Cimpress prices; Callon stuck at par; L Brands active on exchange offer; Talen gains

By Abigail W. Adams

Portland, Me., June 1 – While new deal volume was light throughout the week, the domestic and European primary market saw some action on Friday.

In the lone dollar-denominated deal of the day, Cimpress NV priced $400 million of eight-year senior notes (B1/B+) on Friday at par with a coupon of 7%.

As Cimpress brought a new deal into the market to refinance its outstanding 7% notes due 2022, those existing notes were active, a market source said.

In the European market, Etrion Corp. priced €40 million of three-year senior bonds with a coupon of 7¼% and Bulk Industrier AS priced NOK 650 million of three-year secured bonds on Friday.

The new deal pipeline is expected to pick back up in the week ahead, market sources said.

While political instability in Spain and Italy roiled the markets over the past week and prevented the European primary market from doing much business, that is expected to change, a London-based source said.

“If we can close the week on a positive note, next week we’ll be back on track with new deals,” a market source said on Friday.

Meanwhile, Callon Petroleum Co.’s newly priced 6 3/8% senior notes due 2026 (B3/B+) were again the major volume movers in the secondary space although the notes remained “stuck” at par, a market source said.

Talen Energy Corp.’s junk bonds were again on the rise on Friday with the notes seen up 1.5 to 2.5 points in decent trading volume after the future of the energy company’s Colstrip power plant was discussed at an energy summit in Montana.

L Brands, Inc.’s junk bonds were also active and making gains after the company announced an exchange offer for the notes.

Cimpress’ deal

Cimpress priced $400 million of eight-year senior notes (B1/B+) on Friday at par with a coupon of 7%.

Pricing came within price talk for a coupon of 7% and wider than initial price talk in the mid to high 6% area, according to a market source.

J.P. Morgan Securities LLC, BofA Merrill Lynch, Mitsubishi UFJ Securities International plc and SunTrust Robinson Humphrey Inc. are underwriters for the Rule 144A and Regulation S offering.

The deal from the Venlo, Netherlands-based supplier of printed and promotional material and marketing services was marketed via a roadshow which began on Monday.

Proceeds will be used to redeem the company’s 7% senior notes due 2022 (B1/B+), which currently have $275 million outstanding.

Cimpress’ deal priced late in the afternoon and was not seen trading by sources queried.

However, the existing 7% notes were active on Friday and were seen trading in a 105 1/8 to 105¼ range, a market source said.

European primary

With markets firming, Europe saw two small deals price in the Nordic market during Friday’s session.

Etrion priced €40 million of three-year senior bonds with a coupon of 7¼%, according to a company news release.

Pareto Securities was the sole manager for the offering.

The new bonds were issued in a refinancing of the company’s outstanding €40 million of 8% senior secured bonds due April 2019.

The 8% bonds due 2019 have been called for redemption at 101% of the principal amount with redemption to take place on July 17.

There was strong demand in the Nordic market for the new issuance, according to the press release.

Bulk Industrier priced NOK 650 million of three-year secured bonds on Friday, according to a company news release.

The deal was marketed via fixed-income investor meetings which began on May 25.

Arctic Securities AS was sole manager for the Nordic region offering. The deal was oversubscribed, according to the news release.

Callon stuck

Callon’s new 6 3/8% senior notes due 2026 remained in focus in the secondary space with the notes the most actively traded of Friday’s session.

However, the bonds were little changed in the high-volume activity and continued to trade at par, which is where they have been since breaking on Thursday.

“They haven’t been going anywhere,” a market source said.

More than $27 million of the paper traded during Friday’s session.

Callon Petroleum priced an upsized $400 million offering of eight-year senior notes (B3/B+) at par to yield 6 3/8% in a Thursday drive-by.

Pricing came at the tight end of talk for a yield of 6 3/8% to 6½%, according to a market source. Initial guidance was whispered in the 6½% area.

The initial deal size was $300 million.

Talen gains

Talen’s junk bonds were on the rise on Friday as the company’s representatives gathered at an energy summit in Montana.

Talen’s 9½% senior notes due 2022 (B1/B+) were up about 2½ points to trade at 102 5/8, according to a market source. More than $16 million of the bonds traded during Friday’s session.

Talen’s 10½% senior notes due 2026 were up about 1½ points to trade at 95 with more than $12 million of the bonds traded during Friday’s session.

Talen representatives were at the Montana Energy Summit on Wednesday and Thursday where the future of the company’s coal-powered power plant in Colstrip was in focus.

While two units at the power plant are slated for closure in 2022, the continued operation of the remaining units received support from Federal Energy Regulator Commission member Neil Chatterjee, MTN News reported.

Slowest week since February

Including Cimpress, the U.S. primary saw a total of $900 million price during the week in three deals.

That was down from $2.49 billion the previous week and the smallest weekly total since the Feb. 11 week, which saw $537 million.

With that weak showing, the year-to-date total is now $95.98 billion, lagging the 2017 pace of $126.72 billion by 24.3%.

L Brands active

L Brands junk bonds were active and seeing gains in the secondary space after the Columbus, Ohio-based consumer brands company announced an exchange offer for its outstanding notes.

L Brands’ 7% senior notes due 2020 were up about 5/8 point to trade at 106 3/8, according to a market source. L Brands’ 6 5/8% senior notes due 2021 were up about 1 point to trade at 106½.

L Brands announced an exchange in which it will issue up to $700 million in new notes due 2027 and cash for three series of notes which include the 7% and 6 5/8% senior notes, Prospect News reported.

For each $1,000 principal amount of the 7% notes, the company will issue $850 of new notes and pay a cash amount to be set using a spread of 50 basis points over the 1.375% Treasury due April 30, 2020.

For each $1,000 principal amount of the 6 5/8% notes, the company will issue $850 of new notes and pay a cash amount to be set using a spread of 80bps over the 2.25% Treasury due March 31, 2021.

The tenders end at 11:59 p.m. ET on June 27.

Pricing will be set at 11 a.m. ET on June 14.

Indexes mixed

Benchmarks for the high-yield secondary market were again mixed on Friday.

The KDP High Yield index posted a slight loss on Friday after two consecutive days of gains. The index was down 3 basis points with the yield now 5.94%.

The index was up 5 basis points to 70.38 on Thursday with the yield remaining flat at 5.93%. The index was up 4 bps on Wednesday after a 10 bps decline on Tuesday.

The Merrill Lynch High Yield index was up 8.4 bps on Friday shaving the year-to-date return to negative 0.185%. The year-to-date return was negative 0.269% on Thursday.

The CDX High Yield 30 index was up on Friday and recouped its losses from Thursday. The index was up 28 bps to close Friday at 106.5. The index was down 10 bps on Thursday.

The CDX has been volatile throughout the week. The index saw a significant decline on Tuesday when it closed the day down 77 bps but regained its footing to close Wednesday up 44 bps.

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