Hanesbrands, Alight Solutions price; Del Monte on tap; PolyOne, Arconic, Vail trade up

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 30 – Two sharp Thursday drive-by executions closed the book on April 2020, which was the heftiest April for new deal activity since 2015.

Hanesbrands priced an upsized $700 million issue of five-year senior notes (Ba3/BB) and Alight Solutions priced an upsized $300 million issue of five-year senior secured notes (B1/B).

One deal remains on the active forward calendar. Del Monte Foods Inc. plans to price $500 million of five-year senior secured notes (CCC+) on Friday.

Meanwhile, after a weak start to the day, the cash bond market closed Thursday largely unchanged.

The tone of the market was “subdued,” with activity concentrated on new deals, a source said.

Arconic Corp.’s 6% senior notes due 2025 (Ba1/BB+/BBB-), PolyOne Corp.’s 5¾% senior notes due 2025 (Ba3/BB-), and Vail Resorts Inc.’s 6¼% senior notes due 2025 (B2/BB) were all trading with a premium in secondary market activity.

Several of last week’s deals, which had fallen flat in initial trading activity, were also markedly improved over the past few sessions.

Aramark Services, Inc.’s 6 3/8% senior notes due 2025 (B1/BB-), XPO Logistics, Inc.’s 6¼% senior notes due 2025 (Ba3/BB-) and Gap, Inc.’s three tranches of senior secured notes (Ba2/BB) are all now trading with premiums, a source said.

Meanwhile, high-yield mutual and exchange traded funds continued to see cash enter the space with $743 million in inflows through Wednesday’s close, according to the Refinitiv Lipper Fund Flows report.

Biggest April in half a decade

Two sharp Thursday drive-by executions closed the book on April 2020.

Both were upsized and priced tight to talk.

Hanesbrands priced an upsized $700 million issue of five-year senior notes at par to yield 5 3/8%.

The issue size increased from $500 million.

The yield printed at the tight end of yield talk in the 5½% area.

The notes were quoted on a 101-handle in the gray market, a source said.

And Alight Solutions priced an upsized $300 million issue of 5¾% five-year senior secured notes at par to yield 5.748%.

The issue size increased from $250 million.

The yield printed at the tight end of the 5¾% to 6% yield talk.

That finished off April 2020 with $37.27 billion of issuance that came in 57 junk-rated, dollar-denominated tranches.

Notwithstanding a lethal pandemic and its catastrophic impact upon the global economy it was the biggest April for speculative-grade new issuance in half a decade, according to Prospect News data.

April 2020 is the biggest April since that of 2015, which saw $41.13 billion in 64 tranches.

Thursday's activity left one deal parked on the active forward calendar.

Del Monte Foods intends to refinance its capital structure with the help of a $500 million placement of five-year senior secured notes, expected to price on Friday.

The deal comes with initial coupon talk of 12%, and three to five points of original issue discount, sources say.

Arconic in focus

Arconic’s newly priced 6% senior notes due 2025 were in focus in the secondary space with the notes trading with a premium.

The notes were changing hands in the par ¾ to 101½ context in high-volume activity, according to a market source.

The 6% notes had more than $107 million in reported volume heading into the market close.

Arconic is a solid name that is well known in the high-yield market.

The notes were also first-lien secured notes.

“There wasn’t going to be a poor performance from them,” a source said.

Arconic priced an upsized $700 million issue of the 6% notes at par in a Wednesday drive-by.

The yield printed at the tight end of the 6% to 6¼% yield talk. Initial guidance was in the low-to-mid 6% area.

The issue size increased from $600 million.

PolyOne on a 101-handle

PolyOne’s 5¾% senior notes due 2025 were also putting in a strong performance in the aftermarket with the notes trading up to a 101-handle.

The notes were changing hands in the 101¼ to 101¾ context on Thursday with more than $46 million in reported volume during the session., sources said

The plastics materials company is also a solid BB credit with the notes expected to perform well, a source said.

PolyOne priced a $650 million issue of the 5¾% notes at par on Thursday.

The yield printed at the tight end of the 5¾% to 6% yield talk. Initial talk was in the low 6% area.

The deal was heard to be playing to more than $1.5 billion in orders.

Vail outperforms

Vail Resorts’ 6½% senior notes due 2025 outperformed in the aftermarket, a source said.

The notes traded up to a 103-handle. They were changing hands in the 103 to 103½ context heading into the market close.

The performance of the notes was interesting, given that the company was a lodging/resort company and the notes were unsecured, a source said.

However, the coupon was decent and the offering was heavily oversubscribed, sources said.

Vail Resorts priced an upsized $600 million issue of the 6¼% notes at par in a Wednesday drive-by.

Pricing came at the tight end of the 6¼% to 6½% yield talk.

The issue size increased from $500 million.

The deal was heard to be playing to more than $4.7 billion of orders.

No longer flat

Several of the deals that fell flat after breaking for trade last week were markedly improved over the past few sessions.

Aramark’s 6 3/8% senior notes due 2025 traded as high as 104 on Thursday before closing the day at 103¾, sources said.

The notes have steadily climbed since Monday after closing out last week hovering on both sides of par.

Aramark priced a $1.5 billion issue of the 6 3/8% notes at par on April 22.

XPO Logistics 6¼% senior notes due 2025 were also trading up after falling flat last week.

The notes closed Thursday at 101 3/8, a source said.

The notes have also steadily climbed throughout the week after closing last week at par.

XPO priced an $850 million issue of the 6¼% notes at par on April 23.

Gap’s three tranches of senior notes continued to gain with the 8 3/8% senior notes due 2023 closing Thursday at 104 7/8, the 8 5/8% senior notes due 2025 closing at 103 7/8, and the 8 7/8% senior notes due 2027 closing at 103¾, sources said.

The notes have seen a dramatic rebound since last week when the 2023 notes were stuck at par and the 2025 and 2027 notes traded down to a 99-handle – all three tranches priced at par.

The improvement in the recent issues was “a function of the market,” a source said. “The market’s been better this week.”

However, the gains in the market have been “a slower creep up” than the wild swings the market had been seeing, the source said.

With the market stabilizing, the worst of the volatility may be over, the source said.

$814 million Thursday inflows

The dedicated high-yield bond funds had $814 million of net inflows on Wednesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs had $964 million of inflows on the day.

However actively managed high-yield funds sustained $150 million of outflows on Wednesday, the source said.

The combined funds had $743 million of net inflows for the week to Wednesday's close, according to Lipper US Fund Flows on Thursday afternoon.

A substantial portion, $842 million of the $964 million of inflows seen on Wednesday by the high-yield ETFs, were not part of that weekly total, according to the market source who added that the amount in question will appear in the weekly fund flows totals for the week to the May 6 close.

Indexes gain

Indexes continued to inch up on Thursday.

The KDP High Yield Daily index rose 23 basis points to close Thursday at 62.87 with the yield now 7.45%.

The index rose 18 bps on Wednesday, saw a slight decrease of 3 bps on Tuesday and was up 2 bps on Monday.

The CDX High Yield 30 index gained 2 bps to close Thursday at 94.79. The index rose 126 bps on Wednesday, 15 bps on Tuesday and 40 bps on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.