Scientific Games, Sealed Air, Outfront Media, goeasy price; Cascades, Houghton Mifflin join calendar

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 12 – The domestic high-yield primary market’s drive through window was wide open on Tuesday with six issuers pricing $3.33 billion.

Scientific Games Corp. priced $1.2 billion of senior notes (Caa1/B-) in two tranches.

Nexstar Media Group, Inc. priced a $665 million add-on to the Nexstar Broadcasting Inc. 5 5/8% senior notes due July 15, 2027 (B3/B).

goeasy Ltd. priced an upsized $550 million issue of five-year senior notes (Ba3/BB-).

Endeavor Energy Resources, LP priced a $500 million add-on to its 5¾% senior notes due Jan. 30, 2028 (B1/BB-).

Outfront Media Capital LLC and Outfront Media Capital Corp. priced a $500 million issue of senior notes due March 15, 2030 (B1/BB-).

And Sealed Air Corp. priced a $425 million issue of eight-year senior bullet notes (Ba3/BB+).

The forward calendar also swelled with ASGN Inc., Cascades Inc. and Cascades USA Inc., Vector Group Ltd., Univar Solutions Inc. and Houghton Mifflin Harcourt Publishers Inc. prepping offerings.

Meanwhile, the secondary space was again largely flat, sources said.

While focus was on the slew of new deals announced, Dean Foods Co.’s 6½% senior notes due 2023 were among the most actively traded issues in the secondary space.

The notes plummeted on news the struggling food and beverage company had filed for bankruptcy.

Scientific Games’ outstanding junk bonds were also active as the gaming company prepped its new offering.

New issue market nova

A massive post-holiday Tuesday saw the high-yield new issue market go into nova.

Much of the session's massive volume of activity took place at the drive-through window.

Scientific Games priced $1.2 billion of senior notes (Caa1/B-) in two tranches.

The deal included $700 million of 8.5-year notes which priced at par to yield 7%.

The yield printed at the tight end of the 7% to 7¼% yield talk; initial talk was 7¼% to 7½%.

Scientific Games also priced $500 million of 10-year notes at par to yield 7¼%, at the tight end of the 7¼% to 7½% yield talk; initial talk was 7½% to 7¾%.

Nexstar Media Group priced a $665 million add-on to the Nexstar Broadcasting Inc. 5 5/8% senior notes senior notes due July 15, 2027 (B3/B) at 104.875 to yield 4.853% in a drive-by.

The yield printed rich to the 104.5 to 104.75 price talk. Initial talk was 104.25.

goeasy priced an upsized $550 million issue of five-year senior notes (Ba3/BB-) at par to yield 5 3/8%.

The issue size increased from $500 million.

The yield printed tight to yield talk in the 5½% area. Initial talk was in the mid 5% area.

Endeavor Energy Resources priced a $500 million add-on to its 5¾% senior notes due Jan. 30, 2028 (B1/BB-) at 104.00 to yield 4.991%.

The issue price came at the rich end of the 103 to 104 price talk. Initial guidance was in the 103.5 area.

Outfront Media Capital and Outfront Media Capital Corp. priced a $500 million issue of senior notes due March 15, 2030 (B1/BB-) at par to yield 4 5/8%.

The yield printed at the tight end of the 4 5/8% to 4¾% yield talk, and tight to early guidance in the high 4% area.

Sealed Air Corp. priced a $425 million issue of eight-year senior bullet notes (Ba3/BB+) at par to yield 4%.

The yield printed at the tight end of the 4% to 4¼% yield talk and inside of initial talk in the 4¼% area.

In the European high yield market, Heathrow Finance plc priced an upsized £300 million issue of senior secured bullet notes due Sept. 1, 2029 (Ba3//BB+) at par to yield 4 1/8%.

The yield printed at the tight end of yield talk in the 4¼% area and inside of the 4½% to 4¾% initial price talk.

Elsewhere, in a quick-to-market deal that priced on the emerging markets desk, but saw participation from high yield accounts, Mexico's Cemex, SAB de CV priced $1 billion of 10-year secured notes at par to yield 5.45%.

Calendar swells

The active forward calendar also took aboard a significant load of freight on Tuesday.

ASGN expects to price a $500 million offering of 8.5-year senior notes (B2/B) on Thursday.

Initial guidance has the deal coming to yield in the 5% area.

Cascades Inc. and Cascades USA Inc. commenced marketing a dual-currency, three-part offering of senior notes (existing ratings Ba3/BB-) on Tuesday.

The offer includes two dollar-denominated tranches: $300 million of notes due 2026 (tenor approximately six years), non-callable for three years, with initial talk in the low 5% area, and $300 million of notes due 2028 (tenor approximately eight years), non-callable for three years, with initial talk in the mid 5% area.

Vector Group plans to price a $230 million add-on to its 10½% senior notes due Nov. 1, 2026 on Wednesday.

Univar Solutions started a roadshow on Tuesday for a $400 million offering of eight-year senior notes (B2/BB-).

Initial guidance has the deal coming to yield in the 5¾% area.

And Houghton Mifflin Harcourt Publishers started a roadshow on Tuesday for a $350 million offering of 5.25-year senior secured notes (current ratings B3/B).

Initial talk has the notes coming to yield 8¼% to 8½%.

Dean Foods

Dean Foods’ long anticipated bankruptcy filing came to pass on Tuesday with the restructuring announcement made in lieu of the company’s earnings report.

The food and beverage maker’s 6½% senior notes due 2023 plummeted in active trading following the news.

The notes dropped almost 20 points.

They traded as low as 14½ during Tuesday’s session but closed out the day at 20¾, a market source said.

The bounce at the end of the day was most likely a short-squeeze, the source said.

With more than $42 million in reported volume by the late afternoon, the notes were among the most actively traded in the secondary space.

The notes closed out last week in the 30s.

Market players have eyed the 6½% notes for much of the year as the company’s losses mounted.

Dean Foods announced a strategic review and asset sale amid weak earnings earlier in the year.

“They’ve been struggling for some time,” another source said.

The 6½% notes whipsawed between minor gains and large losses as investors weighed the company’s cost cutting measures and prospects for a sale.

While the bankruptcy filing was not a surprise to market players, there was a lot of buying activity in the notes as they traded down over the past few weeks.

There has been some short covering going on in the name, a market source said.

Some players were also buying the notes versus the credit default swap, the source said.

Scientific Games active

Scientific Games’ junk bonds were active following news of the new offering.

The gaming company’s 8¼% senior notes due 2026 were weaker on the news, trading off 1/8 point to close the day at 106 3/8, according to a market source.

More than $18 million of the bonds were on the tape by the late afternoon.

Scientific Games priced a $1.1 billion issue of the 8¼% senior unsecured notes at par in March.

Proceeds were to be used to partially redeem the company’s 10% senior notes due 2022.

The 10% senior notes due 2022 were also active on news proceeds from the new offering will be used to redeem the issue in full.

The notes were little changed at 103. More than $20 million of the bonds were on the tape by the late afternoon.

Friday and Monday fund flows

The most recent daily cash flows of the dedicated high-yield bond funds, covering Friday and Monday, were as follows, according to a market source:

On Friday high-yield ETFs sustained $333 million of outflow, while actively managed high-yield funds saw $20 million of inflows.

On Monday, the most recent session for which data was available at press time, high yield ETFs saw $330 million of inflows, while actively managed funds sustained $10 million of outflows on Monday, the source said.

Indexes mixed

Indexes were mixed at the start of the week with some posting minor gains and others minor losses after closing the previous week largely flat.

The KDP High Yield Daily index dropped 14 bps to close Tuesday at 71.11 with the yield now 5.24%.

The index saw a cumulative gain of 7 bps on the week last week.

The ICE BofAML US High Yield index gained 4.3 bps with the year-to-date return now 11.985%.

The index posted a cumulative loss of 18.1 bps on the week last week with returns dipping below the 12% return threshold on Friday.

The CDX High Yield 30 index dropped 14 bps to close Tuesday at 107.5. The index saw a cumulative gain of 30 bps on the week last week.

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