top of initial indications; however, yield talk comes well inside of early whispers that had the notes coming to yield in the 9¼% area, a trader said.

Baytex Energy brought the offering on the back of deal-size reverse inquiry, the source added.

Timing is accelerated. Books close at 3 p.m. ET on Thursday, and the notes are set to price thereafter. The deal had previously been expected to remain in the market until Friday.

Fund flows

Dedicated high-yield bond funds saw $89 million of net inflows on Wednesday, according to market sources.

High-yield ETFs saw $44 million of inflows, and actively managed funds saw $45 million of inflows.

Combined funds are tracking $50 million of inflows in the week to Wednesday’s close.

© 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.