Multi-Color, Grubhub on tap; Neiman Marcus, GCI price; Teva in focus, gains; Altice up

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 3 – While volatility sidelined the domestic high-yield primary market last week as May came to an end, there was an uptick of activity on Monday.

Neiman Marcus Group priced its $550 million issue of second lien secured notes due April 25, 2024 (Ca/CCC) at 97.00 to yield 14.902% on Monday.

General Communications Inc., issuing as GCI, LLC, priced an upsized $325 million issue of five-year senior notes (B3/B) at par to yield 6 5/8% in a Monday drive-by.

Three deals also joined the forward calendar.

Multi-Color Corp. began marketing a $1.39 billion two-part offering of high-yield notes.

Grubhub Inc. started a roadshow for a $400 million offering of eight-year senior notes (Ba3/BB).

Petroleum Geo-Services, issuing as PGS ASA, plans to conduct a global roadshow for a $150 million offering of senior secured notes due January 2025 (Caa2/CCC+/CCC+).

Meanwhile, the secondary space saw another volatile day with the market “up, down and sidewise,” alongside equities, a source said.

While it was difficult to determine the overall status of the market, some names did see marked improvement.

Teva Pharmaceutical Industries Ltd.’s junk bonds pared their losses on Monday with the notes better bid with a large buyer in the market.

Endo International plc’s 6% senior notes due 2023 were also on the rise.

Altice Luxembourg SA’s junk bonds were active and slightly improved as France prepares to auction off 5G airwaves.

Neiman Marcus yields 14.9%

In a deal that roadshowed in mid-to-late May, Neiman Marcus Group priced a $550 million issue of second lien secured notes due April 25, 2024 (Ca/CCC) at 97.00 to yield 14.902%.

The notes come with a 14% coupon of which 8% will be paid in cash, with the remaining 6% coming as a PIK payment.

The blended coupon came on top of initial coupon talk, a trader said.

Credit Suisse was bookrunner.

GCI upsized and tight

General Communications priced an upsized $325 million issue of five-year senior notes (B3/B) at par to yield 6 5/8% in a quick-to-market Monday trade.

The issue size was increased from $300 million.

The yield printed at the tight end of yield talk in the 6¾% area.

SunTrust was the left bookrunner. Credit Agricole, BofA, JP Morgan, MUFG and TD were the joint bookrunners.

The Anchorage, Alaska-based telecom plans to use the proceeds, including the additional proceeds resulting from the $25 million upsizing of the deal, to fully refinance its 6¾% senior notes due June 2021.

Multi-Color kicks off

Multi-Color Corp. began marketing a $1.39 billion two-part offering of high-yield notes on Monday.

The deal includes $650 million of seven-year senior secured notes (expected ratings B2/B) with initial guidance in the low 7% area and $740 million of eight-year senior unsecured notes (expected ratings Caa2/B-) with initial guidance in the low 9% area.

Pricing is expected on June 13.

BofA Securities is leading the offer.

Proceeds will be used to help fund the buyout of the company by Platinum Equity LLC and fund the merger of Multi-Color with WS Packaging Group, a portfolio company of Platinum Equity.

The transaction is valued at $2.5 billion.

Grubhub junk debut

Grubhub started a roadshow on Monday for a $400 million offering of eight-year senior notes (Ba3/BB).

Initial guidance is 6% to 6¼%.

The bank debt refinancing deal marks the prospective issuer's debut in the high-yield bond market.

The offer is set to price Friday.

JP Morgan, BofA, Citigroup and Goldman Sachs are the joint bookrunners.

PGS sets roadshow

Petroleum Geo-Services, issuing as PGS ASA, plans to conduct a global roadshow starting Thursday for a $150 million offering of senior secured notes due January 2025 (Caa2/CCC+/CCC+).

The roadshow kicks off Thursday in London and moves to Oslo on Friday.

Initial price talk is in the 12% area.

Joint bookrunner Barclays will bill and deliver.

The Lysaker, Norway-based provider of seismic services to the energy industry plans to use the proceeds, together with a $525 million first lien term loan, cash on the balance sheet and the second installment from the sale of Ramform Sterling, to redeem its senior notes due 2020, repay its term loan B and pay down its revolver.

Teva gains

Teva’s junk bonds were again in focus in the secondary space but this time the notes were posting gains.

The belly of the capital structure gained at least 1 point, a market source said.

The generic drug maker’s 2.8% senior notes due 2023 were at 85¼ bid, 86 offered Monday afternoon after closing out Friday at 83¼ bid, 84 offered, the source said.

The notes saw more than $27 million in reported volume.

Teva’s 6¾% senior notes due 2028 were up 1½ points. They were seen changing hands at 91 1/8 with more than $50 million in reported volume, according to a market source.

There was a large buyer in the market on Friday, which pushed the level of the notes up, a market source said.

The notes were also making gains based on equity reports with analysts from two firms upgrading Teva’s stock, the source said.

The junk bonds were under pressure throughout last week following an $85 million settlement with the state of Oklahoma for its role in the opioid epidemic.

Endo International’s junk bonds were also on the rise on Monday.

The 6% senior notes due 2023 were up 1¼ points to 73 1/8 in the late afternoon, according to a market source.

The bonds saw more than $26 million in reported volume.

Endo also has exposure to liability from the opioid epidemic and is seeking either a global settlement or will go to court, Bloomberg reported.

Altice on the rise

Altice’s junk bonds were on the rise on Monday as France prepared to auction off its 5G spectrum.

Altice France’s 7 3/8% senior notes due 2026 gained about ½ point in high-volume activity. The notes traded up to 98 with about $27 million of the bonds on the tape by the late afternoon.

Altice’s 7½% senior notes due 2026 rose about 1/8 point to also trade up to the 98 level. The notes were also active with more than $17 million in reported volume by the late afternoon.

As France prepares to auction off its 5G network to telecommunications companies, the country has vowed to not chase the higher bidder.

The news was good for telecommunications operators, which lobbied against officials chasing high bids so companies could invest in building up their 5G infrastructure, Bloomberg reported.

While news regarding the auction was good, French officials also stated they would be opposed to any merger between France’s telecommunications operators, according to the Bloomberg report.

Altice France and Bouygues SA’s telecom unit have long been rumored to be discussing a potential merger.

Friday outflows

The daily cash flows of the dedicated high-yield bond funds were negative on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $425 million of outflows on the day.

Actively managed high-yield funds saw $60 million of outflows on Friday, the source said.

Look for the junk ETFs to report big outflows again when the Monday daily numbers are reported, a bond trader warned, adding that there were very big bids-wanted-in-competition (BWIC) lists in the market on Monday, a major portion of them from the ETFs.

Indexes

Indexes again opened the week with losses after all posted cumulative losses on the week last week.

The KDP High Yield Daily index slid 6 basis points to close Monday at 69.34 with the yield now 6.03%.

The index saw a cumulative loss of 50 bps on the week.

The ICE BofAML US High Yield index slid 4.7 bps with the year-to-date return now 7.472%.

The index saw a cumulative loss of 60.5 bps on the week last week, dropping below the 8% threshold on May 29.

The CDX High Yield 30 index dropped 17 bps to close Monday at 104.37. The index saw a cumulative loss of 123 bps on the week.

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