Intelsat, PGT, FS price; Energy Transfer, Tesla gain; Diebold falls; funds add $37 million

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 2 – The domestic primary market hopped back into action on Thursday with three deals pricing.

Intelsat Connect Finance SA was in the spotlight with the pricing of an upsized $1.25 billion issue of 9½% senior notes due Feb. 15, 2023 (Ca/CCC-) at 98.25 to yield 10.004%.

While the new notes did not price until late in the session, Intelsat’s outstanding junk bonds saw another active session on Thursday with some seeing as much as a 1 point gain while others traded sideways.

PGT Innovations, Inc. priced a $315 million issue of eight-year senior notes (B3/B) at par to yield 6 ¾%.

FS Energy priced a $500 million offering of five-year senior secured bullet notes (Ba3/BB-) at 97.973 to yield 8%.

The new deal activity is expected to continue into Friday with Ken Garff Automotive Group on tap with a $350 million offering.

While FS Energy and PGT Innovations were seen above their issue price in the secondary space, Energy Transfer Equity, LP’s junk bonds were the focus of trading activity on Thursday with the notes gaining more than 2 points after the company announced it would acquire Energy Transfer Partners, LP.

Tesla Inc.’s 5.3% senior notes due 2025 were also on the rise in active trading on Thursday with investors optimistic following the electric car manufacturer’s second-quarter earnings conference call, despite an earnings miss.

Diebold Inc.’s 8½% senior notes due 2024 continued a downward spiral that started on Wednesday with the notes down 10 points over the past two days after its second-quarter earnings report.

While there was no news to explain the sudden drop, Chobani, LLC’s 7½% senior notes due 2025 were down 4 points on Thursday.

Meanwhile, high-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall liquidity trends in the junk market – saw inflows of $37 million in the week ending at market close Aug. 1, according to the weekly Lipper US Fund Flows report.

Intelsat upsizes

Intelsat Connect Finance SA took Thursday’s spotlight in the primary market as it priced an upsized $1.25 billion issue of 9½% senior notes due Feb. 15, 2023 (Ca/CCC-) at 98.25 to yield 10.004%.

The deal was increased from $1 billion.

The coupon came at the tight end of the 9½% to 9¾% coupon talk. The reoffer price came rich to price talk of 98.

The deal was playing to $1 billon of reverse inquiry, a trader said.

Credit Suisse was the left bookrunner. Goldman Sachs was the joint bookrunner.

The Luxembourg-based satellite services provider plans to use the proceeds to fund the redemption of Intelsat Connect Finance SA’s 12½% notes due 2022 and to retire Intelsat Jackson debt.

PGT, FS Energy price

PGT Innovations priced a $315 million issue of eight-year senior notes (B3/B) at par to yield 6¾%.

The yield printed in the middle of talk set in the 6¾% area and tight to early guidance in the 7% area, a trader said.

SunTrust was the left bookrunner for the acquisition deal.

The new notes were quoted at par ¾ bid, 101¼ offered in the secondary.

FS Energy priced its $500 million offering of five-year senior secured bullet notes (Ba3/BB-) at 97.973 to yield 8% on Thursday. Price talk was in the 8% area on top of initial guidance.

The new notes were seen slightly above their issue price at 98¼ bid, 98¾ offered after breaking for trade, according to a market source.

Ken Garff talk 7½% area

Looking to the Friday session, Ken Garff Automotive Group talked its $350 million offering of five-year senior notes (B1/B) to yield in the 7½% area.

Official talk comes toward the wide end of early guidance that was announced in the 7¼% to 7½% area.

Books close 11 a.m. ET Friday and the acquisition financing deal is set to price thereafter.

Intelsat active

The eyes of the secondary market were on Intelsat’s new $1.25 billion offering. However, the new notes did not price until late in the afternoon.

While traders waited to sink their teeth into the new issue, Intelsat’s outstanding junk bonds were again active in the secondary space.

Intelsat Luxembourg’s 8 1/8% senior notes due 2023 continued to see gains with the notes up another point on Thursday. They were seen trading mostly at 88½, a market source said.

With more than $32 million of the bonds on the tape by late afternoon, the 8 1/8% notes were among the most actively traded of the day. The notes saw a 2 point gain on Wednesday.

The notes started the week in the 85 range but have been on the rise since Intelsat entered the market with a refinancing deal.

While the 8 1/8% notes saw the largest gains in the secondary space, they are not the target of the refinancing.

Intelsat Connect Finance’s 12½% senior notes due 2022 and Intelsat Jackson’s junk bonds are.

The 12½% notes were also active in the secondary space with more than $25 million of the bonds on the tape. However, the notes were largely trading sideways at 100 5/8.

Intelsat Jackson’s 7¼% senior notes due 2020 were also active with almost $18 million of the bonds on the tape in the late afternoon.

However, the notes also saw little price movement with most trades around par ½, a market source said.

Energy Transfer in focus

Energy Transfer Equity’s junk bonds were among the most actively traded in the secondary space with the notes rising more than 2 points after the company announced it would merge with its master limited partnership Energy Transfer Partners.

The Dallas-based company specializing in the storage and transportation of natural gas saw its 5½% senior notes due 2027 up 2 3/8 points, a market source said.

The notes were seen trading around 105 1/8 with more than $46 million of the bonds on the tape by the late afternoon.

The company’s 4¼% senior notes due 2023 were also volume leaders with more than $33 million of the bonds on the tape by late afternoon.

The notes were seen up a little more than 2 points to trade at par.

Energy Transfer Equity announced it would acquire Energy Transfer Partners in a unit-for-unit exchange that is expected to close in the fourth quarter, according to a company news release.

Tesla gains

Tesla’s 5.3% senior notes due 2025 were also on the rise on Thursday with investors optimistic after the company’s second-quarter earnings conference call.

The 5.3% notes were up about 1½ point to trade at 91¼. The notes were also up 1 point on Wednesday after the earnings announcement.

While Tesla reported a loss per share of $3.06 versus analyst expectations of a loss per share of $2.92, cash burn was lower than anticipated.

CEO Elon Musk reaffirmed forecasts for profits in the third and fourth quarter and stated that the company would be able to cover its soon-to-mature convertible bonds without an additional capital raise.

Diebold nosedives

Diebold’s 8½% senior notes due 2024 have been on a downward spiral since the financial self-service, security and services corporation announced its second-quarter earnings prior to the market open on Wednesday.

The notes were down about 10 points over the past two days, a market source said. They were seen at 79 bid, 80 offered on Thursday.

The notes were trading as high as 92 on Tuesday, according to Trace data.

Diebold reported a loss per share of 21 cents for the second quarter versus analyst expectations for earnings per share of 1 cent.

Diebold also announced that it was negotiating an amendment to its credit agreement with its principal lenders.

Chobani down

Chobani’s 7½% senior notes due 2025 also saw a significant drop on Thursday although there did not appear to be any news connected to the decline.

The notes were set to close Thursday at 87½ bid, 88½ offered, a market source said.

They were active in the secondary space with more than $20 million of the bonds on the tape by late afternoon.

The bonds were seen at 91½ bid, 92½ offered on Wednesday and were quoted at 93 bid, 94 offered at the start of the week.

While the notes saw a significant drop, there was no news to indicate the cause.

“Someone knows something,” a market source said.

Indexes mixed

Three benchmarks for the high-yield secondary market were again mixed on Thursday.

After a week of gains, the KDP High Yield Daily index gave up some ground on Thursday. The index closed Thursday down 3 basis points at 70.51 with the yield now 5.81%.

The index was up 1 bps on Wednesday, 9 bps on Tuesday and 11 bps on Monday.

The Merrill Lynch High Yield index continued to climb on Thursday, standing poised for another week of solid gains.

The index was up 4.3 bps with the year-to-date return now 1.262%.

The index was up 2.5 bps on Wednesday, 10.9 bps on Tuesday and 5.3 bps on Monday.

The CDX High Yield 30 index was up 6 bps to close Thursday at 107.05. Thursday’s gains wiped out the index’s 5 bps drop on Wednesday.

The index has been mixed throughout the week with a 12 bps gain on Tuesday after a 22 bps drop on Monday.

© 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.