Enerflex starts roadshow; Credit Suisse high-yield paper declines; Carnival notes perk up

By Paul A. Harris

Portland, Ore., Oct. 3 — Enerflex Ltd. began a high-yield roadshow during the first primary market session in October.

The Calgary-based energy services company came with a $625 million offering of five-year senior secured first lien, second out notes (expected ratings B2/BB-/BB-) on Monday.

The offering was heard to be playing to $425 million of demand on Monday afternoon, a sellside source said.

The deal officially kicks off on a global investor conference call at 12:30 p.m. ET on Tuesday, and the roadshow is expected to wrap up on Wednesday or Thursday.

Meantime Latam Airlines remains in the market with a $1.5 billion offering of secured notes, market sources say.

Yield talk has moved into the 14% to 15% context for both tranches, according to a bond trader who added that the word in the market is that the $1.5 billion offering is half done.

The initial whisper had the five-year notes coming in the low 13% area and the seven-year notes in the low-to-mid 13% area.

The bond offer and the $750 million Latam Airlines term loan B both hit turbulence last week in the withdrawal of Brightspeed's $1.87 bond deal and $2 billion term loan, sources say.

The bonds, which were initially expected to price last week, are now on a timeline that has them pricing late in the present week, according to market sources.

Although the Santiago-based air carrier, which exited Chapter 11 bankruptcy last summer, is ostensibly an emerging markets corporate credit, Yankee accounts – especially accounts focused on distressed debt – participated in the debtor-in-possession (DIP) loan and initially professed interest in the exit financing bonds and loan.

It has been radio silence on the Villa Dutch Bidco €425 million offering of seven-year senior secured notes (B2/B) backing Bain Capital's acquisition of a majority stake in Belgium-based House of HR, according to a London-based debt capital markets banker who noted that the concurrent €1.15 billion of term loans syndicated late last week.

Credit Suisse’s high-yield paper dropped more than 5 points in heavy trading totaling more than $44 million Monday, a source said.

The company’s most active junk issue seen trading over the session was the 8¾% perpetual notes on $14.4 million of secondary volume.

The issue dropped nearly 8 points by the day’s end.

Overall market tone was strong with stocks up and volatility lower on the day.

The S&P 500 added 2.59%.

The iShares iBoxx High Yield Corporate Bond ETF climbed 93 cents, or 1.31%, to $71.97 by the close.

Carnival Corp.’s notes saw a slight pickup in mostly light trading after declining Friday following the cruise operator’s third quarter report.

Credit Suisse notes, CDS spreads weak

Credit Suisse’s 8¾% perpetual notes dropped nearly 8 points to the 91½ bid area on $14.4 million of secondary volume Monday, a market source said.

Credit Suisse’s 6¼% perpetual issue gave back nearly 5¾ points to a quote of 79½ bid by the day’s end.

Trading was active on $6.6 million of supply.

The 7½% perpetual junk notes, quoted Monday down more than 10 points at 75 bid, were trading in the 95 bid range a month ago and have sunk below March 2020 pandemic lows when they traded with an 83 handle.

Credit Suisse’s credit default swaps spreads, a measure of insuring the company’s debt against default, were reported by Prospect News early Monday weaker.

Credit Suisse AT1 capital was down 5 points to 7 points on the day, while the five-year CDS spreads were 2.5 basis points wider, a market source said early Monday.

The Zurich-based financial services company caught the attention of junk investors on restructuring concerns that followed a series of weekend calls the bank made to its investors, a London debt capital markets banker told Prospect News.

Carnival bonds improve

In other junk issues active Monday, Carnival’s 4% notes due 2028 traded about ½ point better at 81½ bid, a source reported.

Secondary supply totaled more than $16 million.

Carnival’s paper and CDS spreads weakened in the prior week.

The Miami-based cruise operator said Friday third quarter revenue climbed higher, while earnings losses also improved.

Indexes

The KDP High Yield Daily index on Monday was 51.84 and a yield of 7.95%, compared to 51.47 and a yield of 8.1% on Friday.

The index posted a cumulative loss of 106 points on the week.

The CDX High Yield 30 index climbed 54 basis points Monday to 96.35. The index ended Friday down 16 bps at 95.81 and posted a cumulative loss of 197 bps on the week.

ETFS see $435 million Friday inflows

High-yield ETFS saw $435 million of daily cash inflows on Friday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds were negative on the day, however, sustaining $145 million of outflows on Friday, the source said.

The combined funds are tracking $1.73 billion of net inflows for the week that will conclude with Wednesday's close, according to the market source.

© 2015 Prospect News.
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