EnerSys prices; Global Partners adds; Callon skyrockets on buyout; First Quantum extends rally

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 4 – EnerSys priced a $300 million issue of eight-year senior notes (Ba3/BB+) at par to yield 6 5/8% on Thursday morning, at the tight end of talk.

Demand for the paper was heard to be in excess of $600 million late Wednesday afternoon.

As the dollar-denominated primary market’s sole Thursday deal, it cleared the active forward calendar.

Meanwhile, the selling pressure of the previous two session subsided with the cash bond market either side of unchanged.

There was an uptick of activity as new paper made its way into the secondary market and topical news sparked large price and volume movements in outstanding issues.

Global Partners LP and co-issuer GLP Finance Corp.’s new 8¼% senior notes due 2032 (B2/B+) continued to add to the strong gains made on the break.

Callon Petroleum Corp.’s senior notes (B2/BB-) rocketed higher after Apache Corp. announced its acquisition of the company with the notes to be taken out in the transaction.

First Quantum Minerals Ltd.’s senior notes (B) continued to move higher after the strong gains of the previous session as market players eye a potential buyout of the company.

Global Partners adds

Global Partners’ new 8¼% senior notes due 2032 continued to add after a strong break in the previous session.

The notes traded in a range of par ¾ to 101½ during the session with the notes trading on a 101-handle heading into the close, a source said.

There was $31 million in reported volume.

Global Partners kickstarted the primary market and priced a $450 million issue of the 8¼% senior notes at par on Wednesday.

The yield printed at the tight end of the 8¼% to 8 3/8% yield talk. Initial guidance was 8½% to 8¾%.

The deal was heard to be 3x oversubscribed.

Callon skyrockets

Callon Petroleum’s senior notes skyrocketed on Thursday after Apache Corp. announced its $4.5 billion acquisition of the company.

The 7½% senior notes due 2030 jumped 5 to 6 points following the news.

They were marked at 105½ bid, 106½ offered and set to close the day wrapped around 105¾%, sources said.

The notes were the most actively traded in the secondary space with $53 million in reported volume.

The 8% senior notes due 2028 jumped 2 points to a 104 handle.

They stood poised to close the day wrapped around 104 3/8.

There was $27 million in reported volume.

The notes were trading up to their anticipated takeout price, a source said.

Apache plans to retire Callon’s debt in the acquisition with proceeds from a new $2 billion term loan, Prospect News reported.

Apache announced its acquisition of Callon in an all-stock transaction with an enterprise value of $4.5 billion on Thursday.

First Quantum higher

First Quantum extended its rally from the previous session as market players eye a potential takeover of the beleaguered mining company.

First Quantum’s 8 5/8% senior notes due 2031 climbed another 3½ points to break above a 92-handle.

They were trading in the 92½ to 93 context heading into the market close.

The yield was about 10%.

There was $41 million in reported volume.

The 8 5/8% notes surged 5 points on Wednesday as news circulated that Barrick Gold Corp. was sounding out a potential acquisition of the company.

There had been heavy selling in First Quantum’s capital structure throughout the fourth quarter as problems surrounding the company’s Panamanian copper mine grew.

The 8 5/8% notes closed 2023 on an 84-handle with the mine forced to cease operation due to widespread domestic unrest and a ruling by the country’s supreme court.

First Quantum priced a $1.3 billion issue of the 8 5/8% notes at par in May 2023.

Fund flows

The dedicated high-yield bond funds sustained $438 million of net outflows in the week to Wednesday’s close, according to a market source citing information from fund-tracker Refinitiv Lipper.

It was the first weekly net outflow from the junk funds in nine weeks, sources said.

In the week to Wednesday’s close, the daily flows of the high-yield ETFs were substantially negative while those of the actively managed high-yield funds were modestly positive.

The ETFs, which had $281 million of daily outflows on Wednesday, posted negative daily cash flows in three of the four reporting days encompassed in the weekly report (Monday, being the New Year’s Day holiday, was excluded): negative-$822 million on Tuesday and negative-$137 million on Friday. For the ETFS the sole positive daily cash flow was $11 million posted on Thursday, Dec. 28.

Actively managed high-yield funds, which had $99 million of daily inflows on Wednesday, posted positive flows in three of the four sessions, including $80 million of inflows on Tuesday and $29 million of inflows last Friday. The sole daily outflow in the series, for that cohort, was Dec. 28’s negative-$24 million, according to the market source.

Indexes

The KDP High Yield Daily index fell 16 basis points to close Thursday at $50.35 with a yield of 6.96%.

The index was down 16 bps on Wednesday.

The ICE BofAML US High Yield index was down 13.5 bps with the year-to-date return now negative 1.085%.

The index fell 44 bps on Wednesday and 51.5 bps on Tuesday.

The CDX High Yield 30 index was off 2 bps to close Thursday at 104.99.

The index fell 49 bps on Wednesday.

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