Morning Commentary: Two new deals unveiled in primary market; First Data bonds improve

By Paul A. Harris

Portland, Ore., Jan. 16 – Junk opened unchanged on Wednesday as the lights came up in a high-yield new issue market that had seen just one deal price since late November, sources say.

Energizer Holdings, Inc. began a two-day roadshow for a $600 million offering of eight-year senior notes.

Initial price talk is 8% to 8¼%, a bond investor said.

Citigroup Global Markets Inc. is the lead bookrunner.

The St. Louis-based manufacturer and distributor of consumer products plans to use the proceeds to help fund the acquisition of Spectrum Brands’ Global Auto Care business.

Meanwhile DCP Midstream Operating LP plans to price a $150 million add-on to its 5 3/8% senior bullet notes due July 15, 2025 (Ba2/BB/BB+) in a quick-to-market Wednesday trade.

Initial price talk has the deal shaping up in the par area, according to a trader.

Left lead active bookrunner Mizuho Securities USA Inc. will bill and deliver. Barclays and SunTrust Robinson Humphrey Inc. are also active bookrunners.

The Denver-based master limited partnership plans to use the proceeds for general partnership purposes, including capital expenditures and debt repayment.

First Data trades higher

Among existing issues, bonds of First Data Corp. traded higher Wednesday morning on news that Fiserv will acquire the New York-based transaction facilitator in a $22 billion all-stock deal, sources said.

The most active issue by far has been the First Data 5¾% senior secured second-lien notes due January 2024, which traded at 103½ on Wednesday, up 2¼ points on the morning, according to a bond trader in New York.

The acquisition deal was approved by the boards of both companies and is expected to close in the second half of 2019.

Tuesday outflows

The daily cash flows of the dedicated high-yield bond funds were negative on Tuesday, a trader said.

High-yield ETFs sustained $107 million of outflows on the day.

Actively managed high-yield funds saw $165 million of outflows on Tuesday, the trader said.

Those daily outflows notwithstanding, with one day remaining in the present reporting period for the weekly flows of the combined funds they are rafting a river of green ink, tracking a whopping $3.3 billion of net inflows for the week that will conclude with Wednesday’s close.

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