Acrisure upsizes; Energizer improves; HCA trades up; MEG Energy slightly rebounds; Tesla drops

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 18 – The primary market continued to churn out new deals with one dollar-denominated issue pricing.

The European primary market also showed signs of life with one deal joining the growing forward calendar.

Acrisure LLC and Acrisure Finance Inc. priced an upsized $750 million issue of five-year senior secured notes (B3/B) at par to yield 8 1/8% on Friday.

Accor SA (BBB-/BBB-) intends to place €500 million of perpetual non-call 5¼-year hybrid securities (expected ratings BB/BB).

Meanwhile, new paper was in focus in the secondary space, which saw another strong day on Friday.

New paper from HCA Inc. dominated activity in the secondary space with both the new 5 7/8% notes and the tap of the 5 5/8% notes trading at a large premium to their issue price.

Acrisure’s new 8 1/8% senior notes also saw high-volume activity with the notes sharply higher after breaking for trade.

Energizer Holdings, Inc.’s 7¾% senior notes due 2027 (B2/B+) continued to see gains in the secondary space after skyrocketing on Thursday.

Outside of the new paper, MEG Energy Corp.’s junk bonds saw a slight rebound on Friday after tanking during Thursday’s session.

Tesla Inc.’s 5.3% senior notes due 2025 traded down in active trading after the electric car manufacturer announced it was slashing its workforce by 7%.

Acrisure upsizes

Acrisure priced an upsized $750 million issue of five-year senior secured notes (B3/B) at par to yield 8 1/8% on Friday.

The issue size increased from $500 million.

The yield printed at the tight end of talk in the 8¼% area and inside of early guidance in the mid 8% area.

The deal was heard to be playing to a $2 billion order book on Friday morning, a trader said.

J.P. Morgan Securities Inc., Morgan Stanley & Co. Inc., RBC Capital Markets Corp. and SunTrust Robinson Humphrey Inc. were the joint bookrunners.

The Grand Rapids, Mich.-based insurance brokerage plans to use the proceeds, including the additional proceeds resulting from the $250 million upsizing of the issue, to fund acquisitions and for general corporate purposes.

Accor junk-rated hybrid

Accor (BBB-/BBB-) mandated BNP Paribas and Citigroup as global coordinators and structuring advisors to arrange meetings with European fixed income investors beginning on Monday.

The Paris-based hospitality company intends to place €500 million of perpetual non-call 5¼-year hybrid securities (expected ratings BB/BB).

Accor also mandated BNP Paribas and Credit Agricole CIB as global coordinators for a euro-denominated offering of senior notes with a six- or seven-year maturity.

Additionally, Accor announced concurrent tender offers (see related story in this issue).

Acrisure trades up

Acrisure’s new 8 1/8% senior notes due 2024 saw high-volume activity after breaking for trade with the notes trading up sharply.

The 8 1/8% notes traded as high as 102½ on Friday although they came in and were trading between 101½ and 101¾ by the late afternoon, a market source said.

More than $74 million of the bonds were on the tape by the late afternoon.

HCA dominates

New paper from HCA dominated trading activity in the secondary space on Friday with the notes also trading sharply above their issue price.

The 5 7/8% senior notes due 2029 were quoted at 101¼ bid, 101½ offered.

The new notes traded as low as par and as high as 101 7/8 but were poised to close the day between 101½ and 101¾, a market source said.

More than $230 million of the bonds were on the tape by the late afternoon.

HCA’s tap of its 5 5/8% senior notes due 2028 lifted the notes from their previous levels. The 5 5/8% notes were up about 7/8 point.

They were quoted at par ¼ bid, par ¾ offered with most trades around par ¾, sources said.

HCA priced an upsized $1.5 billion of senior notes in two tranches in a Thursday drive-by.

The deal included a $1 billion issue of the 5 7/8% notes which priced at par to yield 5 7/8%.

HCA also priced a $500 million add-on to its 5 5/8% senior notes due 2028 at 99 to yield 5.761%. The issue price came at the rich end of the 98.5 to 99 price talk. The tranche was added after the deal was announced.

The overall deal size increased from $1 billion.

Energizer improves

Energizer’s new 7¾% senior notes due 2027 continued to improve in the secondary space after trading sharply above their issue price after breaking on Thursday.

The 7¾% notes gained 5/8 point on Friday. They were quoted at 102 5/8 bid, 102 7/8 offered and traded up to 102 7/8, sources said.

The notes were quoted at 102¼ bid, 102¾ offered on Thursday and closed the day at 102¼.

Energizer priced a $600 million issue of the 7¾% notes at par on Thursday.

The yield printed at the tight end of yield talk in the 7 7/8% area and inside of initial talk of 8% to 8¼%.

The deal was heavily oversubscribed and sought after in the secondary space, sources said.

Like most of the recent deals, the notes traded up sharply due to shortage of supply.

MEG Energy sees slight rebound

MEG Energy’s junk bonds were seeing a slight rebound after tanking on Thursday. The 6½% notes due 2025 were up 1¼ points to 98¼, according to a market source.

They remained active with more than $22 million of the bonds on the tape by the late afternoon. The notes dropped 8 points to a 97 handle on Thursday.

MEG Energy’s 6 3/8% notes due 2023 rose 1 point to 87 3/8 and also saw more than $22 million of the bonds change hands. The notes dropped 13 points during Friday’s session.

MEG Energy’s 7% senior notes due 2025 rose ¼ point to 87¾ on Friday with more than $17 million on the tape by the late afternoon.

The notes dropped more than 12 points on Thursday.

MEG Energy’s junk bonds cratered on Thursday after Husky Energy walked away from its $2 billion hostile takeover bid after the minimum tender condition of MEG shares was not met.

There have also been several negative developments since the takeover offer was initiated, Husky said in a press release.

Tesla drops

Tesla’s 5.3% senior notes due 2025 were down in high-volume activity on Friday after the electric car manufacturer announced it was slashing its workforce by 7%.

The 5.3% notes shaved off 1 3/8 points to close the day at 88. More than $19 million of the bonds changed hands during Friday’s session.

In the memo announcing the staffing cut, CEO Elon Musk also warned the road ahead for the company would be difficult as it works to make its Model 3 car accessible to all consumers.

Mixed Thursday flows

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

High-yield ETFs saw $181 million of inflows on the day.

However, actively managed high-yield funds sustained $55 million of outflows on Thursday, the trader said.

News of those daily flows follows a Thursday afternoon report that the combined funds saw $3.284 billion of inflows in the week to Wednesday's close, according to Lipper US Fund Flows.

Indexes gain

Indexes continued to gain on Friday with all posting large cumulative gains on the week.

The KDP High Yield Daily index was up 13 basis points on Friday to close the day at 68.92 with the yield now 6.48%.

The index rose 5 bps on Thursday and 14 bps on Wednesday after dropping 1 bp on Tuesday. The index rose 1 bp on Monday.

The index saw a cumulative gain of 32 bps on the week.

The ICE BofAML US High Yield index jumped 33.5 bps on Friday with the year-to-date return now 3.92%.

The index rose 6.2 bps on Thursday, 31.7 bps on Wednesday and 17.5 bps on Tuesday after a 17.1 bps drop on Monday.

The index was up 71.8 bps on the week.

After closing 2018 with a year-to-date return of negative 2.265%, the index catapulted past 3% returns in the first two weeks of 2019.

The CDX High Yield 30 index rose 30 bps to close Friday at 104.78. The index was up 55 bps on Thursday, 7 bps on Wednesday and 38 bps on Tuesday after a 42 bps drop on Monday.

The index saw a cumulative gain of 88 bps on the week.

© 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.