Morning Commentary: TPC Group sets roadshow for secured offer; Thursday deals trade at premiums

By Paul A. Harris

Portland, Ore., July 12 – A high-yield new issue market that generated a steady stream of news throughout the July 8 week continued to crank on Friday morning.

E.W. Scripps Co. launched an upsized $500 million offering of eight-year senior notes (B3/B-/B) at 5 7/8%, tight to price talk in the 6% area.

The deal, upsized from $400 million, was heard to be playing to $1.9 billion of orders on Thursday, at initial guidance in the low-to-mid 6% area, according to an investor.

The bonds are set to price Friday.

Meanwhile TPC Group Inc. plans to roll out a $930 million offering of five-year senior secured notes (expected ratings B2/B/B-) on a Monday investor conference call.

The debt refinancing deal is set to conduct a roadshow through the July 15 week.

BofA Securities Inc., Citigroup Global Markets Inc., Wells Fargo Securities LLC, Deutsche Bank Securities Inc. and Goldman Sachs & Co. LLC are the joint bookrunners.

Secondary

Deals priced during a burst of Thursday activity tended be trading at or above new issue prices on Friday morning, sources said.

Olin Corp.’s 5 5/8% senior notes due August 2029 (Ba1/BB+) were trading at par, where they priced on Thursday in a $750 million issue, according to a New York-based bond trader.

The new Masonite International Corp. 5 3/8% senior notes due February 2028 (Ba3/BB+) were par 1/8 bid on Friday morning, the trader said.

The $500 million issue priced at par in a Thursday drive-by.

The Horizon Pharma USA, Inc. 5½% senior notes due August 2027 (B1/B+) were par ¾ bid on Friday morning, after trading as well as 101¼ bid on Thursday night, the trader said.

The upsized $600 million issue (from $500 million) priced at par.

And MTS Systems Corp.’s 5¾% senior notes due August 2027 (B3/B+) were 101 7/8 bid on Friday morning.

The upsized $350 million issue (from $300 million) priced at par on Thursday.

All of them were relatively active in trading, given that it’s a summer Friday, the trader remarked.

Away from Thursday’s deals, the CSC Holdings, LLC (Altice USA, Inc.) 5¾% senior notes due January 2030 (B3/B) were par ¼ bid, par ¾ offered, and seeing sellers on Friday morning, an investor said.

That paper had recently traded at 101.

The deal came at par on July 1 in a $1 billion issue, the investor recounted.

In the interim, Treasuries moved against it.

Ten-year government paper was yielding in the context of 2.13% early Friday, at least 10 basis points higher than it was when the CSC Holdings deal priced at the beginning of the month, a big move in Treasuries, the investor remarked.

Mixed Thursday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Thursday, according to the investor.

High-yield ETFs sustained $319 million of outflows on the day.

However, actively managed high-yield funds saw $30 million of inflows on Thursday, the investor said.

News of Thursday's daily flows trails a Thursday afternoon report that the combined funds saw $619 million of net inflows during the week to the Wednesday, July 10 close, according to Lipper US Fund Flows.

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