EnPro, Intelsat Jackson add-on price; HD Supply, Hilcorp, Matador trade up slightly; Envision lower again

By Paul A. Harris and Abigail W. Adams

Portland, Me., Oct. 2 – The primary market remained active on Tuesday with $1.05 billion in new paper pricing.

Intelsat Jackson Holdings SA priced a $700 million add-on to its 8½% senior notes due Oct. 15, 2024 (Caa2/CCC+) at 100.75 to yield 8.339% in a Tuesday drive-by.

EnPro Industries, Inc. priced a $350 million issue of eight-year senior notes (B1/BB) at par to yield 5¾%.

Meanwhile, Envision Healthcare Corp.’s 8¾% senior notes due 2026 (Caa1/B-) continued to dominate activity in the secondary space with the notes again trading lower.

Sources attributed to the notes’ poor performance to the deal’s weak allocation and covenants.

HD Supply Holdings, Inc.’s 5 3/8% senior notes due 2026 (Ba3/BB-) and Hilcorp Energy Co.’s 6¼% senior notes due 2028 were active and trading at a slight premium to their issue price on Tuesday.

While trading at a premium to its issue price, Matador Resources Co.’s add-on to its 5 7/8% senior notes due 2026 (B2/BB-) drove the notes down from their previous levels.

After a large drop on Monday, PHI Inc.’s 5¼% senior notes due March 15, 2019 rebounded on Tuesday with large amounts trading as the company continues to struggle to find financing for its tender offer.

Intelsat at the rich end

In Tuesday's primary market, Intelsat Jackson Holdings priced a $700 million add-on to its 8½% senior notes due Oct. 15, 2024 (Caa2/CCC+) at 100.75 to yield 8.339% in a quick-to-market trade.

The reoffer price came at the rich end of price talk in the 100.5 area and rich to initial price talk at par.

Goldman Sachs was the sole bookrunner for the debt refinancing deal.

The add-on spurred trading activity in the issue. While the 8½% notes were about ¾ point above their reissue price, they were down ½ point from their previous levels.

The 8½% notes were seen trading at 101½ with more than $41 million bonds on the tape by late afternoon, a market source said.

EnPro prices $350 million

EnPro Industries priced a $350 million issue of eight-year senior notes (B1/BB) at par to yield 5¾%, at the conclusion of a brief roadshow.

BofA Merrill Lynch was the left bookrunner. Wells Fargo, Fifth Third and KeyBanc were the joint bookrunners for the debt refinancing deal.

Envision down again

Envision’s 8¾% senior notes due 2026 were again trading down in the secondary space with the notes dropping to a 98 handle by late afternoon.

The 8¾% notes were seen at 98¾ bid, 99 offered early in the session.

They were down to 98 bid, 98½ offered in the late afternoon with trades around 98¼, sources said.

More than $58 million bonds traded by late afternoon.

The notes traded down soon after pricing on Sept. 28.

With the timing of the concurrent term loan accelerated, there was a sense that there was more demand for the notes than there actually was, a market source said.

The notes were “poorly placed,” with a lot of flippers involved in the deal, the source said. The covenants on the deal were also poor.

Envision priced a downsized $1.225 billion offering of the 8¾% notes at par on Sept. 28.

Proceeds from the LBO financing deal will be used to help fund the buyout of the company by KKR for about $9.9 billion including the assumption or repayment of debt.

HD Supply unchanged

HD Supply’s new 5 3/8% senior notes due 2026 were largely unchanged in active trading on Tuesday. They continued to trade at a slight premium to their issue price.

The notes were seen at par bid, par ¼ offered with trades around par ¼, sources said. More than $40 million bonds were on the tape by late afternoon.

The notes traded in a wide range after pricing on Monday with some trades as high as par 5/8. The notes closed the day around par ¼.

HD Supply priced a $750 million issue of the 5 3/8% notes at par in a Monday drive-by.

The yield printed at the tight end of the 5 3/8% to 5½% yield talk. Initial price talk was in the mid-to-high 5% area.

The deal was playing to $1.25 billion of orders mid-way through the subscription process, a market source said.

Hilcorp improves

Hilcorp Energy’s new 6¼% senior notes due 2028 improved by about ¼ point on Tuesday with the notes continuing to trade at a slight premium to their issue price.

The 6¼% notes were seen at par 3/8 bid, par 5/8 offered on Tuesday with trades around par 3/8, sources said.

More than $20 million of the bonds were on the tape by late afternoon.

The notes were at par 1/8 bid, par 3/8 offered after breaking for trade on Monday.

Hilcorp Energy priced an upsized $600 million issue of the 6¼% notes at par in a Monday drive-by.

The yield printed at the tight end of the 6¼% to 6½% yield talk.

The issue size was increased from $500 million with the deal heard to be playing to $1.4 billion of orders during bookbuilding, sources said.

Sources described both Hilcorp’s and HD Supply’s deals as “status quo deals” and not very exciting.

Matador’s add-on

Trading volume for Matador’s 5 7/8% senior notes due 2026 was light after the company priced a $300 million add-on on Monday.

However, the notes were trading at a slight premium to their 100.5 issue price.

The notes were seen at par 3/8 bid, par ¾ offered on Tuesday with trades around par 5/8, sources said.

While above the reoffer price, the add-on drove the notes down about ½ point from their previous levels, a source said.

Prior to the add-on, the notes were trading around 101 bid, 101¾ offered.

Matador priced an upsized $300 million add-on to its 5 7/8% senior notes due Sept. 15, 2026 at 100.50 to yield 5.772% in a Monday drive-by.

The issue size was increased from $250 million.

The reoffer price came on top of price talk.

PHI rebounds

PHI’s 5¼% senior notes due March 15, 2019 rebounded from Monday’s lows during Tuesday’s session.

The notes were seen at 92 bid, 92¼ offered Tuesday afternoon after opening Monday at 85, a market source said.

The notes have seen high-volume trading over the past two days, despite 90% of the notes having been tendered.

The 5¼% notes were back in focus as news continued to surface about the difficulties the helicopter aviation company was having in securing financing for the tender offer.

PHI again extended its tender offer to Oct. 5 from Sept. 21 with the tender conditional on the completion of financing.

PHI previously attempted to tap the high-yield market for financing, then attempted to finance the tender through a term loan, both of which were abandoned.

“They have to do something soon,” a market source said.

On Friday, PHI borrowed $130 million in a term loan from Thirty Two, LLC, a lender wholly owned by PHI chairman and CEO Al A. Gonsoulin.

Proceeds were used to repay PHI’s senior secured revolving credit facility.

It would be cheaper for the company to buy the notes back through the open market than to finance the tender offer, a market source said.

ETFs see big Monday inflow

High-yield ETFs, which saw a cash drain to the tune of $1.56 billion in the fortnight leading up to the end of September, have lately been seeing conspicuous daily inflows, a trader said.

The ETFs saw $876 million of inflows on Monday.

That followed last Friday's $148 million of daily inflows, the source added.

However actively managed high-yield funds were negative on Monday, sustaining $20 million of outflows on the day, the trader said.

Indexes mixed

Three benchmarks for the high-yield secondary market were mixed on Tuesday after all opened the week strong.

The KDP High Yield Daily index was up 4 basis points to close Tuesday at 70.65 with the yield now 5.73%. The index jumped 17 bps on Monday.

The ICE BofAML US High Yield index was up 5 bps with the year-to-date return now 2.758%. The index jumped 22.5 bps on Monday after a 14.2 bps gain on the week last week.

The CDX High Yield 30 index gave up its gains from Monday. The index dropped 22 bps to close Tuesday at 107.38. The index was up 20 bps on Monday after closing last week largely flat.

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