CNH, Summit drive by, Endo, Univar awaited; new Ball, AerCap busy; Williams less volatile

By Paul A. Harris and Paul Deckelman

New York, June 23 – For a second straight session, the high-yield primary arena saw a pair of quickly shopped new issues price, in contrast to last week, which saw four consecutive days during which just one single deal priced for each of those days.

International heavy equipment manufacturer CNH Industrial NV priced $600 million of three-year notes at a discount to par via a financing subsidiary.

Cement, concrete and asphalt provider Summit Materials LLC came to market with an upsized $325 million of eight-year notes.

Traders reported no immediate aftermarket action in either of the day’s new deals.

They did see considerable trading activity, however, in both of the new issues which got done on Monday.

Metal beverage container maker Ball Corp.’s 10-year megadeal was again among the most active credits, and, as had been the case on Monday, the bonds traded right around their issue price.

Both halves of Dutch aircraft leasing company AerCap Holdings NV’s $1 billion two-part offering were among the most active issues on Tuesday. The notes were trading at firmer levels.

Market participants awaited Wednesday’s expected pricing of offerings from global drug manufacturer Endo International plc and from specialty chemicals company Univar Inc.

Away from the new deals, there again was a fair amount of activity for a second successive session in the debt of energy pipeline and infrastructure operators Williams Cos., Inc. and Energy Transfer Equity, LP, although prices did not move much, in contrast with Monday, when there were some volatile gyrations after Energy Transfer made a takeover offer for Williams, which the latter company rejected.

Statistical indicators of junk market performance were lower across the board on Tuesday, after having been mixed on Friday and better all around on Monday.

CNH at a discount

Tuesday’s session in the high-yield primary market saw a pair of drive-by issuers raise $923 million, as each priced a single tranche of notes.

One of the two deals was upsized.

One came at the tight end of yield talk, while the other came on top of talk.

CNH Industrial Capital LLC priced a $600 million issue of non-callable 3 7/8% three-year senior notes (Ba1/BB) at 99.642 to yield 4%.

The yield printed in line with talk.

Earlier in the day a portfolio manager who was having a look said the deal would be cheap north of 4%.

The sector has headwinds but the credit could be moving up, the buysider commented.

The deal was announced at benchmark size on Tuesday morning.

Morgan Stanley, BofA Merrill Lynch, J.P. Morgan and SG were joint bookrunners.

Proceeds will be used to fund working capital, repay debt and for general corporate purposes.

Summit Materials upsizes

Summit Materials priced an upsized $325 million issue of eight-year senior notes (Caa2/B) at par to yield 6 1/8%.

The quick-to-market deal was increased from $275 million.

The yield printed at the tight end of yield talk that had been fixed in the 6¼% area. That compared with initial guidance in the low 6% area.

The buzz in the market held that the acquisition-related deal was the subject of considerable reverse inquiry, according to the portfolio manager, who elected not to play.

BofA Merrill Lynch was the left bookrunner. Deutsche Bank, Goldman Sachs, Citigroup, RBC and Barclays were the joint bookrunners.

Talking the deals

At least two deals are on deck for Wednesday’s session.

Endo International talked its $1,435,000,000 offering of senior notes (B1/B) to yield 6% to 6¼%.

Books were scheduled to close late Tuesday and the deal is set to price on Wednesday morning.

The deal is doing well, and should come at the tight end of talk, according to the portfolio manager.

Joint bookrunner Barclays will bill and deliver. Deutsche Bank, Credit Suisse and Citigroup are also joint bookrunners.

Also, Univar talked its $400 million offering of eight-year senior notes (Caa1/B) to yield in the 6¾% area.

Books close at 2 p.m. ET on Wednesday and the pricing is set for Wednesday afternoon.

BofA Merrill Lynch, Deutsche Bank, Goldman Sachs, J.P. Morgan, Wells Fargo, HSBC, SunTrust, Morgan Stanley, Barclays, Citigroup and Credit Suisse are the joint bookrunners.

StandardAero roadshow

DAE Aviation Holdings, Inc., the indirect parent of StandardAero, is roadshowing a $485 million offering of eight-year senior notes (Caa2/CCC) through the week.

Jefferies is the left bookrunner for the buyout deal. KKR Capital Markets and MCS Capital Markets are joint bookrunners.

Douglas starts roadshow

Douglas AG began a roadshow on Tuesday in London for a €1,055,000,000 offering of high yield notes.

The issuing entities are two special-purpose vehicles formed for the execution of the buyout of Douglas by CVC Capital Partners from Advent International and the Kreke family.

Kirk Beauty Zero GmbH is offering €635 million of senior secured notes due 2022 (B1).

Kirk Beauty One GmbH is offering €420 million of senior unsecured notes due 2023 (Caa1).

Joint bookrunner Deutsche Bank will bill and deliver. Goldman Sachs, JPMorgan and UniCredit are also joint bookrunners.

Inflows to junk funds

Cash flows for dedicated high-yield funds were positive on Monday, the most recent session for which data was available at press time, market sources said.

High-yield ETFs saw $453 million of inflows on Monday. Asset managers saw $30 million of inflows.

Dedicated bank loan funds, meanwhile, saw $15 million of outflows on the day.

Ball again busy

Looking at specific credits, Ball Corp.’s new 5¼% notes due 2025 were among the most active high-yield issues for a second session in a row.

A trader saw the Broomfield, Colo.-based beverage can manufacturer’s new notes “trading right around the par level” where the quickly shopped $1 billion issue had priced – and traded – on Monday.

“It was the same thing today on volume,” he said, adding that “it’s just been fairly stagnant on price.”

A second trader pegged the notes down 1/8 point at 99 7/8 bid.

He saw over $43 million on the notes having changed hands on Tuesday, on top of them more than $56 million which had moved around on Monday.

Aer Cap shows improvement

Monday’s other transaction – the quick-to-market $1 billion two-part offering from AerCap Holdings – also saw what one of the traders called “decent volume,” with both tranches trading around a 100½ to 100¾ bid level.

A second trader said that the Amsterdam-based aircraft leasing company’s 4 5/8% notes due 2022 gained around 1/8 point to end just under 100½ bid, with around $23 million having traded, putting the credit well up on the Most Actives list.

AerCap’s 4¼% notes due 2020 likewise firmed by 3/8 point to close at 100¾ bid, on volume of over $22 million.

The company had priced $500 million of each notes at par on Monday, after upsizing the total size of its offering from an originally planned $800 million

Williams, Energy Transfer stay active

Away from the new or recently priced issues, there was sizable activity for a second consecutive session in the bonds of Williams Cos. and Energy Transfer Equity.

Those notes have been moving around in the wake of Energy Transfer’s unsolicited $48 billion bid for fellow pipeline operator Williams, disclosed over the weekend, Williams’ rejection of that offer as inadequate and its announcement that it would explore strategic options.

However, unlike Monday, when the bonds gyrated by multiple points, on Tuesday they solidified around Monday’s closing levels.

A trader saw Tulsa, Okla.-based Williams’ split-rated (Baa3/BB+/BBB-) 5¾% bonds due 2044 ending down 1½ points on the session at around 92 7/16 bid, with over $21 million having traded. On Monday, those bonds had swooned by more than 5 points on the day, on volume of more than $48 million.

The company’s 4.45% notes due 2024 were seen about unchanged on Tuesday at just under 97 bid, on turnover of more than $14 million. On Monday, the notes had slid by 2 3/8 points on the session, with over $34 million traded.

Dallas-based Energy Transfer’s 5½% notes due 2027 were unchanged on Tuesday at 101½ bid, with about $12 million having traded. On Monday, that issue had gained 1 1/8 points, with over $16 million having moved around.

Indicators head south

Statistical indicators of junk market performance were mostly lower on Tuesday, after having been mixed on Friday and better all around on Monday.

The KDP High Yield Daily Index was unchanged on Tuesday at 70.77, after having risen by 6 basis points on Monday, its fourth consecutive gain. On Friday, it had jumped by 12 bps.

Its yield was also unchanged, ending at 5.60%. On Monday, it had come in by 2 bps, its fourth straight narrowing.

The recently choppy Markit Series 24 CDX North American High Yield Index continued to zig-zag between gains and losses, as it has been doing for the whole of the past week.

On Tuesday, it dipped by 3/32 point to finish at 106 3/8 bid, 106 7/16 offered, after having advanced by 17/32 point on Monday.

The Merrill Lynch North American Master II High Yield Index fell by 0.059% on Tuesday, its first downturn after four straight gains, including Monday’s 0.138% improvement.

The loss lowered its year-to-date return to 3.239% from 3.30% on Monday. It remained well down from the 4.062% reading, the index’s peak level for the year so far, recorded on May 29.

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