Morning Commentary: Continental on tap; Allison Transmission, Axalta flat; Sunoco eyed

By Abigail W. Adams

Portland, Me., Nov. 10 – After an onslaught of new issuance during Monday’s session, the domestic high-yield primary market took a breather on Tuesday with only one drive-by deal set to price.

Continental Resources Inc. plans to price $1 billion senior bullet notes due January 2031 (existing Ba1/BB+/BBB-) with initial talk in the 5¾% to 6% area, according to a market source.

The offering comes as the rally in the secondary space also took a break with the market unchanged early Tuesday after ripping more than 3 points since last week.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was largely flat at $85.89, an increase of 0.012%, and the SPDR Bloomberg Barclays High Yield Bond index (JNK) was changing hands at 106.91, an increase of 0.019%, about one hour after the opening of equity markets.

Several of the deals to price during Monday’s session were also flat in the aftermarket.

Allison Transmission Inc.’s 3¾% senior notes due Jan. 30, 2031 (Ba3//BB) were wrapped around par in early trading.

The notes were marked at par bid, par ¼ offered early in the session, a source said.

Allison priced a $1 billion issue of the 3¾% notes at par in a Monday drive-by.

Pricing came at the tight end of talk for a yield of 3¾% to 4%. Initial guidance was in the low 4% area.

Axalta Coating Systems LLC’s 3 3/8% senior notes due 2029 (B1/BB-) also fell flat in aftermarket activity.

The 3 3/8% notes were marked at 99 7/8 bid, par 1/8 offered early in Tuesday’s session.

Axalta priced an upsized $700 million, from $600 million, issue of the 3 3/8% notes at par in a Monday drive-by.

Pricing came at the tight end of talk for a yield in the 3½% area. Initial guidance was for a yield in the mid to high 3% area, sources said.

While Allison and Axalta were largely wrapped around par, Sunoco LP’s 4½% senior notes due 2029 (expected B1/BB-) were trading with a slight premium.

The notes were marked at par 3/8 bid, par 7/8 offered early in the session.

Sunoco priced an upsized $800 million, from $500 million, issue of the 4½% notes at par in a Monday drive-by.

Pricing came at the tight end of talk for a yield of 4½% to 4¾%. Initial guidance was for a yield in the high 4% to 5% area.

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