Morning Commentary: Freedom Mortgage, Viasat join calendar; new Power Solutions surges

By Paul A. Harris

Portland, Ore., March 19 – A couple of deals boarded a new issue calendar that has been kept lean, owing partly to a recent preponderance of drive-by issuers.

Both deals that rolled out Tuesday figure to be short-timers.

Viasat, Inc. plans to sell $500 million of eight-year senior secured notes.

Initial guidance has them coming to yield in the 6% area.

The Carlsbad, Calif.-based satellite communications company plans to use the proceeds to pay off its existing revolver and for general corporate purposes.

Meanwhile Freedom Mortgage Corp. plans to sell $350 million of five-year senior notes (B2/B-).

Initial price talk has them coming with a yield in the high 10% area.

The Mt. Laurel, N.J., direct full-service lender plans to use the proceeds to repay debt.

J.P. Morgan Securities LLC is under center for both the Viasat and Freedom Mortgage trades, sources say, adding that both are expected to price on Wednesday.

Power Solutions surges

Bonds priced in the massively oversubscribed Power Solutions (Panther BF Aggregator 2 LP/Panther Finance Co., Inc.) three-part deal on Monday surged into the secondary market, sources said on Tuesday morning.

Both the dollar- and euro-denominated senior secured notes due May 2026 (Ba3/B+/BB) were 101¾ bid, 102 offered on Tuesday morning, according to a London-based sellside source.

The tranches, $1 billion of 6¼% secured notes and €700 million of 4 3/8% secured notes, priced at par.

The lone unsecured tranche lagged the secured paper, where the demand appeared to be, the sellsider said.

However, the unsecured notes were also trading at a substantial premium on Tuesday morning.

The Panther/Power Solutions 8½% senior notes due May 2027 (B3/B/B-) were par ¾ bid, 101¼ offered.

The $1.95 billion unsecured tranche also priced at par.

The deal was heard to be playing to orders in excess of $12 billion equivalent across all three tranches, market sources say.

Turning to headline news, a disclosure from EP Energy that it may not have sufficient liquidity to retire the Everest Acquisition LLC/Everest Acquisition Finance Inc. 9 3/8% senior notes due May 2020 sent that paper tumbling hard, a New York-based bond trader said.

The 9 3/8% notes due 2020 traded at 25, down 13 points, the trader noted, adding that other EP Energy bonds were down 1 to 2 points on the day.

Mixed Monday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Monday, a trader said.

High-yield ETFs sustained $16 million of outflows on the day.

However, actively managed high-yield funds saw $147 million of inflows on Monday, the source said.

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